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					</table><p>The Maharashtra Electricity Regulatory Commission (<a href="https://merc.gov.in/" target="_blank" rel="noopener">MERC</a>) has directed the Tata Power Company Limited – Distribution (<a href="https://tdservices.tatapower.com/our-business/distribution.aspx" target="_blank" rel="noopener">TPC-D</a>), a  distribution company (DISCOM), to compensate Tata Power Green Energy (<a href="https://www.tatapowerrenewables.com/about-us/profile.aspx" target="_blank" rel="noopener">TPGEL</a>) ₹491.2 million (~$5.89 million) against the costs incurred due to the hike in Goods and Service Tax (GST) rate for its wind-solar hybrid and wind project.</p>
<p>MERC accepted TPGEL&#8217;s petition, noting the absence of objections from the TPC-D.</p>
<p><strong>Background</strong></p>
<p>TPGEL was the successful bidder in Tata Power Company Distirbution’s auction for 225 MW solar-wind hybrid power at Noorsar village, in Bikaner, Rajasthan, and wind (98.05 MW) in Maharashtra for 25 years.</p>
<p>Consequently, TPGEL committed to supplying 225 MW of blended wind-solar hybrid power at ₹2.59 (~$0.031)/kWh. MERC adopted the tariff on August 10, 2020.</p>
<p>However, the Ministry of Finance initiated a subsequent change in the law as of September 30, 2021, which resulted in a substantial increase in the GST on supply and civil works/service contracts from 8.9% to 13.8%.</p>
<p>In response, TPGEL filed a petition requesting compensation of ₹491.2 million (~$5.89 million), along with ₹4.68 million ($56,168) as carrying costs due to the hike in GST rates.</p>
<p><strong>Commission’s Analysis</strong></p>
<p>MERC emphasized the choice between a lump-sum payment and a per-unit basis over the power purchase agreement period, offering flexibility to TPGEL and TPC-D. Generators are encouraged to consider voluntary discounts on lump-sum payments.</p>
<p>The Commission highlighted the need to determine the total compensation along with carrying costs at 1.25% above the Marginal Cost of Funds Based Lending Rate (MCLR) per annum of the State Bank of India.</p>
<p>MERC delineated the compensation process when spread over the PPA period, with an annual per-unit rate calculation. This includes computing carrying costs for deferred payment and factoring in energy supply based on the Capacity Utilization Factor (CUF), ensuring transparent and systematic distribution.</p>
<p>It directed TPC-D to communicate its choice of compensation payment—lump-sum or per unit—within two weeks.</p>
<p>At the end of the financial year, TPGEL and TPC-D were directed to reconcile the per-unit charge against the recoverable amount. Over-recovery would be adjusted in March, while any under-recovery due to lower generation will carry forward without additional carrying costs, payable from excess generation above the declared CUF. Unrecovered compensation at the end of the PPA tenure will be reconciled and paid in the last month without additional carrying costs.</p>
<p>The effective date, signifying when the alteration of the GST rate took effect, would guide the implementation of compensation and adjustments within the PPA, as directed by MERC.</p>
<p>In May, MERC <a href="https://www.mercomindia.com/maharashtra-directs-discom-honor-solar-developers-bcd-gst" target="_blank" rel="noopener">directed</a> Maharashtra State Electricity Distribution Company to compensate Juniper Green Field with ₹406.44 million ($4.92 million) for increased Basic Customs Duty on solar inverters and higher GST on renewable energy devices.</p>
<p>Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.</p>
<div class="saboxplugin-wrap" itemtype="http://schema.org/Person" itemscope itemprop="author"><div class="saboxplugin-tab"><div class="saboxplugin-gravatar"></div><div class="saboxplugin-authorname"><a href="https://cms.mercomindia.com/author/staff/" class="vcard author" rel="author"><span class="fn">Staff</span></a></div><div class="saboxplugin-desc"><div itemprop="description"></div></div><div class="clearfix"></div></div></div>

MERC Approves ₹491.2 Million Compensation for Tata Power for GST Hike

<p>The Uttar Pradesh Power Corporation Limited (UPPCL) was recently reprimanded by the state’s electricity commission (UPERC) <a href="https://mercomindia.com/uppcl-reprimanded-delay-getting-approvals-wind-projects/" target="_blank" rel="noopener noreferrer">for a delay in filing</a> its petition to adopt a tariff for 439 MW of wind projects. Further, UPERC came down on the state load despatch center (UPSLDC) for scheduling power for these projects without any approval.</p>
<p>The issue relates to a petition that was filed by the UPPCL for accepting the delay in the adoption of a tariff, approval of power sale agreement (PSA), and power procurement for these projects. The PSA for the projects was signed in 2017, and the projects were commissioned in 2018.</p>
<p>Now, in its latest hearing on October 10, 2019, the UPERC has issued a notice to the UPSLDC for acting in violation of the grid code and the Electricity Act 2003.</p>
<p>In the recent hearings, the council on behalf of the petitioners (UPPCL) had expressed regret for not approaching the commission for timely adoption of the tariff. Furthermore, they also requested the commission to allow UPPCL to file a confidential report.</p>
<p>In its latest order, the state commission has given UPPCL two weeks to file a report citing the action taken against the responsible parties.</p>
<p>Also, UPPCL and Power Trading Corporation of India (PTC) had requested the UPERC to allow the withdrawal of a tariff adoption petition for one of the wind projects. The withdrawal would allow the petitioners to now approach the Central Electricity Regulatory Commission (CERC) for tariff adoption since the projects would supply power to multiple states. For this, the UPERC has granted its permission to UPPCL and PTC to withdraw the petition and approach the central commission, respectively.</p>
<p>Last month, the UPERC issued draft regulations for <a href="https://mercomindia.com/uttar-pradesh-banking-charges-solar-wind/" target="_blank" rel="noopener noreferrer">captive and renewable energy</a> generating projects in the state. The main objective of these regulations is to promote the generation of electricity from renewable sources, facilitate connectivity of renewable power projects with the grid, and ensure the sale of electricity to any person.</p>
<div class="saboxplugin-wrap" itemtype="http://schema.org/Person" itemscope itemprop="author"><div class="saboxplugin-tab"><div class="saboxplugin-gravatar"></div><div class="saboxplugin-authorname"><a href="https://cms.mercomindia.com/author/shaurya-bajaj/" class="vcard author" rel="author"><span class="fn">shaurya</span></a></div><div class="saboxplugin-desc"><div itemprop="description"><p><span style="font-family: Calibri"><span style="color: #000000"><span>Shaurya is a staff reporter at MercomIndia.com with experience working in the Indian solar energy industry for the past four years in various roles. Prior to joining Mercom, Shaurya worked with a renewable energy developer and a consulting company. Shaurya holds a Bachelors Degree in Business Management from Lancaster University in the United Kingdom. </span></span></span></p>
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UPSLDC Receives Notice for Scheduling Power From 439 MW of Unapproved Wind Projects

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