The Maharashtra Electricity Regulatory Commission (MERC) recently directed the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to pay the principal amount to four wind project developers. By December 2021, MSEDCL also needs to clear the corresponding late payment surcharge due until the generation month of December 2020.

The Commission said that any delay in the payment of the late payment surcharge would attract an interest of 1.25% per month.

The Commission asked the distribution company (DISCOM) to communicate the specific date for the payment of the outstanding amount. It directed the DISCOM to develop a transparent mechanism for payment of dues within a month from the date of the order, failing which it would be compelled to take action.

Kukreja Enterprises, LB Kunjir, Kukreja Development Corporation, and OP Enterprises had filed petitions seeking directions to MSEDCL to pay the principal amount and the late payment surcharge.

Background

All four petitioners are engaged in the business of developing and operating wind energy projects in Maharashtra. Kukreja Enterprises has two wind projects of a total capacity of 3.3 5 MW, whereas LB Kunjir has three wind projects with a total capacity of 4.5 MW. Kukreja Development Corporation operates two wind projects of a total capacity of 2.75 MW, and OP Enterprises, a wind project of 1.5 MW capacity.

All the projects are located in Maharashtra and have been developed under Maharashtra’s policy on non-conventional energy sources.

The wind energy generators, based on the provisions of the power purchase agreements (PPAs), had claimed the following as the principal amount and late payment surcharge liabilities:

The petitioners argued that even with several reminders, MSEDCL failed to make the payments.

MSEDCL, in its response, said that despite the financial crisis, it had committed to releasing outstanding amounts for generation month up to December 2020 within the next three months. It requested the Commission to direct the generators to provide a late payment surcharge waiver undertaking, given its precarious financial position due to the Covid-19 pandemic.

As per the payment plan dated June 25, 2021, submitted by MSEDCL, it had resolved to make payment of outstanding amounts up to December 2020 to the wind energy generators by December 2021.

Commission’s analysis

Considering financial difficulties due to the Covid-19 pandemic, the Commission noted that in its order dated September 7, 2021, it had agreed to MSEDCL’s plan of releasing the payments by December 2021. It said that MSEDCL has to commit specific payment dates now.

The Commission directed MSEDCL to pay the corresponding late payment surcharge amount along with the outstanding principal amount as per the specific date committed by MSEDCL. Any delay in payment would attract interest at the rate of 1.25% per month from the respective dates.

MERC added that MSEDCL was yet to submit the compliance status of developing a transparent mechanism for the payment of dues. It directed the DISCOM to complete the exercise within one month and report the compliance, failing which action would be initiated.

Earlier, in a similar order, MERC had directed MSEDCL to fulfill its payment obligations for energy injected into the grid from four wind energy projects.

Subscribe to our real-time Regulatory Updates to ensure that you never miss any critical updates from the renewable energy industry.