The Maharashtra Electricity Regulatory Commission (MERC) has given its approval for the long-term procurement of 50 MW bagasse-based co-generation power by MSEDCL.

The commission has also allowed the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to delete the clauses of performance guarantee and financial closure from the earlier approved Request for Selection (RfS) and power purchase agreement (PPA) documents.

The MSEDCL will set the ceiling rate after considering the prevailing market conditions, according to the MERC order. Moreover, the power procured from these projects will be counted towards the fulfillment of its non-solar renewable purchase obligations (RPO) for the respective periods.

Case Background  

On August 30, 2019, the Maharashtra State Electricity Distribution Company Limited, had filed a case before the MERC seeking its approval for the long-term procurement of power from bagasse-based co-generation projects. The power was to be procured from projects whose energy purchase agreements (EPAs) with MSEDCL had either expired or were about to expire with the ceiling rate of ₹3.56 (~$0.05) /kWh as approved by the commission. The rate was for the procurement of 50 MW bagasse-based co-generation power.

Initially, for a limited period between the financial year (FY) 2018-19, the commission had allowed MSEDCL to procure power from a project whose EPA had expired at the mutually agreed tariff of ₹3.56 (~$0.05) /kWh. However, subsequently when MSEDCL again approached the commission for the approval of procurement of 87 MW of bagasse-based power from projects whose EPA had expired or was going to expire, the commission directed MSEDCL to undertake competitive bidding and provided the following dispensation:  

“The commission notes that now in FY 2019-20, MSEDCL is having 87 MW total capacity from 6 different bagasse-based co-generation projects whose EPAs with MSEDCL have expired or are expiring. Thus, there are enough projects for conducting a competitive bidding process for the procurement of power. Hence, the commission is not inclined to accept the prayer of MSEDCL to procure bagasse-based co-generation power at a mutually agreed price. Instead, the commission directs MSEDCL to procure such power through competitive bidding only. The mutually agreed price approved by the commission could be the ceiling price based on which the bidding process could be conducted. 

Based on these directives, MSEDCL proposed to initiate competitive bidding for the procurement of 50 MW bagasse-based co-generation power from projects whose EPAs have expired, with a ceiling tariff of  ₹3.56 (~$0.05)/kWh and sought its approval for the deletion of some of the clauses in the approved RfS and PPA documents.

The commission then noted that the projects whose EPAs have expired are already commissioned projects and have been supplying power to MSEDCL for the past 13 years. The commission also allowed MSEDCL to delete the provisions from the projects whose EPAs with MSEDCL have either expired or about to expire. However, the commission did not allow MSEDCL to remove the clause related to penalty for a lower generation.

Meanwhile, in its recent orders, the commission categorically stated that the procurer would set the ceiling rate.

Recently, Mercom had reported that the MSEDCL invited requests for selection for the procurement of 50 MW of power generated from bagasse-based co-generation power projects in the state.  According to the tender, the projects which are already supplying power to MSEDCL under an existing energy purchase agreement, which has already expired or is going to expire by March 31, 2020, will be eligible to participate in the bidding process.

In July 2019, the Maharashtra Electricity Regulatory Commission ruled in favor of Dr. Babasaheb Ambedkar Sahakari Sakar Karkhana Ltd., which had filed a petition regarding its 25.7 MW bagasse-based cogeneration power project. The petition was filed for a refund of power evacuation infrastructure expenditure from Maharashtra State Electricity Transmission Co. Ltd. (MSETCL) and Maharashtra Energy Development Agency (MEDA).