Maharashtra DISCOM and SECI Spar Over Solar Agreement, Dispute on Jurisdiction

The Maharashtra Electricity Regulatory Commission (MERC) asserted that it was the appropriate commission to adjudicate a dispute between the Solar Energy Corporation of India (SECI) and the Maharashtra State Electricity Distribution Company Limited (MSEDCL).

Background: 

The MSEDCL had filed a petition with the Commission seeking compensation from SECI following a shortfall in the supply of power as agreed upon under the power sale agreements (PSA) between both the parties. The parties had entered into two PSAs for the supply of power to the MSEDCL from 1 GW of solar projects in the state back in 2016.

However, due to delays in the commissioning of some of these projects, the sale of power from them was delayed, leading to a shortfall in power supply to the MSEDCL. In its petition, the MSEDCL sought for orders declaring that SECI did not perform its contractual obligations and for compensation to the tune of ₹1.32 billion (~$17.9 million) towards losses due to the shortfall in the supply of power.


The state distribution company (DISCOM) stated that despite its letters to SECI claiming compensation for the losses, SECI did not reimburse the claimed dues and denied all claims allegations made by the MSEDCL.

In its response, SECI argued that the dispute was outside the scope of the MERC and the petition filed before it by the MSEDCL was “misconceived and not maintainable.” It argued that it was a generating company owned and controlled by the central government and that all matters connected to it fell under the regulatory scope of the Central Electricity Regulatory Commission (CERC). It contended that the MERC had no jurisdiction to entertain the MSEDCL’s petition claiming relief from SECI.

Commission’s Stand:

The MERC stated that through this interim order, it would first decide the issue of its jurisdiction in the matter.

Upon analysis of the arguments presented by both parties, the state Commission said that even though SECI has been incorporated as a generating company, in the present case, it was performing the role of a trading licensee. It said that under the provisions of the Electricity Act, an entity could play different roles, including a generating company, or a transmission, distribution, and trading licensee.

MERC noted that it had the power to determine the role played by each party as per the agreement and adjudicate as necessary. It said that as per its findings, SECI was not a generating company in this case and that the provisions applicable for central sector generating companies were not applicable here. It concluded that SECI’s role as per the PSA was that of a trading licensee.

The Commission also went on to explain that any dispute involving a state distribution licensee for the procurement of power in the state was within the jurisdiction of the state Commission.

Final Order: 

In its final order, the MERC declared that it was the appropriate Commission to handle the present dispute. It directed SECI to file its submissions on the merits of the petition and to send a copy to the MSEDCL within two weeks from the date of the order. Subsequently, it directed the MSEDCL to file its rejoinder within a week of SECI’s submission.

It notified that the date for the hearing on the main prayers of the petitioner would be disclosed by the Secretariat of the Commission separately.

In another case relating to PSA with SECI, the Kerala State Electricity Regulatory Commission ordered the Kerala State Electricity Board Limited to file a petition incorporating all the recommended changes for the approval of the power sale agreement for the procurement of 100 MW of wind power from SECI.

Last month, ReNew Wind Energy Private Limited, a subsidiary of ReNew Power, filed a petition with the Central Electricity Regulatory Commission asking it to issue orders restraining SECI from encashing its bank guarantee following delays in project implementation due to force majeure events.

 

Image credit: Brian Turner / CC BY