MERC Revises Power Tariffs, Reduces Revenue Gap to Surplus

MERC Revises Power Tariffs, Reduces Revenue Gap to Surplus

The Maharashtra Electricity Regulatory Commission (MERC) has revised its earlier Multi-Year Tariff (MYT) Order after partially allowing a review petition filed by the Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL), significantly altering projected financial outcomes and easing the burden on consumers.

The revised order modifies the MYT Order dated March 28, 2025, for the fifth control period (FY 2025–26 to FY 2029–30). The new tariff structure will come into effect from July 1, 2025.

Challenging Older Order

MSEDCL had challenged the original order, citing errors and inconsistencies that it claimed would cause “grave prejudice” to stakeholders and affect the utility’s financial viability. MERC had stayed the implementation of the original order on April 2, 2025, pending a detailed review.

Following an in-depth evaluation, MERC made several key changes:

• Capital Expenditure: MERC approved MSEDCL’s projected capex of Rs. 55,624.5 crore, correcting earlier exclusions for grant-funded and DPR-approved schemes.

• Power Purchase Costs: The commission raised the total power procurement cost to Rs. 5.2 lakh crore for the control period, from the previous estimate of Rs. 4.75 lakh crore, and approved Rs. 6,057 crore for FY 2024–25.

• Tariff Adjustments: The Time-of-Day (TOD) rebate during night hours was scrapped, aligning with efforts to promote solar-hour consumption.

• Category Reclassification: Hotels will remain under the commercial tariff category, reversing a previous move to classify them as industrial consumers.

• Grid Support and EHV Network: MSETCL has been directed to compensate MSEDCL for delays in EHV network connections affecting consumer access.

• Renewable Purchase Obligation (RPO): Energy bought from MSEDCL by non-obligated entities will now count toward its RPO compliance, aligning with new national rules.

• Rooftop Solar (RTS): Grid Support Charges will apply once RTS installations in the state cross 5,000 MW, with MSEDCL required to publish progress data weekly.

• Agricultural Tariff Relief: To reduce the subsidy burden and prevent tariff shocks, MERC approved MSEDCL’s plan to segregate agricultural and non-agricultural cost structures, resulting in reduced tariffs for farmers.

The cumulative financial impact of these revisions has transformed the previously projected revenue gap of Rs. 44,480 crore into a surplus of Rs. 143 crore for the control period. The shift is expected to stabilize MSEDCL’s finances while minimizing tariff hikes for consumers, especially in the agricultural sector.