MERC Declines To Re-Determine Wind Tariff On Actual CUF

MERC Declines To Re-Determine Wind Tariff On Actual CUF

The Maharashtra Electricity Regulatory Commission (MERC), in its latest order, has declined to amend a regulation retrospectively to re-determine tariffs. The case pertained to the re-determination of tariffs for wind power generators in Maharashtra.

The order emerged when the state power utility MSEDCL approached the regulatory commission, arguing that actual tariff determination should be based on the actual Capacity Utilization Factor (CUF) rather than the wind density in the zone. The petitioner alleged that several wind generators received undue benefits due to misclassification. MSEDCL claimed that several wind power generators originally classified in low wind zones (Zone-I) were operating with a better CUF.

MERC clarified that the RE Tariff Regulations, 2010 introduced the determination of generic tariffs for wind projects based on the wind zone classification of their location, with associated CUF levels. The commission also noted that this approach was continued in the RE Tariff Regulations, 2015, with revised CUF norms.

“Progressive increase have been stipulated by the Commission in normative CUF associated with each Wind Zone class—for instance, from 20% in 2010 to 22% in 2015 for Wind Zone 1 (Annual WPD of 200–250 W/m²) considering technological advancement and other factors,” MERC stated.

MERC explained that generic tariffs for wind energy projects refer to a standardized pricing mechanism wherein tariffs are determined based on pre-set parameters such as capital cost, return on equity (RoE), depreciation, and the debt/equity ratio.

Generic tariff determination

It further stated that before transitioning to the competitive bidding era, the generic tariff regime was used as a market development tool. However, generic tariffs adopt a “one-size-fits-all” approach, which entails risks related to technological differences and regional resource variability.

MSEDCL, in this petition and earlier ones, has consistently argued that certain wind projects achieve higher CUF and unfairly benefit from higher tariffs. However, MERC pointed out that MSEDCL’s submissions are silent on wind projects located in higher wind zones but achieving lower CUF. In the past, during Renewable Purchase Obligation (RPO) verification exercises, MSEDCL had frequently claimed that wind generators generally achieved lower CUF than contracted.

MERC noted that this issue has been addressed in the past, and the current petition was deemed not maintainable on the grounds of Res Judicata (a matter that has already been judged).

Petition not maintainable 

“From submissions on record, it is amply clear that MSEDCL intends to consider actual CUF as a norm for wind zone classification and corresponding tariffs. But this aspect will be tantamount to determination of tariff project-wise. This aspect has been categorically dealt by the Commission in its Order dated 03 April 2018 in Case No.41 of 2017,” the commission stated.

“In para (21) above, relevant portion of the Order has been reproduced. In view of ruling in Order dated 03 April 2018 and the structure of the Petition, it can be concluded that MSEDCL is essentially attempting to seek the same reliefs which have already been adjudicated. In view of uncontroverted findings in Order dated 03 April 2018 in Case No.41 of 2017, the present Petition is not maintainable on ground of Res Judicata,” the MERC order concluded.