MERC Approves Medium-Term Power Purchase Agreements For 145 MW At Competitive Rates

Tata Power Company Limited’s Distribution Business (TPC-D) has recently filed a petition with the Maharashtra Electricity Regulatory Commission (MERC) seeking approval to adopt tariffs for the purchase of 145 MW of power on a medium-term basis. This power procurement was carried out through a bidding process, following guidelines issued by the Ministry of Power, Government of India. Along with the petition, TPC-D requested an expedited hearing to speed up the approval process.

In the petition, TPC-D asked for approval of tariffs at ₹5.45 per kilowatt-hour (kWh) for 70 MW from Jindal Power Limited (JPL) and ₹5.47 per kWh for 75 MW from Dhariwal Infrastructure Limited (DIL). The contract period for this procurement is proposed from May 1, 2025, to April 30, 2027.

The need for this medium-term power procurement arose due to two key regulations introduced by MERC in 2024: the Framework for Resource Adequacy Regulations and the Multi-Year Tariff Regulations. These regulations require distribution companies like TPC-D to carefully plan and secure power supplies to meet the demand reliably and cost-effectively.

Earlier, TPC-D had filed a petition seeking approval to initiate a bidding process for 200 MW of medium-term power. MERC had approved this in February 2025, along with certain modifications requested by TPC-D to the standard bidding documents. Following this approval, TPC-D conducted the bidding process by inviting bids through the government’s DEEP Portal and by publishing public notices in newspapers. Multiple power producers took part in the bidding.

A Bid Evaluation Committee was formed to review all the bids submitted. After careful evaluation, JPL and DIL emerged as the lowest bidders offering competitive tariffs. TPC-D then entered negotiations with both companies, resulting in the final agreed tariffs of ₹5.45 per kWh for JPL and ₹5.47 per kWh for DIL.

TPC-D supported the reasonableness of these tariffs by comparing them with recent medium-term and short-term power procurement rates in the market. While TPC-D initially planned to procure 200 MW through medium-term contracts, it later decided to reduce this to 145 MW and meet the remaining power requirements through short-term contracts and banking arrangements.

During the hearing, MERC raised questions about the small price difference of 2 paise per kWh between the two bidders. The commission asked TPC-D to try further negotiations to bring the prices down. However, DIL explained that the rising cost of coal procurement had made it difficult for them to match the lower tariff offered by JPL.

MERC also noted that although TPC-D had initially projected a need for 200 MW, it had scaled down the medium-term procurement to 145 MW. The commission advised TPC-D to reduce its reliance on short-term power purchases, which are generally more expensive and less predictable.

After reviewing all the details, MERC concluded that TPC-D had followed the required procedures for procurement and that the tariffs discovered through the bidding process were reasonable. Consequently, MERC approved the power purchase agreements with JPL and DIL for 70 MW and 75 MW, respectively, for two years from May 1, 2025, to April 30, 2027.

This approval allows TPC-D to secure a stable supply of power at reasonable rates, helping ensure reliable electricity distribution to consumers in Maharashtra while complying with the latest regulatory requirements.