Case No. 52 of Coram. Shri Azeez M. Khan, Member Shri Deepak Lad, Member. Mahati Hydro Power Projects Pvt. Ltd.

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1 Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai Tel /65/69 Fax Website: / www. merc.gov.in Case No. 52 of 2017 In the matter of Petition of Mahati Hydro Power Projects Pvt. Ltd. for reimbursement of evacuation arrangement costs of its Veer Small Hydro Project by Maharashtra State Electricity Transmission Co. Ltd. Coram Shri Azeez M. Khan, Member Shri Deepak Lad, Member Mahati Hydro Power Projects Pvt. Ltd. : Petitioner V/s Maharashtra State Electricity Transmission Co. Ltd. : Respondent No.1 Maharashtra Electricity Development Agency : Respondent No. 2 Appearance For the Petitioner For the Respondent No. 1 For the Respondent No. 2 For Authorized Consumer Representative Smt. Dipali Sheth (Adv.) Shri Abhijeet Joshi (Adv.) None Dr. Ashok Pendse, TBIA ORDER Dated: 10 April, 2018 Mahati Hydro Power Projects Pvt. Ltd ( Mahati ), 32-33, Shankarshet Road, Behind S.T. Workshop, Pune, has filed a Petition on 23 February, 2017 seeking payment by Maharashtra State Electricity Transmission Co. Ltd. (MSETCL) and Maharashtra Energy Development Agency (MEDA) of the balance amount of the expenditure incurred towards the evacuation arrangement beyond the inter-connection point. MERC Order in Case No. 52 of 2017 Page 1 of 13

2 2. Mahati s prayers are as follows: (a) Direct the Respondent No. 1 and/or Respondent No. 2 to pay Rs. 1,44,25,000/- (Rupees One Crore Forty Four Lacs and Twenty Five Thousand Only) towards the balance payment for construction / creation of the evacuation arrangement beyond the inter-connection point; (b) Direct the Respondent No. 1 and/or Respondent No. 2 to pay interest on the balance unpaid dues from their respective due dates as per the below table: Amount Rate of Interest Due from Status Rs. 28,85,000/- 18% p.a. May, 2013 Pending Till date Rs. 28,85,000/- 18% p.a. May, 2014 Pending Till date Rs. 28,85,000/- 18% p.a. May, 2015 Pending Till date Rs. 28,85,000/- 18% p.a. May, 2016 Pending Till date Rs. 28,85,000/- 18% p.a. May, 2017 Not Due (c) Direct Respondents to comply with the provisions of the GoM Policies, GOM Procedures July 14, 2010 and Order dated November 09, 2005 in letter and spirit; (d) Direct Respondent No. 1 and/or Respondent No. 2 to make timely payment of the installment due in May, 2017; (e) Direct Respondents to comply with the conditions agreed upon in the aforesaid MOU date October 8, 2013; (f) Direct Respondents to pay costs for the present Petition 3. The Petition states as follows: 3.1 Mahati is a Hydro Power Generating Company in Maharashtra incorporated under the provisions of the Companies Act, The Government of Maharashtra, Water Resources Department (GoMWRD) has issued a Policy dated 15 September, 2005 to encourage the development of Small Hydro Projects (SHPs) in Maharashtra through private participation on Build, Operate and Transfer (BOT) and Build, Own, Operate and Transfer (BOOT) basis. 3.3 Vide its Order dated 9 November, 2005 in Case No. 25 of 2004 ( 2005 SHP Order ), which was for determination of the Tariff for SHPs, the Commission has held that the MERC Order in Case No. 52 of 2017 Page 2 of 13

3 transmission costs shall be borne by the State Transmission Utility (STU) [which is MSETCL]. 3.4 Vide letter dated 17 July, 2007, GoMWRD allotted the development of the Power Plant at the Veer Left Bank Canal downstream of Veer Dam, Tehsil Purandhar, District Pune to Mahati, and the same was accepted on 9 August, Pursuant to the Government of Maharashtra (GoM) Policy on development of Non- Conventional Energy Sources dated 14 October, 2008 ( GoM Policy, 2008 ), Mahati developed the Power Plant at Veer, which was commissioned on 20 May, The GoM Policy, 2008 was amended vide GoM, Industries, Energy & Labour Department (IE&LD) s Resolution dated 3 August, 2009 ( GoM Policy, 2009 ). Section 1.1 of the GoM Policy, 2008 was amended to require Generators to sell 100% electricity generated through Non-Conventional Energy sources to Licensees or clients in Maharashtra to avail benefits under the GoM Policy, 2008: GoM Policy, If the Promoters / Developers / Investors wish to avail the benefits allowed under this policy then, it is obligatory for them to sell the 50% of electricity generated from the Projects commissioned under this policy to Maharashtra State Distribution Company Limited (MSEDCL) at the rate fixed up by MERC under a long term Power purchase / agreement. It shall be obligatory to sell the remaining 50% electricity within the state of Maharashtra only. Amendment made to Section 1.1 by GoM Policy, It shall be binding on Promoters/ Developers/ Investors to sell 100% Electricity generated through nonconventional energy Source to Licensee or Client in the State. 100% electricity generated from small hydro power project upto 25 MW under Irrigation Department is permitted to sell any licensee or a client. 3.7 GoMWRD issued Govt. Resolution No. HEP 1209(143/2009)/HP dated 31 October, 2009 ( GoMWRD GR 2009 ) providing for 100% sale of electricity generated through SHPs to be sold to consumers or Distribution Licensees in Maharashtra. 3.8 Pursuant to the GoM Policy, 2008, GoM issued further procedural directions on 14 July, 2010 ( GoM Procedures of 2010 ), which provided that 50% of the cost of evacuation arrangement is to be refunded by MEDA through the Green Energy Fund (GEF) and the balance cost is to be refunded by MSETCL to the Developer in 5 equal annual instalments starting from May, 2013, i.e. one year after commissioning of the Power Plant. MERC Order in Case No. 52 of 2017 Page 3 of 13

4 3.9 Vide Order dated 27 October, 2014 in Case No. 73 of 2014, the Commission held that there should not be any cap on the reimbursement of the cost of evacuation arrangement by MSETCL irrespective of Government Policies: Regulation 17.1 of the MERC (RPO-REC) Regulations, 2010, clearly stipulates the responsibility of the Distribution Licensee with regard to the evacuation arrangements. It also provides that the evacuation infrastructure cost beyond the inter-connection point is to be borne by the Licensee and recovered from the consumers through a suitable pricing framework developed by the Commission. This responsibility of the Licensee cannot be modified or capped by any contrary in IE&LD s Policy dated 14 July, 2010 or any other such instrumentality As per Regulation 17.1 of the MERC (Renewable Purchase Obligation (RPO), its Compliance and Implementation of REC Framework) Regulations ( RPO Regulations ), 2010, the Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) is required to bear the cost of evacuation arrangement, which is to be recovered from its consumers. The RPO Regulations, 2010 provide that the Licensees shall bear the costs of development of evacuation infrastructure beyond the inter-connection point. In the present matter, the evacuation infrastructure was developed beyond the inter-connection point by Mahati and was handed over to MSETCL after commissioning. Hence, the cost is to be reimbursed to Mahati as per the RPO Regulations, Vide letter dated 23 October, 2012, Mahati submitted a proposal for sale of electricity from its SHP at the Average Pooled Purchase Cost (APPC) rate under the Renewable Energy Certificate (REC) mechanism to MSEDCL. Vide its letter dated 20 November, 2012, MSEDCL accepted the proposal of Mahati, making it eligible for REC as specified in the RPO Regulations, Mahati confirmed its acceptance as per letter dated 6 December, It also entered into an Energy Purchase Agreement (EPA) for sale of energy generated from its SHP to MSEDCL at the APPC rate from the date of commissioning to 31 March, Clause 4 of the Memorandum of Understanding (MoU) dated 8 October, 2013 provided that the amount to be refunded for the evacuation arrangement would be the actual expenditure or the estimated cost as per MSETCL, whichever is lower. The estimated cost and the actual expenditure incurred for the evacuation infrastructure are as below: MSETCL Estimated cost Actual expenditure incurred by Mahati Rs Lakh Rs Lakh 3.13 Therefore, as per the MoU, MSETCL is liable to reimburse Rs. 1, 44, 25,000/- (i.e. the MSETCL estimated cost of Rs. 1,99,25,000 minus Rs. 55,00,000/- refunded by MEDA). The evacuation expenditure actually incurred by Mahati has not been considered as per the Commission s Order dated 9 November, 2005 in Case No. 25 of 2004 on the determination of SHP Tariff. Therefore, Mahati is entitled to MERC Order in Case No. 52 of 2017 Page 4 of 13

5 reimbursement of the evacuation arrangement costs from MSETCL as per that Order read with the Order in Case No. 73 of 2014 (cited above) and the GoM Policy, 2008 read with the GoM Policy, 2009 and the MoU The SHP is connected to the 132 kv Transmission Network of MSETCL, and the work of power evacuation arrangement was carried out by Mahati as per the terms and conditions of the GoM Policies and also the Connection Agreement/ Approval. Vide letter dated 19 June, 2013, Mahati submitted detailed Bill of Material with cost to MSETCL for verification and refund of the evacuation arrangement cost. After verification and audit by MSETCL s Executive Engineers/Superintending Engineers, it was sent to the Head Office of MSETCL. In response, MSETCL, vide letters dated 30 November, 2013 and 4 December, 2013 asked Mahati for various documents Vide letter dated 17 December, 2013, Mahati submitted the required documents and clarifications and requested reimbursement of the evacuation arrangement cost. As per the requirements for reimbursement of evacuation arrangements stated in the GoM Policy, 2008, Power Evacuation Certificates dated 11 March, 2014 and 3 December, 2016 were issued by the Maharashtra State Load Despatch Centre (MSLDC), which were also submitted to MSETCL vide letter dated 28 March, As per the permissions granted by MSEDCL from time to time, the energy generated by the SHP is sold to Licensee / consumer/client(s) only in Maharashtra for consumption through Distribution Open Access. The details of sale of energy in Maharashtra since commissioning are as below: PERIOD BUYER MODE May 20, 2012 to March, MSEDCL APPC basis April 01, 2013 to March 31, 2014 Mahindra Hinoday Open Access Industries, Bhosari, Pune April 01, 2014 to March 31, 2015 Taj Lands End, Mumbai Open Access April 01, 2015 to March 31, 2016 Taj Lands End, Mumbai Open Access April 01, 2016 to June 30, 2016 No Generation due to nonavailability - of water July 01, 2016 to March 31, 2017 Taj Lands End, Mumbai Open Access 3.17 The above details have already been indicated in the Power Evacuation Certificates dated 11 March, 2014 and 3 December, 2016 (upto July, 2016) issued by the Office of the Chief Engineer, MSLDC, Airoli, Navi Mumbai. MERC Order in Case No. 52 of 2017 Page 5 of 13

6 3.18 Vide letter dated 4 June, 2014, MSETCL stated that Mahati is not eligible for the refund of evacuation cost as : a) Power is sold to private consumers through Open Access, and b) Mahati does not have a long-term EPA with a Distribution Licensee MSETCL has completely misunderstood and misinterpreted the GoM Policy, 2008 and its amendment in As the conditions mentioned in MSETCL s letter dated 4 June, 2014 were incorrect, Mahati, vide its letters dated 21 June, 2014, 14 August and 2 November, 2015, 10 December, 2016 and 8 February, 2017, followed up and explained its eligibility for refund of the evacuation cost, and requested MSETCL to refund the amount incurred on the power evacuation arrangement Mahati successfully installed and commissioned the power evacuation infrastructure beyond the inter-connection point in accordance with the GoM Policies as per the requirements specified by MSETCL and under its supervision. The evacuation arrangement has been transferred to MSETCL vide MoU dated 8 October, The Power Evacuation Certificates issued by MSLDC on 11 March, 2014 and 3 December, 2016 show that, since commissioning of the SHP, Mahati has sold 100% energy to MSEDCL and private consumers only in the Maharashtra. Therefore, Mahati has duly fulfilled the condition of 100% sale of electricity in Maharashtra as stipulated in the GoM Policies for refund of evacuation cost Pursuant to commissioning of the SHP, on 8 October, 2013 MEDA has refunded Rs. 55 lakh towards evacuation cost through the GEF In accordance with the GoM Policies read with Order dated 27 October, 2014 in Case No. 73 of 2014 and the MoU of 8 October, 2013, MSETCL is liable to refund Rs. 1,44,25,000/- as the balance amount of Rs. 55,00,000/- has been refunded by MEDA. MSETCL is required to reimburse the remaining cost of the evacuation arrangement in five equal instalments from one year after commissioning of the SHP, i.e. from May, Accordingly, five instalments of Rs lakh each were payable by MSETCL and/or MEDA as follows: Sr. No. Amount/Rs. Due Date Status 1. 28,85,000 May 2013 Not paid 2. 28,85,000 May 2014 Not paid 3. 28,85,000 May 2015 Not paid 4. 28,85,000 May 2016 Not paid 5. 28,85,000 May In its Reply dated 6 July, 2017 (submitted at the time of the hearing), MSETCL has stated as follows: MERC Order in Case No. 52 of 2017 Page 6 of 13

7 4.1 MSETCL has not processed the refund request of Mahati as it has failed to submit a copy of its long-term EPA with a Distribution Licensee or any consumer to whom it is supplying power through Open Access. MSETCL has demanded a copy of the EPA as per its practice. 4.2 Para 3.71 of the Commission s SHP Tariff Order in Case No. 25 of 2004 states that the Order applies to the supply of electricity from SHPs to Distribution Licensees in Maharashtra. Also, para of the Order states that the EPA period for BOT for SHP shall be 30 years. However, the tariff shall be applicable for 20 years. 4.3 Regulation 11.2 of the RPO Regulations, 2010 requires that Captive Users and Open Access Consumers shall purchase Renewable Energy (RE) as stated in Regulation 7.1 and accordingly enter into long-term arrangement to meet their RPO. Mahati is a SHP and is supplying electricity through Open Access. Hence, according to Regulation 11.2, it must enter into a long-term EPA with its consumers. Hence, it can be inferred that an Obligated Entity under the RPO Regulations shall not avail RE without a long-term EPA. 4.4 Regulation 2.1 (ff) of the MERC (Terms and Conditions for Determination of RE Tariff) Regulations ( RE Tariff Regulations ), 2010 defines the useful life of the Mini/Micro Hydro and SHPs as 35 years. Regulation 6.2 also states that the tariff period for SHPs up to and including 5 MW shall be 35 years. 4.5 In view of the above provisions, it is the accepted practice of MSETCL to demand a longterm EPA. Accordingly, vide its letter dated 4 June, 2014, MSETCL had informed Mahati that, to be eligible for refund of evacuation charges, it must submit a long-term EPA with a Distribution Licensee in Maharashtra. 4.6 MSETCL has estimated Rs lakh as the cost for evacuation arrangement though the GR dated 14 July, 2010 [GoM Procedure of 2010] has capped it at Rs crore. However, the Commission, vide its Order dated 27 October, 2014 in Case No. 73 of 2014, has ruled that the responsibility of the Licensee for evacuation cannot be modified or capped by any contrary dispensation in IE&LD s Policy or any other such instrumentality. However, if the cap is removed, it will burden the end consumers. Even if the cap is removed and MSETCL s estimate in considered, the liability of MSETCL will be 50% and 50 % will be that of MEDA. 4.7 Mahati is not entitled to Rs lakh. The actual cost as per MBR to be refunded is Rs lakhs. Further, Rs lakh includes the cost of the metering arrangement, which is not part of the evacuation arrangement. Metering cost relates to the Distribution Licensee for the purpose of billing and must be excluded. 5. At the hearing held on 6 July, 2017: 5.1 Mahati reiterated the submissions in its Petition, and emphasized the following: MERC Order in Case No. 52 of 2017 Page 7 of 13

8 (i) Mahati has developed a 4.8 MW SHP at Veer, Tehsil: Purandhar, District, Pune commissioned on 20 May, (ii) The GoM Policy, 2008 was amended by the GoM Policy As per Section 1.1 of the amended Policy, the Generator has to sell 100% of electricity generated through non-conventional energy sources to a Licensee or client in Maharashtra State to avail its benefits. (iii) The GoM Procedures of 2010 for non-conventional Power Projects provide that 50% of the cost of power evacuation arrangement is to be refunded by MEDA from the GEF and the balance is to be refunded by MSETCL in 5 annual instalments starting from May, 2013, i.e. one year after commissioning of the Power Plant. (iv) Vide its Order dated 27 October, 2014 in Case No. 73 of 2014, the Commission has removed the cap on reimbursement of evacuation arrangement costs by MSETCL irrespective of Government Policies. (v) Clause 4 of the MoU dated 8 October, 2013 provides that the amount to be refunded for the evacuation arrangement would be the actual expenditure or MSETCL s estimated cost, whichever is lower. The estimated cost and actual expenditure incurred for creation of evacuation infrastructure are as below: MSETCL estimated cost - Rs lakh Actual expenditure incurred - Rs lakh (vi) MEDA has refunded Rs. 55 lakh towards evacuation cost through the GEF on 8 October, 2013 and the balance is awaited from MSETCL. (vii) Mahati has submitted the certifications issued by MSLDC on 11 March, 2014 and 3 December, 2016 stating that 100 % energy was sold in Maharashtra. Despite this, MSETCL has not refunded the balance amount incurred on power evacuation. (viii) Vide letter dated 4 June, 2014, MSETCL stated that Mahati is not eligible for the refund of evacuation cost as the power is sold to private consumers through Open Access and it does not have a long-term EPA with a Distribution Licensee. (ix) Mahati has submitted the Power Evacuation Certificates from MSLDC. It has sold the entire power in Maharashtra. As per GoM s Policy, the power can be sold to any consumer in Maharashtra and there is no need of a long-term EPA. Hence, Mahati is entitled to refund of the power evacuation cost. 5.2 MSTECL responded that: (i) MSETCL has not refunded the cost of power evacuation as Mahati has not supplied power to a Distribution Licensee through a long-term EPA. MERC Order in Case No. 52 of 2017 Page 8 of 13

9 (ii) The actual cost as per MBR is Rs lakhs. Hence, Mahati is entitled to refund of only Rs lakhs and not Rs lakhs as claimed. Further, the actual cost of Rs includes the cost of metering of Rs lakh, which is not part of the evacuation arrangement and is not required to be refunded. MSETCL will refund the balance amount. 5.3 To a query of the Commission regarding the requirement of a long-term EPA, MSETCL stated that all other SHPs have EPAs with Distribution Licensees except Mahati. 5.4 As regards subsidy from MEDA and GoM s Policies, the Commission observed that, in order to promote non-conventional and RE and considering its nature, it had held long back that it is the duty of the concerned Transmission/Distribution Licensee to make or pay for the evacuation arrangements. Hence, vide Order dated 27 October, 2014 in Case No. 73 of 2014, it has not agreed with the cap on reimbursement on the evacuation arrangement cost. It is up to Mahati and MSETCL to decide the scope of work of power evacuation for reimbursement purposes. Commission s Analysis and Ruling 6. The 4.8 MW SHP at Veer, District Pune was commissioned by Mahati in May, The power is being evacuated through MSETCL s 132 kv Transmission Network. The power evacuation arrangement was undertaken by Mahati considering the specifications of MSETCL. Clause 4 of the MoU between Mahati and MSETCL dated 8 October, 2013 regarding the transfer of power evacuation assets to MSETCL provides that the amount to be refunded for the evacuation arrangement would be the actual expenditure incurred by Mahati or MSETCL s estimated cost, whichever is lower. The estimated cost, the actual expenditure incurred on the evacuation infrastructure and the reimbursements made to Mahati are as follows: i. MSETCL s approved estimated cost: Rs lakh; ii. Actual cost as approved by MSETCL: Rs lakh; iii. Actual expenditure claimed to have been incurred by Mahati: Rs lakh; iv. Reimbursement by MEDA from GEF: Rs. 55 lakh; v. No reimbursement from MSETCL; 7. MSLDC s Power Evacuation Certificates (for the period upto July, 2016) stating that the entire energy generated from Mahati s SHP is sold in Maharashtra have been provided to MSETCL on 28 March, The details are summarized at para earlier in this Order. Mahati has also sold power to MSEDCL under a short-term EPA at the APPC rate. 8. MSETCL s contentions with regard to the remaining reimbursement of the expenses incurred by Mahati towards the power evacuation arrangements are as follows: MERC Order in Case No. 52 of 2017 Page 9 of 13

10 a. Mahati has not submitted any long-term EPA with a Distribution Licensee or a consumer to whom it is supplying power through Open Access. In support of this requirement, MSETCL has cited the Commission s SHP Order of 2005, the RPO Regulations, 2010, and its own Board Resolution and practice. b. GoM has capped the total cost of the evacuation arrangements at Rs crore for the purposes of reimbursement. However, vide its Order dated 27 October, 2014 in Case No. 73 of 2014, the Commission has removed this cap stating that evacuation arrangements are the responsibility of MSETCL/MSEDCL. The Commission s decision to remove the cap will burden the consumers. c. Even if the cap is removed, as per GoM s Policy, 50 % of the reimbursement of the cost is the liability of MEDA and MSEDCL s liability is limited to only the remaining 50 %. d. Mahati is not entitled to Rs. 224 lakh, which is the expenditure it claims to have incurred. The actual cost as assessed by MSETCL is Rs lakh (as per the corrected detailed statement on record in these proceedings). Moreover, this amount of Rs lakh includes Rs lakh (the lower of the MSETCL estimated and the actual cost) of metering arrangements, which cannot be considered as a part of the power evacuation arrangements. The metering cost relates to the Distribution Licensee for the purpose of billing and is, therefore, to be excluded. 9. The relevant Orders of the Commission and GoM s Policies regarding the evacuation of power from SHPs provide as follows: a) Clause 1.1 of the GoM Policy, 2008 (quoted at para. 3.6 above) provided that, for refund of the power evacuation arrangement cost, 50% of the electricity from the Project had to be sold to MSEDCL at the Commission-approved rate under a long-term EPA, and the remaining 50% to others within Maharashtra. After transfer of the evacuation infrastructure to MSEDCL or MSETCL, as the case may be, MEDA would refund 50% of the approved expenses on the evacuation arrangements to the Developer from the GEF. b) The 2008 Policy was amended in August, 2009 by the GoM Policy, 2009 to require only that the entire SHP generation be sold to Licensees and/or other clients within Maharashtra, and the percentage allocation between them was removed: 1.1 It shall be binding on Promoters/ Developers/ Investors to sell 100% Electricity generated through non-conventional energy source to Licensee or Client in the State. 100% electricity generated from small hydro power project upto 25 MW under Irrigation Department is permitted to sell any licensee or a client. MERC Order in Case No. 52 of 2017 Page 10 of 13

11 c) Thereafter, the GoM Procedures of 2010 (issued in July, 2010) stipulated that 50% of the cost of power evacuation from RE Projects be refunded by MEDA from the GEF to the Developer, and that the remaining amount be reimbursed by MSETCL in 5 equal annual instalments from the year following the commissioning of the Plant. d) The GoM Procedures of 2010 also provided that 100% of the electricity generated from non-conventional energy source would be sold to Distribution Licensees or other clients in the State; and stipulated that the Developer submit a copy of the EPA with the Licensee to MEDA. MSLDC certification regarding the sale of the generation in Maharashtra was to be furnished to MEDA annually. 10. a) As regards the responsibility of developing the evacuation infrastructure, the RE Tariff Regulations, 2010 provided as follows (and the provision in the subsequent Regulations of 2015 is similar): 17.1 The licensees shall be responsible for development of evacuation infrastructure beyond the inter-connection point while developer/generating company will have to develop evacuation infrastructure from generation facility up to the interconnection point at its own expense; Provided that, the evacuation infrastructure cost beyond the inter-connection point shall be borne by the licensees and shall be recovered from the consumers as per suitable pricing framework developed by the State Commission; b) The term inter-connection point was defined in both the RE Tariff Regulations, 2010 and the RPO Regulations, 2010 as follows: "Inter-connection Point" shall mean the interface point of renewable energy generating facility with the transmission system or distribution system, as the case may be: (ii) in relation to mini/micro hydro power, small hydro power, biomass power, non-fossil fuel based co-generation power projects and solar thermal power projects, the inter-connection point shall be line isolator on outgoing feeder on HV side of generator transformer. c) The subsequent RE Tariff Regulations, 2015 and RPO Regulations, 2016 also define inter-connection point similarly. d) Hence, the capital cost considered for the determination of generic tariffs in the RE Regulations do not include the capital cost for evacuation arrangements beyond the inter-connection point. MERC Order in Case No. 52 of 2017 Page 11 of 13

12 11. These regulatory provisions have their genesis in various Orders of the Commission providing the dispensation for different types of RE Projects issued more than a decade ago. In its 2005 SHP Order, the Commission had ruled as follows: Cost of Evacuation Facilities and Infrastructure 3.20 Thus with reference to the cost of evacuation facilities the Commission mandates that the Project holder shall bear the cost of switchyard and interconnection facilities at the site upto the point of energy metering at the project switchyard. The STU will bear the cost of transmission lines and associated facilities beyond the point of energy metering for the evacuation of power. The Project holder shall provide an interest free advance to the STU equivalent to 50% of the cost of works to be carried out by the STU for power evacuation purposes. In case there is more than one such Project holder sharing the evacuation facilities to be set up by the STU, the advance amount shall be shared amongst the holders in equal proportion. The STU shall refund this interest free advance to the holder(s) in five equal instalments, spread over a period of 5 years, commencing from one year after the date of commissioning of the project. Sale of Power 3.58 Generated electricity can be sold to any consumer located in the State of Maharashtra or any willing distribution licensee or any power trading company. There shall be no limitation on the supply of energy units by the Developer to the Distribution Licensees. However, Maharashtra State Electricity Distribution Company shall have the first right of refusal. Sale of power shall be in accordance with the Orders, Regulations and Directions of the Commission. 12. The Commission s long-standing dispensation, since its SHP Tariff Order of 2005 (quoted above) and in the RPO Regulations, 2010 and 2015, that the power evacuation infrastructure cost is to be borne by the concerned Licensee and that there is no ceiling on the reimbursement of such cost to the Developer was reiterated by the Commission in its Order dated 27 October, 2014 in Case No. 73 of 2014, among others: 15. Regulation 17.1 of the MERC (RPO-REC) Regulations, 2010, clearly stipulates the responsibility of the Distribution Licensee with regard to the evacuation arrangements. It also provides that the evacuation infrastructure cost beyond the inter-connection point is to be borne by the Licensee and recovered from the consumers through a suitable pricing framework developed by the Commission. This responsibility of the Licensee cannot be modified or capped by any contrary dispensation in IE&LD s Policy dated 14 July, 2010 or any other such instrumentality. 19. The Commission also notes that, as is clear from the foregoing, some provisions of IE&LD s Policy set out in GRs dated 14 October, 2008, 3 August, 2009 and 14 July, 2010 are contrary to the provisions of the Regulations and related Orders of the Commission. They are also contrary to the 2005 Policy of another arm of GoM itself, namely the Water Resources Department MERC Order in Case No. 52 of 2017 Page 12 of 13

13 13. As will be evident from the above, MSETCL s understanding that the Commission removed the ceiling of Rs crore on the total cost admissible for reimbursement for the first time vide its Order dated 27 October, 2014 is entirely incorrect. The Commission had never mandated such a ceiling. 14. The dispensations of the Commission as well as of GoM provide for sale of the entire electricity generated to Licensees or others in Maharashtra. There is no requirement that this must be on the basis of long-term EPAs. Whether or not transactions of a shorter period would qualify against the RPO targets of Licensees or other Obligated Entities under the RPO Regulations is a separate matter and has nothing to do with the reimbursement of the cost of evacuation arrangements. 15. The fact that MEDA has provided Rs. 55 lakh through the GEF but that amount is less than 50% of the cost is not relevant since, under the long-standing dispensation of the Commission, it is the responsibility of MSETCL to provide the evacuation arrangement or to reimburse its cost. 16. As regards the metering cost, it is to be borne by the Developer, as would be clear from the Commission s Open Access Regulations of 2005, 2014 and 2016 and other dispensations of the Commission. It is also clear from the EPA with MSEDCL. 17. In view of the foregoing, MSETCL shall reimburse Rs lakh (i.e. the approved cost of the evacuation arrangements (Rs lakh) minus the metering cost (Rs lakh) and minus Rs. 55 lakh provided by MEDA) to Mahati within 2 months, along with applicable interest from the date the respective instalments were due till the date of payment. MSETCL is entitled to the expenses incurred towards the evacuation arrangements through its Aggregate Revenue Requirement, but not to the interest amount arising from the delay in payment. The Petition of Mahati Hydro Power Projects Pvt. Ltd. in Case No. 52 of 2017 stands disposed of accordingly. Sd/- (Deepak Lad) Member Sd/- (Azeez M. Khan) Member MERC Order in Case No. 52 of 2017 Page 13 of 13