Maharashtra Electricity Commission Dismisses Bagasse-Based Developer’s Petition

The, Maharashtra Electricity Regulatory Commission (MERC) has dismissed a petition filed by Olam Agro India Pvt. Ltd. (OAIPL) to directing MSETCL to comply with MERC’s previous impugned order. The commission observed that since the order in question is already under review, the current petition stands dismissed.

OAIPL has established a 20 MW bagasse-based co-generation power plant at Chennati Rajgoli village, Chandgad tehsil, Kolhapur district. It had filed a petition seeking reimbursement of cost of power evacuation arrangement for its bagasse-based plant. MERC passed an order on May 2, 2018.

In this order, the commission directed MSETCL to reimburse the lower of the total cost of power evacuation arrangement for the petitioner’s bagasse-based plant.

The commission stated, “In view of the foregoing, MSETCL shall reimburse the lower of total cost as per its approved estimated cost or the actual verified cost incurred by Olam Agro, net of the amount paid by MEDA, within two months, along with applicable interest from the date the respective installments were due till the date of payment. MSETCL is entitled to the expenses incurred towards the evacuation arrangements through its aggregate revenue requirement, but not to the interest amount arising from the delay in payment,”

However, MSETCL did not comply with the commission’s above directives, despite OAIPL’s follow-up.

The commission also noted that MSETCL had also filed a petition seeking a review of the May 2 2018 impugned order. In its petition, MSETCL requested the commission to consider the Maharashtra government’s policy and the commission’s order in number of various renewable energy projects previously approved by MERC.

The DISCOM argued that deviation from this order will increase the project’s financial burden by ₹5 billion (~$67.6 million) and ultimately the common consumer would bear the brunt in the form of an increase tariff. Further, MSETCL submitted that the delay in compliance with the impugned order was not intended, and apologized for this oversight.

Recently, MERC had approved MSEDCL’s proposal to procure long-term bagasse-based cogeneration power through competitive bidding. This ruling is expected to pave the way for grid-connectivity and a power purchase agreement (PPA) for 200 MW of bagasse-based cogeneration projects in the state. It will also attract developers active in the bagasse-based cogeneration project sector, as the PPA will be long-term at 20 years, compared to the previously accepted medium-term 13-year PPA.

Delay in the scheduled commissioning date of power projects due to unavailability of evacuation infrastructure has been plaguing the sector across all power generation segments including solar and wind. In a recent notification issued by the Ministry of New and Renewable Energy (MNRE), any delay in the scheduled commissioning date of solar projects due to unavailability of internal execution or transmission system by solar park developers will now be liable to a penalty. This step if implemented strictly could prove positive for the sector.