MERC Takes Up Jurisdiction Battle In MSEDCL Solar PPA Dispute In Maharashtra

The Maharashtra Electricity Regulatory Commission (MERC) has been approached by the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to resolve a dispute related to a Power Purchase Agreement (PPA) signed with Braithwaite Nacof Solar Project Ltd. This dispute originates from a tender issued by MSEDCL in January 2022 for the development of 865 MW of solar photovoltaic power projects in the state. Following the bidding process, Braithwaite was awarded a Letter of Award (LoA) in August 2022, and the PPA was subsequently signed in March 2023.

As per the agreement, Braithwaite was responsible for ensuring the timely commissioning of the solar power project by the Scheduled Commercial Operation Date (SCOD). Initially, the SCOD was fixed for August 17, 2023. However, upon request from Braithwaite, the deadline was extended to March 31, 2024. Despite this extension, Braithwaite did not complete the commissioning of the project by the new deadline. In response, MSEDCL issued a Default-cum-Termination Notice to the company for failing to meet the required timelines.

Braithwaite contested this termination and approached the Bombay High Court. The court then directed MSEDCL to file a petition before the MERC under Section 86(1)(f) of the Electricity Act, 2003. This section allows the regulatory commission to adjudicate disputes between licensees and generating companies. Accordingly, MSEDCL filed a petition with the MERC, requesting the Commission to either settle the dispute itself or appoint an arbitrator to do so.

In response to this, Braithwaite submitted an Interlocutory Application (IA), requesting the dismissal of MSEDCL’s petition. The company argued that MERC does not have jurisdiction over the dispute because Braithwaite is not a “generating company” as per the definition in the Electricity Act. Furthermore, Braithwaite stated that the delay was due to factors beyond its control, such as pending approvals, and should be considered a force majeure event.

The MERC, after hearing arguments from both parties, acknowledged the complexity of the matter, particularly the legal question of whether Braithwaite qualifies as a generating company. However, the Commission stated that it has prima facie jurisdiction to handle the matter based on Section 86(1)(f). It referred to a Supreme Court judgment in the Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd. case, which clarified the Commission’s authority in handling such disputes between power generators and licensees.

While the MERC confirmed its preliminary jurisdiction to consider the matter, it decided to leave the final decision on the jurisdictional question to the Bombay High Court. The case is still open, and further proceedings will depend on the High Court’s view on whether the MERC can fully adjudicate this contractual dispute.