Open Access: MERC Disallows Discoms To Levy Cross Subsidy Surcharge

Open Access: MERC Disallows Discoms To Levy Cross Subsidy Surcharge

The Maharashtra Electricity Regulatory Commission (MERC) in its latest judgment disallowed the local discoms of Thane in Maharashtra to levy Cross-Subsidy Surcharges (CSS) for open access consumers. The verdict from the state regulatory body came to the fore after Mindspace Business Parks Pvt Ltd (MBPPL) and Gigaplex Estate Pvt Ltd (GEPL) moved the MERC.

Both MBPL and GEPL are local discoms operating in the Special Econimic Zones (SEZs) of Thane district in Maharashtra. They filed the petition under the provisions of MERC (Distribution Open Access) Regulations, 2016 to remove difficulties in operationalizing open access. The two different pleas asked for allowing the discoms to levy cross subsidy surcharge for open access consumers. 

The local discoms in their petition said that the MERC in the impugned Orders allowed recovery of only 63% and 59% of total fixed cost through fixed charges for FY 2023-24 and FY 2024-25 respectively. 

“The balance fixed cost is being recovered through energy charges. If the consumer opts for open access, the Petitioners will not be able to recover the portion of the fixed cost included in the energy charges. If CSS was determined as per Tariff Policy formula, the Petitioners would have recovered the same from CSS. In the impugned Order the Commission has determined ‘nil’ CSS,” the petitioners said.

However, the MERC in its order reiterated its earlier stand as ordered in its last order. The State Commission said that the contention of the petitioners that the lack of determination of CSS would lead to passing of the burden to the consumers not opting for open access lacked merit.

Final MERC order 

“The ruling of the Commission in the impugned Orders is clear. Even if the consumer avail open access , there is no loss to the Petitioners as the average cost of supply is equal to average billing rate. Even if the consumer avail open access, it has to pay the wheeling charges and other charges as per the DOA Regulations 2016. Hence, the contention of the Petitioners that if the consumers avail OA then its burden will be passed onto other consumers is not based on the merit,” the MERC order said. 

It also added, “The Commission’s decision to determine the nil CSS is a considered decision. Hence, the Commission is not inclined to accept the Petitioners prayer to determine the CSS under removal difficulties. Further, the CSS issue is not related to the open access operational difficulty for which the Petition has been filed.”