Regulator Rejects Wind Developers' Plea for Interest on Delayed Payment by DISCOM

The Maharashtra Electricity Regulatory Commission (MERC), in a recent order, has rejected the petition seeking directions against Maharashtra State Electricity Distribution Company Limited (MSEDCL) for failing to comply with the Commission’s order dated July 4, 2020, to compensate for power supplied by the wind power generators. The period under consideration for review was from the financial year 2014-15 to 2016-17.

Lalpur Wind Energy, Khandke Wind Energy, and Bothe Windfarm Development had filed the petition against MSEDCL.

Background

The wind power generators requested the Commission to take appropriate action against MSEDCL and direct MSEDCL to settle the sum against the invoices raised along with 15% annual interest from the date of invoice until realization.


The petitioners said that the Commission directed MSEDCL to compensate for power injected from petitioners’ wind projects during FY 2014-15 to 2016-17 in the order dated July 4, 2020.

The wind developers informed the Commission that MSEDCL did not compensate them despite the directions of the Commission. Therefore, the petitioners raised invoices for MSEDCL. As per the invoices dated December 22, 2020, MSEDCL was requested to pay ₹48.16 million (~$657,095) plus taxes to Lalpur Wind Energy, and ₹65.90 million (~$885,378) plus taxes to Khandke Wind Energy. MSEDCL was requested to pay ₹95.10 million (~$1.27 million) to Bothe Windfarm Development as per the invoice dated December 24, 2020.

In its response, MSEDCL said it has already filed an application seeking a stay on the Commission’s order dated July 4, 2020, before the Appellate Tribunal for Electricity (APTEL). Therefore, the order dated July 4, 2020, could not be executed until respective appeals pending before APTEL are decided.

MSEDCL informed that it has, as per the direction of APTEL on May 13, 2021, paid the amount to all three petitioners as described below on May 29, 2021.

Payments to Wind Power Generators

On June 18, 2021, the petitioners informed the Commission that MSEDCL has not fully complied with the Commission’s order and claims made by them. MSEDCL was directed to compensate the developers at average power purchase cost (APPC) plus floor price of non-solar renewable energy certificates applicable for the respective year.

In its response, MSEDCL said it had deducted renewable energy cost and Power Grid Corporation’s (PGCIL) charges inclusive of reactive charges while computing APPC. As per the definition of APPC, DISCOMs only need to deduct renewable energy costs while computing APPC. In addition, MSEDCL was not directed to remove PGCIL charges and reactive charges while computing APPC in the Commission’s order dated July 1, 2020, and July 4, 2020.

Commission’s analysis

After analyzing submissions made by the petitioners and the respondent, the Commission noted that it had directed MSEDCL to compensate the petitioners for power injected from their projects from FY 2014-15 to FY 2016-17 at the rate of APPC plus floor price of non-solar renewable energy certificates applicable for the respective years.

The Commission noted that both parties had filed appeals before the APTEL against respective orders of the Commission. It also noted that MSEDCL made payments to the petitioners as per the direction of APTEL on May 29, 2021.

The petitioners had contested MSEDCL’s method to compute APPC and raised objections against the exclusion of the PGCIL charges inclusive of reactive charges from the total power purchase cost.

The Commission said all three petitioners in their respective invoices did not mention any due date for payments. In addition, both parties did not sign any energy purchase agreement governing the conditions of payment and the charges for delayed payment. So, the Commission rejected the petition requesting interest on alleged delayed payment by MSEDCL.

In a case of delayed payment for wind energy supplied by generators in Tamil Nadu, DISCOM was directed to pay interest at the rate of 12% per annum as mentioned in the power purchase agreement.

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