Maharashtra Court Ruling Puts 20-Hour Solar Banking to Rest; 17-Hour Option Under Review as Fairness Toward Consumers Takes Center Stage – EQ

Summary:

It should be safe to assume that 20 hours banking won’t be back, 17 hours banking for solar is a possibility and net metering may continue as it is. However, the court has directed MSEDCL to be fair with consumers. Looks like it will be challenged in supreme court.

This Court should be specially careful in dealing with matters of exercise of inherent powers when the interest of consumers is at stake. The interest of consumers, as an objective, can be clearly ascertained from the Act. The Preamble of the Act mentions “protecting interest of consumers” and Section 61(d) requires that the interests of the consumers are to be safeguarded when the appropriate Commission specifies the terms and conditions for determination of tariff. Under Section 64 read with Section 62, determination of tariff is to be made only after considering all suggestions and objections received from the public. Hence, the generic tariff once determined under the statute with notice to

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## **1. Background & Case Overview**

A **batch of writ petitions** (Nos. 19437/2025 to 21714/2025) was filed by multiple renewable energy developers, industry associations, and corporate consumers — including **O2 Renewable Energy VII Pvt. Ltd., National Solar Energy Federation of India, JSW Neo Energy Ltd., UltraTech Cement Ltd., NTT Global Data Centers, Vidarbha Industries Association, and others** — challenging a **Review Order dated 25 June 2025** issued by the **Maharashtra Electricity Regulatory Commission (MERC)**.

The petitions were directed **against MERC and Maharashtra State Electricity Distribution Company Ltd (MSEDCL)**, the state’s power distribution utility.

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## **2. The Core Issue**

The challenge centered on the **legality and procedural validity** of the **MERC Review Order** that **modified the earlier Multi-Year Tariff (MYT) Order dated 28 March 2025**.

Petitioners argued that MERC:

* **Substantially altered key tariff provisions** (including renewable energy banking, hotel tariff categories, and CAPEX levels),
* **Did so without public consultation or stakeholder hearing**, and
* **Violated the principles of natural justice and the TOB (Transaction of Business) Regulations, 2022**.

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## **3. Key Legal Context**

### **a. Relevant Regulations & Acts**

* **Electricity Act, 2003** – Sections 64(3) and 86(3) mandate transparency and public consultation in tariff determination.
* **MERC (Transaction of Business and Fees & Charges) Regulations, 2022** – Particularly *Reg. 28(f)* requires notice and hearing before allowing a review.
* **MERC (Multi Year Tariff) Regulations, 2024** – *Reg. 14* provides for public notice, publication, and public hearing before MYT orders.

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## **4. Petitioners’ Arguments**

* The **Review Order was passed ex parte**, without providing a hearing to any stakeholders.
* The **review substantially modified** the MYT order (not a clerical correction).
* **Changes affected consumers and renewable energy developers** — especially through:

* Restriction on **solar energy banking** (from 17-hour to 8-hour drawal limit).
* **Re-categorization of hotels** from industrial (HT-I) to commercial (HT-II), leading to higher tariffs.
* **Increase in CAPEX** from ₹31,749 crore to ₹87,374 crore, affecting consumer tariffs.
* Violation of **natural justice** and **statutory procedure** under Reg. 28(f) and Section 64(3) of the Act.

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## **5. Respondents’ Arguments (MERC & MSEDCL)**

* The **tariff review is a regulatory (legislative) function**, not an adjudicatory one; hence, no hearing is necessary.
* **Review petitions** are part of MERC’s **inherent powers**, not subject to CPC or judicial review procedures.
* The **Electricity Act, 2003 is a complete code**; appeals should lie before **APTEL (Appellate Tribunal for Electricity)**, not the High Court under Article 226.
* The Review Order was justified to **correct or refine** the MYT Order in the **public interest**.

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## **6. Court’s Observations**

* The **impugned review order** made **major substantive changes**, including to:

* Renewable energy **banking conditions**,
* **Tariff categorization** of consumer classes,
* **CAPEX and ARR** figures with tariff implications.
* These were **not minor clerical corrections**; hence, stakeholder consultation was **mandatory**.
* **Regulation 28(f) of TOB Regulations, 2022** clearly requires hearing of opposite parties before allowing a review.
* **MERC’s failure** to issue public notice, share review filings, or allow stakeholder representation was a **clear procedural breach**.
* **Transparency under Section 86(3)** and public participation under **Section 64(3)** were not optional; they are **statutory obligations**.
* The **Electricity Act’s purpose** (consumer protection, fairness, rational tariff) is defeated if reviews altering major terms are done without notice.

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## **7. Findings**

The Court found:

1. MERC’s Review Order was **passed in violation of natural justice** and **statutory procedures**.
2. It **substantially modified the original MYT Order**, affecting multiple stakeholders.
3. The **impugned order is void ab initio** as it was made **without consultation or hearing**.
4. Petitioners were **not obliged to approach APTEL** first, since the breach was **procedural and jurisdictional**, warranting **High Court interference**.

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## **8. Judgment & Directions**

The Division Bench **allowed the petitions**, holding that:

* The **Review Order dated 25 June 2025** stands **quashed and set aside**.
* MERC is directed to:

* **Supply copies** of the MSEDCL review petition and all documents to stakeholders.
* **Invite objections/suggestions** and conduct **public hearings** as per statutory procedure.
* **Reconsider and reissue** a fresh order **after due process**.

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## **9. Legal Precedents Referenced**

* *PTC India Ltd v. CERC (2010) 4 SCC 603*
* *Gujarat Urja Vikas Nigam Ltd v. Solar Semiconductor (2017) 16 SCC 498*
* *State of U.P. v. Sudhir Kumar Singh (2021) 19 SCC 706*
* *Nawabkhan Abbaskhan v. State of Gujarat (1974) 2 SCC 121*
* *Jaipur Vidyut Vitran Nigam Ltd v. MB Power (2024) 8 SCC 513*

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## **10. Significance of the Judgment**

* Reinforces the **requirement of transparency** and **stakeholder participation** in electricity tariff processes.
* Establishes that **review powers under regulatory functions** cannot override **natural justice**.
* Protects **renewable developers, consumers, and industrial bodies** from unilateral regulatory changes.
* Sets a **precedent** that **MERC (and other SERCs)** must issue **public notice and hearings** for **any substantial modification** of approved tariffs.

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