The Maharashtra Electricity Regulatory Commission (MERC) recently directed Hindustan Petroleum Corporation (HPCL) and the Maharashtra State Electricity Distribution Company (MSEDCL) to recompute the delayed payment charge from April 2012 to September 2017 according to the notified SBI benchmark interest rate and adjust the surplus amount accordingly.

HPCL had filed a petition against MSEDCL for non-compliance with the Commission’s earlier order in which MSEDCL was asked to pay ₹9.89 million (~$120,240) as the outstanding delayed payment charge for the 3.75 MW project at Dhule.

Background

HPCL has a 3.75 MW wind energy project installed in the Dhule district of Maharashtra, and it had entered into a WEPA on May 29, 2008, for 13 years from the commercial operation date (COD) of the wind power project.

HPCL submitted that MSEDCL was liable to pay an outstanding delayed payment charge of ₹9.89 million (~$120,240) and ₹2.27 million (~$27,598) as interest as of March 2022.

MSEDCL noted that HPCL had filed the present petition on March 30, 2022, and hence the claims for which the cause of action arose before March 30, 2019, were barred by limitation. Therefore, HPCL can only claim the late payment charge from April 2019 to June 2020, which amounted to ₹4.04 million (~$49,117).

The distribution company added that it had already paid the reconciled amount of ₹5.91 million (~$71,852) from April 2012 to September 2017 to HPCL, and there was no non-compliance.

It clarified that the Commission had made the position clear that the interest of 1.25% would only be applicable when MSEDCL fails to pay the delayed payment charge amount.

HPCL argued that the claim of HPCL was not barred by law of limitation on account of the lockdown imposed in Maharashtra from March 23, 2020, on account of the COVID-19 pandemic, which had undeniably affected the day-to-day activities of HPCL.

The wind generator added that it was agreed that parties would sit together and resolve the difference at the earliest. HPCL followed up with MSEDCL, but the difference has not been resolved yet. MSEDCL paid ₹5.91 million (~$71,852) on April 26, 2021, after almost two years. However, the balance amount of ₹1.35 million (~$16,413) was not yet paid to HPCL.

Commission’s analysis

The Commission observed that HPCL had not raised any issue about the outstanding principal amount. Regarding the late payment charge, the Commission noted that the difference in the delayed payment charge amount claimed by both parties was due to the variation in the due date, the payment receipt date, and the difference in the rate of interest considered by both parties.

The Commission noted that HPCL, as well as MSEDCL, had not submitted the details of the then prevailing interest rates required for computation of the delayed payment charge for the period of April 2012 to September 2017. Hence, the Commission could not compute the same.

Therefore, the Commission directed HPCL and MSEDCL to recompute the delayed payment charge from April 2012 to September 2017 by applying the then-notified and correct SBI benchmark interest rate.

The Commission said that an interest rate of 1.25% per month would be applicable on the outstanding delayed payment charge amount for the power procured from April 2012 to September 2017.

Further, the Commission approved the delayed payment charge of ₹6.39 million (~$77,688) as claimed by MSEDCL from October 2017 to June 2020 and asked HPCL to raise a supplementary bill.

MSEDCL was mandated to pay by the due date per the wind energy purchase agreement (WEPA). Any delay beyond the due date will attract interest at 1.25% per month on the outstanding delayed payment charge.

The state regulator noted that MSEDCL had paid the delayed payment charge amount on April 26, 2021, after a delay of 25 months. Therefore, the Commission directed MSEDCL to compute interest on late payment of the delayed payment charge at an interest rate of 1.25% per month for a delay of 25 months based on recomputed amount.

In January this year, MERC allowed wind power generators’ claim on delayed payments along with interest for energy supplied to MSEDCL.

Earlier, MERC had ruled in favor of a wind power developer and said that it was eligible for a late payment surcharge for January 2017 and from April 2017 to February 2018 with an interest of 1.25% per month on the outstanding amount.

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