MERC Orders DISCOM to Refund Excess Penalty Charges to Theme Park Owner

MSEDCL charged an additional ₹1.39 million in excess demand penalty for renewable open access projects


The Maharashtra Electricity Regulatory Commission (MERC) has directed the Maharashtra State Electricity Distribution Company (MSEDCL) to reimburse Imagicaa World Entertainment, a theme park owner in Maharashtra, for excess demand penalty charges plus interest incurred due to renewable energy open access levies.


Imagicaa had sought a review of the Commission’s order dated February 15, 2023, which had asked MSEDCL to refund excess wheeling charges to Imagicaa. The Commission, however, had rejected Imagicaa’s plea for a refund of excess demand penalty charges.

Imagicaa contended that MSEDCL had calculated the demand penalty based on wheeling charges on the entire renewable electricity generation rather than actual electricity drawn for consumption from its renewable (solar and wind) open access project. This resulted in the levying of an excess demand penalty to the tune of an additional ₹1.39 million (~$16,796).

Imagicaa said that based on the correct formula of the calculation, which is twice the wheeling charges for the month in which the consumer failed to achieve the maximum demand, the penalty should have been ₹656,157 (~$7,900). MSEDCL, however, charged the theme park operator $2.05 million (~$24,696).

The petitioner did not achieve maximum demand greater than 70% (700 kVA) of open access in two consecutive months, i.e., in April (675 kVA) and May 2020 (655 kVA), and therefore, it was liable to pay a penalty of twice the wheeling charges.

Commission’s Analysis

After hearing the petitioners and MSEDCL, MERC noted that since it had directed a refund of excess wheeling charges, a proportionate refund of excess demand penalty charges should also follow.

In its recent order, MERC observed: “The Commission erred in justifying MSEDCL’s action for levying demand penalty charges computed on improper wheeling charges. MSEDCL should refund the excess demand penalty for April and May 2020 months, as claimed by Imagicaa.”

The Commission directed MSEDCL to pay interest at the rate equivalent to the Bank of India’s rate on the excess penalty amount. MSEDCL has been given one month to comply with the refund order.

Last month, MERC directed MSEDCL to release the performance bank guarantees of solar developers ACME Sikar Solar and ReNew Dinkar Urja upon the termination of their power purchase agreements, failing the power evacuation set up by state entities.

Last year, MERC directed the Tata Power Company to compensate Tata Power Green Energy ₹491.2 million (~$5.89 million) against the costs incurred due to the hike in Goods and Service Tax rate for its wind-solar hybrid and wind project.