Petition of MSEDCL for Medium Term Procurement of 1000 MW Power in the State of Maharashtra of the MERC (Multi Year Tariff) Regulations – EQ

Summary:

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## 📂 **Case Details**

| **Case No.** | **Description** |
| ————— | —————————————————————————————————————————————————————– |
| **142 of 2025** | Petition by MSEDCL seeking approval of deviations from Ministry of Power (MoP) Standard Bidding Documents (SBD) for medium-term procurement of **1000 MW** power. |
| **190 of 2025** | Petition for **adoption of tariff** discovered through competitive bidding for procurement of **993 MW** thermal power for 5 years (FY 2025–30). |

Both petitions were **heard together** as they relate to medium-term power procurement through competitive bidding.

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## 🧾 **Key Background**

* MSEDCL filed the **first petition on 20 June 2025** seeking approval for deviations in standard bidding documents.
* On **7 August 2025**, MSEDCL filed a **second petition** for adoption of tariffs discovered through competitive bidding.
* MSEDCL proceeded with the bidding process **before approval of deviations**, which the Commission criticized as **procedural non-compliance**, though it decided to consider both petitions together in view of power supply needs.

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## ⚡ **Power Demand & Supply Analysis**

### **Demand Growth Projections (RA Study by MSEDCL)**

| Year | Projected Peak Demand (MW) |
| ——- | ————————– |
| 2025–26 | 27,732 |
| 2026–27 | 30,520 |
| 2027–28 | 33,521 |
| 2028–29 | 34,287 |
| 2029–30 | 35,334 |

The Commission observed that MSEDCL’s projections were **slightly lower** than those of the **CEA Resource Adequacy (RA) Study**, but accepted them for analysis.

### **Capacity Planning**

* Existing contracted thermal capacity: **21,474 MW**
* Planned additions (by FY 2030–31): **~2,200 MW**
* Identified shortfall during peak hours:

* **Morning Peak:** up to 1,900 MW
* **Evening Peak:** up to 2,400 MW

Given the shortages and upcoming renewable additions with intermittent supply, the Commission found **MSEDCL justified in procuring 993 MW of medium-term thermal power** as a **“bridge arrangement”** until long-term projects are operational.

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## 🧱 **Tender and Bidding Process**

* **Tender No.:** CE/PP/Mid-Term/04
* **Tender floated on:** 20 March 2025 via **Bharat e-Procurement Portal** (not DEEP Portal).
* **Bid Opening Dates:**

* Technical Bids: 25 June 2025
* Financial Bids: 27 June 2025
* **e-Reverse Auctions:** 11 rounds conducted up to **10 July 2025**.
* **Ceiling Tariff:** ₹5.40/kWh

### **Final Bidders & Tariffs**

| **Bidder** | **Capacity (MW)** | **Tariff (₹/kWh)** | **Location / Remarks** |
| ——————————— | —————– | —————— | ———————- |
| Powerpulse Trading Solutions Ltd. | 543 | 5.55 | Vidarbha (InSTS) |
| Manikaran Power Ltd. | 100 | 5.55 | Shengaon (InSTS) |
| Jindal Power Ltd. – Shirpur | 100 | 5.55 | Maharashtra |
| Jindal Power Ltd. – Tamnar | 250 | 5.67 | Chhattisgarh (ISTS) |

**Total Procured Capacity:** 993 MW

> *Tariffs were slightly above the ₹5.40/kWh ceiling but found reasonable compared with other medium-term bids (₹5.56–₹7.10/kWh range across states).*

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## 🧩 **Regulatory Findings**

### **Issue A – Quantum Justification**

MERC agreed that the 993 MW procurement was justified to address **temporary generation gaps** during morning and evening peaks until new capacities come online.

### **Issue B – Deviations from MoP SBDs**

MSEDCL sought **13 deviations**, including:

* Using **BHARAT Portal** (instead of DEEP Portal) to allow ceiling tariff entry.
* **Ceiling Tariff provision** – approved.
* **Reduced condition precedent** period from 90 to 30 days – allowed with warning.
* **Relaxed financial/technical eligibility** to widen participation – allowed.
* **Performance Security validity** extended till March 2030 – approved.
* **No compensation for fuel shortages/change in law** – approved.
* **Deletion of payment security clause for termination** – approved (covered under LPS Rules, 2022).

> MERC approved the deviations **but criticized MSEDCL for post-tender filing**, warning against repetition.

### **Issue C – Compliance with Section 63 of the Electricity Act**

The Commission found that the **bidding was transparent and competitive**, receiving **nine technically qualified bids**. Despite procedural lapses, the process **met Section 63 requirements** for tariff adoption.

### **Issue D – Tariff Reasonableness**

After benchmarking against recent national bids, MERC found the ₹5.55–₹5.67/kWh tariffs **reflective of current market rates** and **adopted them** for a 5-year term (Nov 2025–Oct 2030).

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## 📜 **Final Directions and Order**

1. **Both petitions (Case Nos. 142 & 190 of 2025) allowed.**
2. **Deviations in RFQ, RFP, and APP approved** as per observations.
3. **Adoption of tariffs** ₹5.55–₹5.67/kWh for **993 MW** medium-term thermal power procurement.
4. MSEDCL to **enter into Power Procurement Agreements (PPAs)** with the successful bidders for **5 years (1 Nov 2025 – 31 Oct 2030)**.
5. Copy of executed agreements to be submitted to MERC within **1 month**.
6. MERC expressed **strong displeasure** over MSEDCL’s procedural lapses and directed strict compliance in future tenders.

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## 📘 **Annexure: Key Deviations Approved**

| **Clause** | **Deviation** | **MERC View** |
| ——————————– | —————————————– | —————————— |
| Bidding Platform | Shift from DEEP to BHARAT portal | Allowed |
| Ceiling Tariff | Introduced ₹5.40/kWh | Allowed |
| Financial Net Worth | To be calculated on bid date (not FY-end) | Allowed |
| Performance Security | Valid till 31.03.2030 | Allowed |
| Change in Law | No compensation for fuel shortage | Allowed |
| Payment Security for Termination | Deleted | Allowed |
| CP Period | Reduced to 30 days | Allowed (exceptional approval) |

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## 🧠 **Key Takeaways**

* MERC’s order reflects a **balanced regulatory stance** — approving MSEDCL’s power procurement to maintain supply security while admonishing procedural lapses.
* The adopted tariffs align with **prevailing market rates** and support **resource adequacy compliance** under MERC’s 2024 framework.
* The decision underscores the importance of **advance regulatory approval** before tendering and **transparency** in deviation justification.

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