The Maharashtra Electricity Regulatory Commission (MERC) has directed the Maharashtra State Electricity Distribution Company (MSEDCL) and the Braithwaite Nacof Solar Project (Braithwaite) to resolve a power purchase agreement (PPA) dispute through arbitration.

The MERC direction follows a Bombay High Court order.

Background

The dispute between MSEDCL, the applicant, and Braithwaite, the respondent, arose after the latter failed to commission a 500 MW solar project within the PPA’s agreed deadline.

The scheduled commercial operation date was August 17, 2023, which was extended to March 31, 2025. On July 2, 2024, due to Braithwaite’s failure to commission the project, MSEDCL issued the default-cum-termination notice under the PPA’s provisions.

Braithwaite challenged the termination before the Bombay High Court under the Arbitration and Conciliation Act, 1996, seeking stay orders and the appointment of an arbitrator.

After the hearing, the High Court directed both parties to approach MERC to appoint an arbitrator or adjudicate the dispute under the Electricity Act, 2003.

Commission’s Analysis

The Commission said that by entering the PPA and acting as a prospective generator, Braithwaite assumed a generating company’s status and obligations. Therefore, accrued rights, obligations, and liabilities under the PPA, which the applicant signed as a prospective generator, would still apply after the PPA’s termination.

The Bombay High Court upheld MERC’s position and disposed of the related arbitration petitions, instructing the Commission to allow the parties’ nominee arbitrators to select a presiding arbitrator for dispute resolution via arbitration.

MERC issued the final order permitting the arbitration to move forward.

Recently, MERC directed MSEDCL not to levy wheeling charges and losses on solar open access consumers not using the distribution company’s distribution system or end-to-end dedicated transmission lines.

In March this year, MERC approved the adoption of a tariff of ₹3.65 (~$0.0421)/kWh for Adani Electricity Mumbai to procure 250 MW wind power from JSW Neo Energy for 25 years.

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