The Maharashtra Electricity Regulatory Commission (MERC) has directed Maharashtra State Power Generation Company Limited (MSPGCL) to pay ₹1,11,03,214 to Karnataka Resco Rooftop Solar Private Limited (KRRSPL) as Deemed Generation Compensation for the financial year 2022-23.
MERC has ordered MSPGCL to release the compensation within 30 days, along with a Late Payment Surcharge (LPS) on the outstanding amount from the date it became due until the date of actual payment.
The dispute involved five solar power projects developed by KRRSPL at Bori, Goregaon, Hatta, Pedgaon and Rani Unchegaon under the Mukhyamantri Saur Krishi Vahini Yojana (MSKVY). KRRSPL had entered into back-to-back Power Purchase Agreements (PPAs) with MSPGCL for electricity generated from the projects, which was ultimately procured by Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL).
Under the PPAs, KRRSPL was eligible for compensation if grid availability during the specified solar generation period fell below the guaranteed 98% level. The applicable generation window was between 8:00 AM and 6:00 PM.
KRRSPL submitted its compensation claim under Article 4.7 of the PPA after recording instances of lower grid availability. MSPGCL initially verified the developer’s claim of ₹1,11,03,214 in June 2023. However, MSEDCL subsequently reduced the admissible amount to ₹17,45,089, which was later revised to ₹17,69,702.
MSEDCL’s reduction was based primarily on its calculation of total generation hours using a 24-hour day, in line with standard Capacity Utilization Factor (CUF) calculations. It also excluded certain interruptions, including over-voltage, under-voltage and scheduled maintenance outages, from the calculation of grid unavailability.
MERC rejected this methodology and held that the compensation calculation under Article 4.7 must reflect the actual operational window of the solar projects. The Commission determined that the total generation hours should be calculated using the 10-hour period between 8:00 AM and 6:00 PM.
According to MERC, applying a 24-hour period would artificially lower the average generation per hour and weaken the intended purpose of the compensation mechanism under the PPA.
The Commission also ruled that over-voltage, under-voltage and scheduled maintenance interruptions on the distribution system cannot automatically be excluded from grid unavailability calculations. Such interruptions can be excluded only when MSEDCL establishes that they resulted from an act or default of the generator.
MERC further clarified that MSPGCL’s payment obligation under its direct PPA with KRRSPL is unconditional. MSPGCL cannot defer payment on the grounds that MSEDCL has not completed its verification or released funds under the separate Power Sale Agreement (PSA).
However, MSPGCL can recover the corresponding amount from MSEDCL in accordance with the provisions of the back-to-back PSA.
With these findings, MERC allowed KRRSPL’s petition and granted the developer full relief. The Commission made no order as to costs.
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