MERC junks Tata Power plea on standby charges

The Maharashtra Electricity Regulatory Commission, the state power regulator, has rejected the contention of Tata Power Company that the standby charges it pays to the Maharashtra State Electricity Board be shared on a 50:50 basis with Reliance Energy. 
 
Based on MERC's order, Reliance Energy will receive a refund of around Rs 373 crore (Rs 3,730 million) from TPC, in respect of excess payments already made towards standby charges, as per various interim orders, REL has said in a media release. 
 
Tata Power has however said in a media statement that it will contest the order and also said that it has to pay only Rs 322 crore (Rs 3,220 million) as refund to Reliance Energy. 
 
The two companies have been locked in a dispute since 1997 over the sharing of the standby charges. Tata Power has a standby arrangement with MSEB under which it pays the board Rs 746 crore (Rs 7,460 million)

annually for agreeing to provide instant power in an emergency. 
 
Tata Power also has an arrangement with REL under which it will supply power to the latter in an emergency. Tata Power had been demanding that REL pay it 50 per cent of the charges that it was paying MSEB which in turn was disputed the Reliance Energy. 
 
"MERC has also recognised that REL has not revised its tariff since March 1997. Accordingly, MERC has stated that it will rework REL's expenses vis-à-vis the revised standby charges while finalising REL's aggregate revenue requirement (ARR) and will examine whether REL has earned its due reasonable return," REL has said. 
 
MERC has also ruled in its order that the responsibility to bear delayed payment charges and interest on arrears due to MSEB for standby charges is solely that of TPC, as REL was in no way party to the agreement between TPC," REL has said.