Adani Electricity Mumbai Secures MERC Approval For 500 MW Medium-Term Power Procurement At Competitive Tariffs

Adani Electricity Mumbai Limited – Distribution Business (AEML-D) filed a petition with the Maharashtra Electricity Regulatory Commission (MERC) on March 26, 2025, seeking approval to adopt tariffs for procuring 500 MW of Round the Clock (RTC) power. This power procurement is planned for a medium-term period from April 1, 2025, to May 31, 2027. Along with the petition, AEML-D requested an urgent hearing to expedite the approval process.

In the petition, AEML-D proposed tariffs discovered through a competitive bidding process held on December 24, 2024. The company requested approval to procure 100 MW of power from Jindal Power Limited – Shirpur Thermal Power Plant at ₹5.36 per kWh, 125 MW from Dhariwal Infrastructure Limited at ₹5.47 per kWh, and 50 MW from Tata Power Company Limited also at ₹5.47 per kWh. AEML-D also sought permission to approach the Commission again if other bidders revised their tariffs or offered additional power at revised rates.

The tariff rates for AEML-D during the control period from financial year 2025-26 to 2029-30 will be regulated under the Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2019. Currently, AEML-D’s peak power demand stands at 2,056 MW. This demand is met through a mix of long-term contracts, renewable energy agreements, and short-term market purchases. The projected peak demand is expected to grow from 2,337 MW in FY 2025-26 to 3,115 MW in FY 2029-30.

AEML-D is facing a power shortfall, which is currently managed through short-term purchases from the open market. Procuring 500 MW under the Medium Term Power Procurement (MTPP) agreement aims to reduce this dependence on short-term markets and protect consumers from price volatility. While long-term power procurement contracts are also planned, these usually take 24 to 30 months to be finalized. Hence, medium-term procurement combined with short-term purchases will help bridge the gap until long-term supplies are available.

The Maharashtra Electricity Regulatory Commission had issued Resource Adequacy Regulations in 2024 to ensure a reliable power supply. AEML-D submitted its final Resource Adequacy Plan, which includes the proposed 500 MW medium-term procurement.

The company began the competitive bidding process on October 29, 2024, using the DEEP Portal, following guidelines from the Ministry of Power. After a pre-bid meeting to address bidders’ queries, the bid submission date was extended to December 17, 2024, to encourage competitive offers. Technical bids were opened on December 17, and six bidders qualified. Financial bids were opened on December 24, followed by an e-reverse auction and a round of tariff negotiations where bidders were asked to lower tariffs and offer additional power.

Based on this process, Jindal Power Ltd, Dhariwal Infrastructure Ltd, and Tata Power Trading Co. agreed to supply power at revised tariffs. Letters of Award were issued, with supplies from Jindal Power expected to start on April 1, 2025, subject to tariff approval. Supplies from Dhariwal Infrastructure and Tata Power will commence after power purchase agreements are executed and tariffs are approved.

AEML-D continues to engage with other bidders for possible tariff revisions but decided to seek approval for the discovered tariffs to meet immediate demand, considering the Multi-Year Tariff Control Period’s start.

The tariffs proposed by AEML-D range from ₹5.39 to ₹6.50 per kWh in recent medium-term deals. AEML-D argued that the tariffs from Jindal Power, Dhariwal Infrastructure, and Tata Power are reasonable and aligned with current market rates. They also emphasized that tariffs discovered through transparent competitive bidding should be adopted by the Commission according to the Electricity Act, 2003.

During the hearing on April 29, 2025, AEML-D reaffirmed its request for tariff approval. The Commission noted that the procurement of 275 MW was included in the power purchase projections of the recent Multi Year Tariff (MYT) Order and that AEML-D had complied with the necessary procedures.

The Commission found the tariffs of ₹5.36/kWh, ₹5.47/kWh, and ₹5.47/kWh reasonable and consistent with market rates, noting they were lower than the recently approved medium-term tariff of ₹5.56/kWh for BEST. The bids were technically and financially compliant.

Consequently, the Commission approved the tariffs for the two years from April 1, 2025, to May 31, 2027. The Commission also ordered AEML-D to submit copies of the final power purchase agreements for record-keeping. This approval is expected to help AEML-D manage its power demand reliably while protecting consumers from short-term price fluctuations.