Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400005.
Tel. 022 22163964/65/69 Fax 22163976
Email: mercindia@merc.gov.in
Website: www.mercindia.org.in/ www.merc.gov.in

CASE No.367 of 2018

Case of SEP Energy Pvt. Ltd. regarding altering the banking mechanism by reducing the
open access quantum

Coram

Anand B. Kulkarni, Chairperson

Mukesh Khullar, Member

SEP Energy Pvt. Ltd. ……..Petitioner

Vs
Maharashtra State Electricity Distribution Co. Ltd. ......Respondent

Appearance:

For the Petitioner : Shri Varun Pathak, (Adv.)

For the Respondents : Shri Ashish Singh, (Adv.)

ORDER
Dated: 14 February, 2019

SEP Energy Pvt. Ltd. (“SEP Energy”), has filed this Petition under under Sections 9 , 42 (2),
49, 61, 62, 66 and 86 (1) (f) , 86 (3) and (4) of the Electricity Act, 2003 (“EA”) and MERC
(Distribution Open Access) Regulations, 2016 (“DOA Regulations, 2016”) regarding altering
the banking mechanism by reducing the open access quantum unilaterally by MSEDCL.

2. SEP Energy’s main prayers are as follows:

a. Hold that MSEDCL cannot unilaterally alter the banking mechanism by reducing the
open access quantum of the Petitioner; and
b. Set aside Email Dated October 17, 2018 issued by MSEDCL and all acts done
pursuant to the said email by MSEDCL while protecting the Petitioner;
c. Clarify the banking mechanism appropriately in light of the issues raised in the
present petition; and

MERC Order in Case No. 367 of 2018 Page 1 of 10

 d. In the interim period during the pendency of the instant petition direct MSEDCL to
allow banking for the entire quantum as was being done prior to issuance of Email
dated October 17, 2018 by MSEDCL; and
e. Allow open access to the Petitioner in the interim period during the pendency of the
instant petition for the entire quantum without linking it to the retained contract
demand with MSEDCL; and
f. Court fees, costs (inclusive of litigation costs) and expenses incurred by the
Petitioner;

3. The Petition states as follows:

3.1 SEP Energy is a wind generating company having 16 wind turbines with total
installed capacity of 4.225 MW located at Satara, Maharashtra. From the total 16
wind turbines, SEP Energy is supplying electricity on captive basis. The capacity
being used on the captive basis is 4.225 MW.

3.2 SEP Energy has been supplying captive power since from 1 April, 2017 to 31 May,
2018 using the power network of TATA, and from 1 May, 2018 till date using
MSEDCL network.

3.3 The instant Petition is being filed against the illegal acts of Maharashtra State
Electricity Distribution Co. Ltd. (“MSEDCL”) and arbitrary behaviour employed by
it regarding granting of banking facilities to SEP Energy in terms of the provisions
of the EA and the Regulations framed by this Commission.

3.4 MSEDCL by its email dated 17 October, 2018 has stated as under:

“………..
This is to kindly inform you that, you have applied for 4.225 MW under STOA
sourcing power from following RE generator,
1. M/s SEP Energy Pvt. Ltd
In this regard, this is to kindly inform you that as per MERC order dated
12.07.2018 in case No. 119 of 2018, the actual generation from Solar PV
Project may reach up to 70 to 80% of the solar plant capacity, during highest
radiation time of day. The same is also possible in case of wind generator
during highest wind pressure at any time of the day.
Also the Commission in the Wind Tariff Order dated 24 Nov’ 2003 (Case No
17(3),3,4 & 5 of 2002) has explained the rationale behind the banking
facility:
i) A developer who opts for self-use/sale to third party is expected to limit the
project size such that the energy provided can be availed by him in full.
ii) It would be reasonable to assume that more than 10% of total energy
generation from the project will not be banked with the utility at any point of
time.

MERC Order in Case No. 367 of 2018 Page 2 of 10

 In view of the above MERC orders and considering your total/retained
MSEDCL contract demand, the maximum open access quantum that can be
allowed to you, is 2.514 MW. Since your total open access CD applied for the
month of November is more than allowable OA CD, you are requested to
inform the STOA application IDs for which open access CD is to be reduced.
You are requested to submit the compliance within 3 working days, please
note that late compliance will not be entertained.”

3.5 In reply, SEP Energy through communications dated 23 October, 2018 and 6
November 2018 requested MSEDCL to reconsider its stand which has not been
replied. As there was no response from MSEDCL, SEP Energy was forced to reduce
its open access demand which has resulted in tangible losses to SEP Energy and SEP
Energy may invoke the jurisdiction of the Commission for adjudication on damages
at a subsequent date.

3.6 SEP Energy has been availing open access for reduced capacity. STOA approval
numbers are 25808, 25809 and 25810. As per STOA number 25808, the applied
capacity is 0.45MW and the alloted capacity is 0.161MW.

3.7 Hon’ble the Supreme Court of India in Hindustan Zinc Ltd. v. Rajasthan Electricity
Regulatory Commission, (2015) 12 SCC 611, has held that promotion of renewable
energy is the mandate of the Constitution of India and the same is relatable to
section 86 (1) (e) of the EA wherein the State Electricity Regulatory Commission is
under an obligation to promote the renewable sources of energy (which also includes
wind energy). In this regard reliance is placed upon paragraphs 15 to 17, 24, 35 and
36 of the above stated judgement.

3.8 Hon’ble the APTEL in its judgement dated 1 August, 2014 in Appeal No. 59 of
2013 and Appeal No. 116 of 2013, MSEDCL v. MERC & Ors., has clearly held in
paragraph 31 of the said judgement that banking of wind energy is an essential
feature to enable the commercial viability of a wind energy generator supplying
power to a consumer, captive or otherwise, through open access.

3.9 Hon’ble the APTEL has in its judgement dated 21 September, 2011 in Appeal No.
53, 94 and 95 of 2010, TNEB v. TNERC & Ors., clearly in paragraph 27 of the said
judgement that the concept of banking was evolved in line with the provisions of the
EA, National Electricity Policy and National Tariff Policy.

3.10 The Commission in the DOA Regulations, 2016 read with MERC practice directions
dated 19 October, 2016 and 8 March, 2017 has clearly explained the rationale for
banking and open access for wind energy projects.

MERC Order in Case No. 367 of 2018 Page 3 of 10

 3.11 MSEDCL has erroneously interpreted the Order dated 12 July, 2018 passed by the
Commission in Case No. 119 of 2018 (“Roha Dyechem Order”) , to mean that
open access quantum of SEP Energy be reduced considering the total/retained
contract demand with MSEDCL and therefore, MSEDCL’s act of reduction of the
open access quantum of SEP Energy is arbitrary. Roha Dyechem Order pertained to
MSEDCL’s objection regarding accommodation of power flow and nothing in the
said Order can be interpreted to mean that open access quantum of SEP Energy must
be reduced.

3.12 The provisions of the EA, Statement of Reasons to DOA Regulations, DOA
Regulations, Practice Directions, Order dated 15 January, 2018 passed by the
Commission in Case No. 137 of 2017 ( “Krishna Valley Order”) and Order dated 4
May, 2018 passed in Case No. 76 of 2017, (“Sai Wardha Order”) make it clear
that MSEDCL cannot unilaterally reduce the open access quantum of SEP Energy.

3.13 MSEDCL is illegally benefitting at the expense of SEP Energy as it had already
banked 15,59,784 units and the said units ought to be adjusted in the banking
mechanism in accordance with the DOA Regulations, 2016.

4. MSEDCL in its submission dated 4 February, 2018 , stated that :

4.1 The present Petition is regarding non-approval of STOA applications from SEP
Energy for November 2018. The STOA applications for November 2018 were
received on 8 October, 2018 through online open access portal.

4.2 The Commission in its Order dated 12 July, 2018 in Case No. 119 of 2018 – Roha
Dychem Pvt. Ltd. Vs MSEDCL has considered that:
“
16. In the present Case, the Commission notes that the Contract Demand of RDPL
is 2266 kVA with MSEDCL and it has applied for Open Access of 10 MW from
its Solar PV project for self use. If the CUF of Solar PV Project is considered
as 19% (On an annual basis), the Open Access Demand becomes 1.9 MW. But
the actual generation from this Solar PV Project may reach up to 7 to 8 MW
during highest radiation time of day, i.e. in the Noon (Considering 70 to 80%
efficiency of the Solar Panels). In this Case the Open Access generation will
become 8 MW for particular instant, which is much more than the Contract
Demand of the RDPL.
17. The Commission notes that in such scenario there could be actual utilisation
approximately 8 MW of the transmission/ distribution corridor for wheeling
the power. As against the contract demand, this is clearly an excessive
resultant power flow. In such cases, where excessively generated RE power
cannot be fully availed, generator has provision of banking such excess RE
power.
MERC Order in Case No. 367 of 2018 Page 4 of 10
 18. The Commission notes that the issues are related to the banking facility available
to Wind Projects in the Wind Tariff Order dated 24 November, 2003:
“…2.4.3 ……
A developer who opts for self-use/sale to third party is expected to limit the
project size such that the energy provided can be availed by him in full.
However, inability to consume the energy fed into the grid fully due to factors
beyond control cannot be ruled out, especially since the generation of wind
power is to some extent unpredictable due to its dependence on nature. ……..
The Commission understands that the developers generally plan the size of
their wind projects after taking into account their own energy requirement as
well as that of the third party purchaser if it is contemplated. Therefore, under
normal circumstances, the developer will not have to bank a substantial
portion of the energy with the utilities. Even if the developer had to bank
substantial portion in one month, he could use it in the next month. This would
mean that it would be reasonable to assume that more than 10% of total
energy generation from the project will not be banked with the utility at any
point of time. Therefore, the Commission has decided that upto 10% of total
energy generation from the project banked with the utility will be purchased
by the utility at the rate specified by the Commission.”

4.3 Accordingly, vide email dated 17 October, 2018 it was conveyed that:

“As per MERC order dated 12.07.2018 in case No. 119 of 2018, the actual
generation from Solar PV Project may reach up to 70 to 80% of the solar
plant capacity, during highest radiation time of day. The same is also possible
in case of wind generator during highest wind pressure at any time of the day.
Also the Commission in the Wind Tariff Order dated 24 Nov’ 2003 (Case No
17(3),3,4 & 5 of 2002) has explained the rationale behind the banking facility:
i) A developer who opts for self-use/sale to third party is expected to
limit the project size such that the energy provided can be availed by
him in full.
ii) It would be reasonable to assume that more than 10% of total energy
generation from the project will not be banked with the utility at any
point of time.
In view of the above MERC orders and considering your total/retained
MSEDCL contract demand, the maximum open access quantum that can be
allowed to you, is 2.514 MW. Since your total open access CD applied for the
month of November is more than allowable OA CD, you are requested to
inform the STOA application IDs for which open access CD is to be reduced.”

4.4 In this regard, vide email dated 23 October, 2018 , SEP Energy informed about
reduction of open access quantum in r/o STOA application IDs 7921, 7933, and

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 7927. Accordingly, STOA permissions were issued for application IDs 7918, 7919
and 7921

5. At the hearing held on 6 February, 2019, SEP Energy and MSEDCL re-iterated their
submissions.

Commission’s Analysis and Ruling:

6. The issue raised by SEP Energy is that MSEDCL has limited its open access quantum for
November, 2018 to the extent of CD arbritrarily which has resulted in lesser banking facility
to SEP Energy. SEP Energy has contended that such action is in contravention of the
provisions of the EA, DOA Regulations, 2016 read with Practice directions dated 19 October,
2016 and 8 March, 2017, various Orders passed by Hon’ble the Supreme Court , Hon’ble the
ATE and the Commission.

7. SEP Energy has also contended that MSEDCL has erroneously interpreted the Roha
Dyechem Order by making it compulsory to applicant to reduce its open access quantum at
par with its contract demand with MSEDCL, which has resulted in tangible losses to SEP
Energy that will be subsequently applied before the Commission for adjudication.

8. MSEDCL, on the other hand, has refuted the contentions of SEP Energy and has submitted
that it had acted in accordance with the dispensation given by the Commission in Roha
Dyechem Order by conveying SEP Energy vide email dated 17 October, 2018 as under:
“As per MERC order dated 12.07.2018 in case No. 119 of 2018, the actual generation
from Solar PV Project may reach up to 70 to 80% of the solar plant capacity, during
highest radiation time of day. The same is also possible in case of wind generator
during highest wind pressure at any time of the day.
Also the Commission in the Wind Tariff Order dated 24 Nov’ 2003 (Case No 17(3),3,4
& 5 of 2002) has explained the rationale behind the banking facility:
i) A developer who opts for self-use/sale to third party is expected to limit the
project size such that the energy provided can be availed by him in full.
ii) It would be reasonable to assume that more than 10% of total energy
generation from the project will not be banked with the utility at any point of time.

In view of the above MERC orders and considering your total/retained MSEDCL
contract demand, the maximum open access quantum that can be allowed to you, is
2.514 MW. Since your total open access CD applied for the month of November is
more than allowable OA CD, you are requested to inform the STOA application IDs
for which open access CD is to be reduced.

9. MSEDCL has further submitted that SEP Energy , in response to email dated 17 October,
2018 had informed as under:

“ Dear Sir,

MERC Order in Case No. 367 of 2018 Page 6 of 10

 Please consider the following table for STOA application
STOA % of capacity
Application Capacity Metering to be
SN No. (MW) Point No considered Remarks
1 7918 1.9 1016 100 consider the application
2 7919 0.45 2019 100 consider the application
Partially consider the
3 7921 0.45 2005 36 application
4 7933 0.225 2006 0 Hold the application
5 7927 1.2 8272 0 Hold the application

We have banked units from the above metering points and paid wheeling and
transmission charges, we hope MSEDCL will adjust the banked units even though
there is no STOA due to capacity restriction.

10. From perusal of the email communications exchanged between the Parties, the Commission
is of the view that reduction in open access quantum was not objected by SEP Energy but the
issue of banking was kept open by it with respect to the metering points, on which the open
access quantum was partially or was completely reduced. The Commission observes that
after availing STOA for November, 2018, SEP Energy is agitating the issue of
unilaterally/arbritrarily reduction of its open access quantum to bring it at par with its contract
demand with MSEDCL.

11. The Commission observes that the issue raised in the instant Case has been dealt by the
Commission in Roha Dyechem Order where-in the Commission has held as under:

“….16.In the present Case, the Commission notes that the Contract Demand of
RDPL is 2266 kVA with MSEDCL and it has applied for Open Access of 10 MW
from its Solar PV project for self use. If the CUF of Solar PV Project is considered
as 19% (On an annual basis), the Open Access Demand becomes 1.9 MW. But the
actual generation from this Solar PV Project may reach up to 7 to 8 MW during
highest radiation time of day, i.e. in the Noon (Considering 70 to 80% efficiency of
the Solar Panels). In this Case the Open Access generation will become 8 MW for
particular instant, which is much more than the Contract Demand of the RDPL.

17.The Commission notes that in such scenario there could be actual utilisation
approximately 8 MW of the transmission/ distribution corridor for wheeling the
power. As against the contract demand, this is clearly an excessive resultant power
flow. In such cases, where excessively generated RE power cannot be fully availed,
generator has provision of banking such excess RE power.

18.The Commission notes that the issues are related to the banking facility available
to Wind Projects in the Wind Tariff Order dated 24 November, 2003:

MERC Order in Case No. 367 of 2018 Page 7 of 10

 “…2.4.3

The Commission notes that banking of energy is involved in case of self-use and sale
to a third party. The MSEB, in the past, have adopted a policy according to which the
MSEB is not liable to purchase any energy once the producer opts for sale to third
party. Any surplus energy at the end of the year gets lapsed, and the producer of the
energy does not get any compensation for it.

While the Commission shares the view of the MSEB that banking facility is being
provided for the benefit of the developer and/or third party purchaser, and also that is
infirm power which the MSEB cannot schedule and optimally utilize, the Commission
does not agree with the treatment mooted by the MSEB for the banked energy.

A developer who opts for self-use/sale to third party is expected to limit the project
size such that the energy provided can be availed by him in full. However, inability to
consume the energy fed into the grid fully due to factors beyond control cannot be
ruled out, especially since the generation of wind power is to some extent
unpredictable due to its dependence on nature. Matching of load and generation may
not be possible. Further, the Commission’s decision to allow settlement of energy on
the basis of TOD time slots may create problems for matching load and generation.
Any need to change third party purchaser may take time, during which the energy will
be continually fed into the grid and consumed by consumers for which the MSEB
would be collecting revenue. Therefore, the Commission is of the view that it would
not be prudent to allow this energy to get lapsed.

The Commission understands that the developers generally plan the size of their wind
projects after taking into account their own energy requirement as well as that of the
third party purchaser if it is contemplated. Therefore, under normal circumstances,
the developer will not have to bank a substantial portion of the energy with the
utilities. Even if the developer had to bank substantial portion in one month, he could
use it in the next month. This would mean that it would be reasonable to assume that
more than 10% of total energy generation from the project will not be banked with the
utility at any point of time. Therefore, the Commission has decided that upto 10% of
total energy generation from the project banked with the utility will be purchased by
the utility at the rate specified by the Commission. Further, the Commission feels that,
under force majeure conditions, surplus energy in excess of 10% may be purchased
by the Utility at a rate less than the rate applicable for the 10% limit as the Utility
derives commercial advantage from such energy by selling each consumer.

19.The Commission in the Wind Tariff Order has explained the rationale behind the
banking facility and also explained that a developer who opts for self-use/sale to third
party is expected to limit the project size such that the energy provided can be availed
by him in full. In the same Order, the Commission has also observed that under
normal circumstances, the developer will not have to bank a substantial portion of the
energy with the Licensees.

20.The Commission in its Order in Case No. 76 of 2017 and 36 of 2017 had only
suggested that undertakings may be taken on the issue of resultant power flow so as to

MERC Order in Case No. 367 of 2018 Page 8 of 10

 bind the consumer in a way to ensure that the quantum of Open Access sought was
not over and above the Contract Demand but was subsumed within it. It is pertinent
to note that conventional power which is scheduled on 15 minutes time block and
therefore the power flow can be monitored to remain within the contract demand.
However, in case of RE power being infirm in nature, such monitoring is not possible.
Therefore, undertakings for RE power in excess of contract demand from MSEDCL
neither be monitored nor enforced.

21.In view of the foregoing, the Commission is not inclined to accept the prayer of
RDPL to direct MSEDCL to grant Open Access permission for the quantum of 10 MW
from its Solar PV Project. However, the Commission directs MSEDCL to examine the
issue afresh in holistic manner considering all these provisions and metering
infrastructure and inform Petitioner accordingly. (Emphasis Added)

19. The Commission observes that in the instant Case, SEP Energy has applied for Open Access
for more than its contract demand. Also, SEP Energy has raised the issue that banking facility
would not be available to it, if such applied open access quantum is allowed at par with its
contract demand. The Commission observes that both these issues raised by SEP Energy
were also raised in the Roha Dyechem Order. Commission has clearly ruled in that case that
the provision relating to banking of infirm wind energy is to ensure that instead of lapsing
any excess generation due to climatic conditions, it could be made available for use
subsequently when the generation falls short due to the same climatic conditions. However,
such adjustment of wind energy generation through banking route is available only on the
margin of its contract demand. The regulation does not intend that an excessive capacity
should be built by consumer over and above its contract demand so as to use banking facility
to adjust over generation due to over sized generation plant against the total contract demand
with the MSEDCL. Therefore, Commission intended that the banking facility is intended to
be used for adjusting the infirm injection only at its margin. Petitioner has a contract demand
of 1.6 MW whereas he has installed capacity of 4.225 MW from wind generation for captive
use. MSEDCL considering the margin for resultant power flow of 10 % has allowed
petitioner to draw upto 2.514 MW of power. Installing such captive generation capacity
which is more than double the contract demand is clearly not meant to be used for adjusting
the infirm availability on margin. Hence, the Commission is of the view that dispensation
given by the Commission in Roha Dyechem Order is squarely applicable to the instant Case
also. Thus, the Commission is not inclined to accept the contentions of SEP Energy.

20. SEP Energy has also contended that MSEDCL should allow banking for the entire quantum
as was being done prior to issuance of Email dated 17 October, 2018 by MSEDCL. SEP
Energy has further stated that MSEDCL is illegally benefitting at the expense of SEP Energy
as it has already banked 15,59,784 units and the said units ought to be adjusted in the banking
mechanism in accordance with the DOA Regulations, 2016. However, it is observed that SEP
Energy has not submitted its detailed submission on this issue. Also, MSEDCL has not
submitted its say on this issue. In view of the above , the Commission directs both the Parties

MERC Order in Case No. 367 of 2018 Page 9 of 10

to sit together and resolve this issue as per the applicable provisions of the banking specified
under the DOA Regulations, 2016. Hence, the following Order:

ORDER
Case No. 367 of 2018 is dismissed.

Sd/- Sd/-
(Mukesh Khullar) (Anand B. Kulkarni)
Member Chairperson

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