The Hindu Business Line : Captive plants free to sell surplus power: MERC

THE Maharashtra Electricity Regulatory Commission today said that captive power plants are free to sell surplus power to any buyer provided they have dedicated transmission lines; marking the end of State Electricity Board's monopoly on power transmission as envisaged in the Electricity Act 2003.

The MERC said a captive plant does not need a licence or permission to sell surplus power to a dedicated buyer through its own transmission lines and the buyer need not pay surcharge. Also, these plants need not pay wheeling charges to the Maharashtra State Electricity Board so long as the seller and buyer do not use its grid.

Captive plants should have been set up for `self-use', which has been defined as using more than 50 per cent power for itself, MERC said in an order on a complaint from MSEB alleging breach of permission granted to Bhushan Steel and Strips Ltd.

The Commission rejected charges by MSEB against Bhushan Steel that the latter could not sell surplus power to a third party from its 24 MW captive power plant at Raigad district, without a licence.

Also, it had accused Bhushan Steel of poaching its customer Vipras Castings Ltd. MSEB had cut power supply to Vipras, which had defaulted on payments of Rs 13 crore to MSEB.

Vipras Casting later approached the BIFR because of its financial difficulties.

MERC held up Vipras' argument that as MSEB had cut power supply to it, it was no longer an MSEB customer.

Therefore, if it bought power from Bhushan Steel, it could not be termed as poaching.

"In this case, neither is Bhushan Steel using MSEB's network nor is Vipras any longer MSEB's consumer. Thus, no wheeling charges are payable to MSEB nor is a surcharge leviable under Section 42 (2), nor is an additional surcharge on wheeling attracted under Section 42 (4) to meet the fixed cost of distribution licensee arising out of its obligation to supply," said MERC in its order.

MERC has, however, said the MSEB is free to seek clarification from the State Government on whether captive plants need to take its permission for setting up the dedicated overhead transmission lines under Section 68 (2) (a).

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