Maha power regulator puts controversial order on hold after solar cos move court

Mint

02-07-2025

Mumbai: The Maharashtra Electricity Regulatory Commission (MERC) has assured the Bombay High Court that it will not implement till 14 July its order that green power producers complain makes it difficult to supply excess electricity to the grid for later retrieval.
The move comes after a consortium of renewable energy developers challenged the decision, saying it would cripple their ability to provide round-the-clock low-cost power, rendering them uncompetitive.
The court was hearing a plea filed by the National Solar Energy Federation of India (NSEFI), JSW Neo Energy Ltd, and nine other solar developers including Sunsure Solar Park MH One Pvt. Ltd and Solenco Solar Park MH-V Pvt. Ltd.
The developers have called MERC's decision arbitrary, unlawful, and detrimental to the commercial viability of clean energy projects in the state.
MERC, along with the Maharashtra State Electricity Distribution Company Ltd (MSEDCL), submitted that it would not enforce the contested provisions until mid-July.
'The aforesaid statement is accepted as an undertaking given to this court. In light of the aforesaid statement, we find that at this stage, the petitioners are adequately protected and hence, no further ad-interim relief is passed in the above petitions,' the court said on 1 July.
In addition to MERC's 25 June order, the developers have challenged Regulation 115 of the Multi-Year Tariff (MYT) Regulations, 2024, which empowers distribution companies to propose new Time-of-Day (ToD) slots and tariffs.
The core issue before the court stems from MERC's reversal of its March 2024 decision that allowed consumers to draw banked solar power across different ToD slots—enabling both operational flexibility and financial efficiency. Under the revised rules, solar energy banked during, say, 9 am to 5 pm, must be consumed strictly within that window, significantly diminishing the value of banking.
This makes the supply of renewable power to commercial and industrial (C&I) customers more expensive for solar companies. This is because solar power is generated in excess during the morning and afternoon hours when the sun shines the brightest. The excess power during this period is supplied to the grid and drawn by MSEDCL. Later, when the C&I customer needs power when the sun sets, it tends to draw it back from the grid at a nominal fee, usually about 8-10% of the power banked.
Solar producers fear that a change to the banking structure would jeopardize their long-term power supply agreements with C&I consumers as the cost increases.
MSEDCL proposed to change the banking structure as it was getting more expensive for it to supply the power back during non-solar hours from other sources. India suffers from insufficient capacity to store its solar power.
In the court, developers argued that MERC enacted the change without public consultation, a legal requirement in tariff matters, thereby breaching principles of natural justice.
'The review petition (filed before MERC) was neither made available to the stakeholders nor were the stakeholders permitted to address any arguments,' the petition reads, calling the process a 'complete go-by to the established principles of law.'
They also contend that their intervention applications, which sought a hearing in the review proceedings, were dismissed without explanation.
The petition states that nearly 600 MW of solar capacity in Maharashtra is affected by the order.
The developers are seeking to quash both the 25 June directive and Regulation 115, arguing that the latter unlawfully delegates tariff-setting authority to distribution companies.
Legal experts say the case raises broader questions around regulatory accountability and administrative fairness.
'The failure of MERC to provide due process, such as adequate hearing or consultation, before issuing a significantly impactful review order constitutes a direct infringement of the petitioners' fundamental legal right to fair administrative action,' said Kunal Sharma, founder and managing partner at Taraksh Lawyers & Consultants.
He noted that while the petition does not directly challenge Regulation 115, the court could still strike down the order on procedural or jurisdictional grounds.
'The petition derives substantial force from the argument that the revised banking provisions are inconsistent with the existing DOA Regulations and that MERC acted beyond the scope of its limited review jurisdiction,' Sharma said.
Sachit Mathur, managing partner at Emerald Law, offered a different view, suggesting the review order could hold if MERC's rationale is sound.
'With respect to the ToD tariff and banking provisions, the Commission's reliance on review jurisdiction may withstand scrutiny. In particular, the omission of Regulation 20.3 could plausibly qualify as an error apparent on the face of the record,' Mathur said.
MERC maintains that the review order is a clarification, aligning the tariff framework with earlier regulatory processes. It insists that stakeholder input had been taken during the original MYT proceedings and that repeat consultation during the review is not mandatory. It also warned that granting relief solely on procedural grounds could set a sweeping precedent.