The Maharashtra Electricity Regulatory Commission (MERC), in a recent order, allowed for revisions in contract demand up to two occasions for high-tension (HT) commercial and industrial (C&I) consumers and up to one occasion for low-tension (LT) C&I consumers in a billing cycle up to March 31, 2022.

Kalika Steel Alloys and 27 others had filed a petition with the Commission, demanding the contract be revised. They sought an extension of the earlier order passed by the Commission, allowing for multiple revisions of the contract demand in light of the disruption caused due to the Covid-19 pandemic.

Background

The Commission, in its earlier order, had granted relaxation concerning revisions in contract demand per month, which was further extended up to March 31, 2021.

Contract demand is the amount of electricity (kW) that a customer demands from the distribution company (DISCOM) in a specified time.

The petitioners said that throughout the last nine months, they had carried out their operations in such a manner that the Maharashtra State Electricity Distribution Company Limited’s (MSEDCL) operations were not put under any undue stress.

The petitioners, in their submissions, added that they feel because of the magnitude of the Covid-19 crisis, the economic situation is unlikely to improve for some time. They noted that they were facing an acute financial crunch, as the cost of electricity accounted for about 60% of their total cost of production.

MSEDCL, in its reply, added that the Commission’s earlier order was on account of the difficulties faced by the industries due to less demand. The present situation was different as the demand was back to normal.

The DISCOM further added that the benefits extended by the Commission had been availed by only a handful of consumers. Hence, the difficulties being cited by the petitioners were not affecting the majority of consumers in Maharashtra.

However, Adani Electricity Mumbai Limited, in its reply, said that currently, the entire country, as well as the state of Maharashtra, was reeling under the second wave of the Covid-19 pandemic and the lockdown had resulted in the closure of most establishments of non-essential category. Considering these factors, the company said that it didn’t have any objection to the extension request of the Commission’s earlier order, allowing the contract demand to be revised.

Tata Power Corporation-Distribution also echoed similar views and said that it would abide by the Commission’s order.

Commission’s analysis   

The Commission noted that citing the consequences of the Covid-19 pandemic, the petitioners stated that the economic scenario was unlikely to improve anytime soon, and hence there was an uncertainty in the business, planning supply chain, and logistics. Hence, they sought approval to extend the provision of multiple revisions in the contract demand until March 31, 2022.

The Commission observed that considering the prevailing pandemic circumstances, the consumers needed the flexibility of revising their contract demand for a longer period. Also, the number of occasions allowed in earlier practice direction needed to be modified for changed circumstances.

Accordingly, the Commission deemed it proper to allow revisions in contract demand for two occasions in a billing month for HT C&I consumers. Similarly, the LT consumer can revise the contract demand only once in a billing month.

The Commission further acknowledged the operational difficulty, especially getting meter survey data and resetting of the maximum demand counter, among others. The Commission opined that with the reduction in the number of occasions allowed for revising contract demand in a month, the issues raised by MSEDCL would be addressed appropriately.

The Commission noted that for short-term open access consumers, revision in the contract demand would not be allowed during the open access period. Also, the medium-term and long-term open access consumers should apply for the revision in open access permissions commensurate with its intended revised contract demand.

The Commission observed that MSEDCL had raised the provision of net-metering regulations, which linked maximum allowable net metering rooftop capacity to contract demand of consumer subject to the higher limit of 1 MW. With the revision in contract demand, the allowable capacity of net metering needed to be lowered accordingly. The Commission clarified that although it was correct that under net metering regulations, the capacity of a rooftop solar project was linked to the contract demand of the consumer, the revision in such capacity with every revision in contract demand would not be possible.

The Commission also added that the relaxation granted through this order would not have a substantial burden on the DISCOMs. The Commission directed the DISCOMs to attend to the request for revision in contract demand within three days of application, which otherwise would be required to be undertaken in the next billing cycle. The Commission directed the DISCOMs to be quick in providing services to the consumers so that the C&I consumers could ramp up their activities amid the tough times of the pandemic.

In September last year, the Delhi Electricity Regulatory Commission had reduced the fixed charges by 50% for industrial and non-domestic consumers. The notification issued by the Commission had stated that in the lockdown period (until May 30, 2020), several C&I establishments had not tapped into their contracted capacity.

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