Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) has submitted its observations on the draft “Transaction of Business and Fees and Charges (Third Amendment) Regulations, 2026” proposed by the Maharashtra Electricity Regulatory Commission (MERC). The comments were shared through a letter dated March 17, 2026, by the Chief Engineer (Commercial), in response to a public notice issued by the commission in late February seeking stakeholder feedback.
A key issue raised by MSEDCL relates to the Annual License Fee charged to distribution companies. At present, this fee is calculated at 0.05% of revenue, excluding taxes and duties. The utility highlighted that such charges are treated as a pass-through under the Aggregate Revenue Requirement, which means any increase in the fee ultimately impacts electricity tariffs paid by consumers. To avoid placing additional financial burden on the public, MSEDCL has proposed introducing a maximum cap on the fee.
The utility referred to a directive issued by the Government of Maharashtra on August 28, 2025, which recommended retaining the current rate of 0.05% while imposing an upper ceiling of Rs. 50 crore. According to MSEDCL, without such a limit, the annual license fee could rise significantly in the future as electricity sales and revenues grow. While the draft regulation already provides for a minimum fee of Rs. 5 lakh, the utility believes that an upper cap is equally necessary to maintain balance and protect consumer interests.
MSEDCL also raised concerns over the proposed introduction of fees for evaluating Capital Investment Schemes, particularly for Detailed Project Reports. The draft regulations suggest a tiered fee structure for approving such schemes. However, the utility described these charges as excessive and pointed out that historically, such evaluations were carried out by the commission without any additional fees. It further noted that similar regulatory bodies in other states do not generally impose such charges.
The company emphasized that many of its projects are funded through government grants, soft loans, or specific financial arrangements where no provision exists to cover regulatory evaluation fees. In view of this, MSEDCL has proposed a significantly reduced fee structure. For example, for projects costing between Rs. 25 crore and Rs. 100 crore, the draft proposes a fee of Rs. 1 lakh, whereas MSEDCL has suggested lowering it to Rs. 10,000.
In addition, the utility commented on the accounting treatment of such fees. It agreed that fees related to approved capital expenditure can be capitalized once the project is completed. However, for schemes that are rejected or sent back for revision, MSEDCL requested that the fees be treated as additional operation and maintenance expenses. Through these suggestions, the utility aims to ensure that the regulatory changes remain practical while minimizing any unnecessary increase in electricity tariffs for consumers across Maharashtra.
Discover more from SolarQuarter
Subscribe to get the latest posts sent to your email.
