MERC rejects BEST’s petition to terminate Tata Power contract

BEST petitioned the Maharashtra Electricity Regulatory Commission (MERC) to terminate its power purchase agreement with Tata Power‘s Trombay Unit 5, citing high energy charges ranging from Rs 8 to Rs 11 per unit. 

BEST argued that these tariffs were burdening 1.08 million consumers in Mumbai. However, MERC dismissed the plea, highlighting transmission constraints in sourcing power from outside Mumbai, necessitating Tata Power’s embedded generation for a secure supply.

During a recent bidding, Sai Wardha Power Generation Private Ltd (SWPGPL) offered a lower tariff of Rs 5.56 per unit for 2024-25. BEST claimed that replacing Tata Power’s electricity with SWPGPL’s would save consumers approximately Rs 100 crore annually. Tata Power countered, stating that contract termination could only occur under specific conditions, such as bankruptcy or a prolonged power supply failure exceeding 90 days.

MERC acknowledged the existing transmission challenges and emphasized that a gradual phaseout of costly units like Trombay would only be considered after the contract ends in March 2029. The commission’s decision underscores the need to adhere to existing agreements and address transmission issues before shifting power sources.