Tata Power to contest MERC order

Reliance Energy may defend regulatory order on standby charge

Tata Power Company will move the Bombay High Court against the order passed by state power regulator Maharashtra Electricity Regulatory Commission (MERC) last week on the standby charges issue.

The move assumes significance as the Appellate Tribunal, which under the Electricity Act 2003 has the right to hear appeals against the rulings of power regulators, is yet to be constituted.

"We are in the process of preparing a writ petition to be filed in the Bombay High Court," said Mohan Gurunath, vice president of Tata Power. Industry sources said Reliance Energy (REL) is planning to defend the MERC order.

Last week MERC rejected the contention of Tata Power that the standby charges it pays to Maharashtra State Electricity Board be shared on a 50: 50 basis with the REL. It also directed Tata Power to refund REL.

REL contends that it will receive a refund of Rs 373 crore while Tata Power says that it has to pay only Rs 322 crore.

Tata Power and REL (formerly BSES) have been locked in a dispute since 1997 over the sharing of standby charges. Tata Power has a standby arrangement with MSEB under which it pays the board Rs 746 crore annually for agreeing to provide instant power in an emergency.

Tata Power also has an arrangement with REL under which it will supply power to the latter in an emergency. Tata Power had been demanding that REL pay it 50 per cent of the charges that it is paying MSEB. This was disputed by REL.

The two companies have fought in the Bombay High Court as well as in the Supreme Court in the past. After the latest ruling , the scene of the dispute is shifting back to the Bombay High Court.