Regulatory Body Orders Refund of Excess Electricity Charges By MSEDCL

Summary

The Maharashtra Electricity Regulatory Commission (MERC) ordered Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) to refund excess wheeling and transmission charges collected from Open Access (OA) consumers between September 2020 and May 2023.[1] The MERC determined that these charges should be calculated based on actual energy consumption, not gross energy injection, as per Regulation 14.6 of the MERC (Distribution Open Access) Regulations 2016 and the Practice Directions dated 8 March 2017. This decision was in line with a previous MERC order (Case No. 206 of 2017) and an Appellate Tribunal for Electricity (ATE) judgment (Appeal No. 20 of 2019). The MERC dismissed MSEDCL’s argument that the transmission licensees were necessary parties to the proceeding, stating that MSEDCL is responsible for correcting the charges and can adjust any excess payments with the licensees.

Case Timeline

• September 2020 – May 2023: MSEDCL levies and collects excess wheeling and transmission charges from OA consumers.
• 26 September 2023: OA consumers write to MSEDCL highlighting objections and requesting a refund of excess charges.
• 30 October – 1 November 2023: Four OA consumers (M/s. ICC Reality India Pvt. Ltd., EON Hinjewadi Infrastructure Pvt. Ltd., Panchshil Infrastructure Holdings Pvt. Ltd., and Panchshil Corporate Park Pvt. Ltd.) file petitions with MERC seeking refunds.
• 22 March 2024: MERC holds an E-Hearing on the matter.
• 28 March 2024: Petitioners file common written submissions.
• 18 June 2024: MERC issues a common order directing MSEDCL to refund the excess charges with interest.

Issue Raised

The central issue was whether MSEDCL correctly calculated and collected wheeling and transmission charges from OA consumers. The petitioners argued that MSEDCL’s methodology, based on gross energy injection, contravened MERC regulations and practice directions, which stipulate that charges should be based on actual energy consumption.

Appellant’s Arguments

• MSEDCL’s calculation of wheeling and transmission charges based on gross energy injection is incorrect and violates MERC regulations and practice directions.
• The MERC’s order in Case No. 206 of 2017 and the ATE’s judgment in Appeal No. 20 of 2019 support the petitioners’ position that charges should be based on actual energy consumption.
• The petitioners’ claims are not time-barred, as each incorrect invoice constitutes a fresh cause of action.
• MSEDCL is responsible for refunding the excess charges, and the transmission licensees are not necessary parties to the proceeding.

Respondent’s Arguments.

• The transmission licensees are necessary parties, as MSEDCL has already remitted the collected transmission charges to them.
• MSEDCL’s previous methodology was accepted by the MERC until the ATE’s judgment in 2022, and the subsequent MERC order clarifying the methodology should only apply prospectively.
• The MERC’s previous orders regarding captive OA users support MSEDCL’s position that both transmission and wheeling losses are recoverable from OA consumers.

Order

The MERC ordered MSEDCL to refund the excess wheeling and transmission charges collected from the petitioners for the period from September 2020 to May 2023, with applicable interest, within one month from the date of the order. MSEDCL was directed to verify the claims made by the petitioners before making the refund payment. The MERC also declined to initiate action against MSEDCL under Section 142 of the Electricity Act 2003, as MSEDCL had been implementing the correct methodology since June 2023.

Analysis

The MERC’s order is a significant victory for OA consumers. It reaffirms that wheeling and transmission charges should be calculated based on actual energy consumption, not gross energy injection. This decision aligns with previous MERC rulings and the ATE judgment, providing clarity and consistency in the interpretation of the relevant regulations. The order also clarifies that MSEDCL is solely responsible for rectifying billing errors and refunding overcharged amounts, regardless of whether the transmission charges have been passed on to the licensees. This decision is likely to have a positive impact on the electricity market in Maharashtra, promoting transparency and fairness in billing practices. It also underscores the importance of regulatory bodies in safeguarding consumer interests and ensuring compliance with regulations.

[1] https://merc.gov.in/wp-content/uploads/2024/06/Common-Order-in-Case-No.-206-207-208-and-211-of-2023.pdf