MERC directs state power companies to withdraw circulars

Wednesday, 16 January 2013 07:11 Harikumar B

MERCMaharashtra 's electricity regulator has directed the state-run power distributor to withdraw two commercial circulars regarding levy and open access, saying they contradict some provisions of the Electricity Act, 2003.The circulars, issued by the Maharashtra State Electricity Distribution Co (MSEDCL) in 2011, withdrew tax benefits and other perks including open access that were offered by the government to promote use of renewable energy.

The regulator's order, made available on its website recently, will benefit wind power generators in the state like Enercon India and Ushdev International, and their consumers, such as Tata Motors and Serum Institute of India. These companies had approached the regulator after the circulars were issued.

As per guidelines, consumers using one megawatt (mw) or more of power fall under the category of 'open access consumers'.

The regulator has also clarified that the state-run distributor is not relieved from its 'universal service obligation' to supply electricity in respect of open access consumers.

Wind turbine generators in the state say that they have started incurring losses due to delay in issuance of credit reports and open access permission by MSEDCL. The distributor also issued bills withdrawing incentives granted to such companies, they add.

"Although, I have not read the recent order, withdrawal of two internal circulars of MSEDCL will benefit wind power producers in Maharashtra as they will be able sell energy directly to industrial consumers under open access policy," said Ushdev International's vice-chairman Arvind Prasad said.

Renewal energy companies also allege that reduction in contract demand in respect of some of the open access consumers has also led to termination of power procurement contracts with some open access consumers.

"The energy that we produced since April 2012 was banked with MSEDCL because open access policies of these projects were not renewed after end of March 2012. We have now made application for open access and hope to monetise the banked energy once open access permission is finally granted,"" Prasad added.

Earlier, the regulator had issued interim orders in the petitions directing status quo ante prior to issuance of the circulars.

Tata Motors is being represented by Dipali Sheth and Dhwani Mehta of MDP & Partners along with counsel MG Ramachandran and Swapna Seshadri. Serum Institute of India and the Indian Wind Power Association Maharashtra State Council, too, are being represented by MDP & Partners, along with counsel Harinder Toor.

Source- Economic Times