Delayed Payment: MERC Asks MSEDCL To Pay Penalty To RE Firms

Delayed Payment: MERC Asks MSEDCL To Pay Penalty To RE Firms

The Maharashtra Electricity Regulatory Commission (MERC) has directed the state power utility, MSEDCL, to pay penalties with interest to two biomass energy generators for delayed payments. The order came after the two renewable energy generators approached MERC against MSEDCL over the issue.

The two companies—Manas Agro Industries and Infrastructure Limited (MAIIL), Wardha, and MAIIL Nashik—had earlier signed an Energy Purchase Agreement (EPA) with the Maharashtra State Electricity Distribution Company Limited (MSEDCL) for the sale of power generated from their plants.

Case Background

MAIIL Wardha operates a 15 MW biomass energy plant in Wardha, while MAIIL Nashik runs a 10 MW biomass energy plant in Nagpur district. MAIIL Wardha sought a total payment of ₹61.47 lakh, while MAIIL Nashik demanded ₹91.76 lakh in payment liabilities. These payments covered the period from 2018-19 to 2023-24, including monthly interest.

The petitioners informed the state power regulator that despite sending invoices, MSEDCL continuously delayed payments. While the EPA signed by MAIIL Wardha included provisions for Late Payment Surcharge (LPS) and Delayed Payment Charges (DPC), the EPA for MAIIL Nashik did not have specific provisions related to LPS.

However, the EPA was signed under the MERC (Terms and Conditions for Determination of RE Tariff) Regulations, 2015, which include provisions for LPS in case of deferred payments.

Commission’s Views

MERC ruled in favor of the petitioners, stating that the 2015 MERC regulations require LPS payments, making MSEDCL liable for penalties even if the EPA does not explicitly mention LPS.

“It is pertinent to note that present case is peculiar in nature wherein Regulatory framework provides for certain dispensation (on LPS applicability), but the contract signed between the parties is silent on said aspect. In this regard, it is necessary to understand that RE Tariff Regulations, 2015 are governing frameworks for procurement of RE power. The EPA entered between MAIIL Nagpur and MSEDCL is at the tariff determined in RE Tariff Order dated 25 January 2016 which is based on various parameters stipulated under RE Tariff Regulations 2015. LPS is one of the such parameter stipulated in the Regulations and hence it cannot be overlooked,” the MERC order said.

Since the EPA signed by MAIIL Wardha already included LPS provisions, there was no complexity in their claims. In its final order, MERC directed MSEDCL to pay the penalties to both companies. However, it instructed MSEDCL to independently calculate and verify the amounts before making payments.

“The Commission directs the Petitioners to raise invoices as per the above approved amounts on MSEDCL with due date as stipulated in respective EPA. MSEDCL is directed to pay such amount within a due date. In case of failure to pay within the due date, the Petitioners may take recourse to mechanism stipulated in recently notified the Electricity (Late Payment Surcharge and related matters) Rules 2022 for recovering its due amount,” the final order of MERC read.