CERC: MERC to Adjudicate Intra-State Transmission Charges for Railways' Power Supply, Citing Lack of 'Contract Path' Agreement - 2025-07-16

CERC Directs Power Generator to State Commission in Transmission Fee Dispute with MSETCL

New Delhi – The Central Electricity Regulatory Commission (CERC), in a significant order dated June 20, 2025, has ruled that the Maharashtra Electricity Regulatory Commission ( MERC ) is the appropriate forum to adjudicate a dispute over transmission charges for power supplied from a Maharashtra -based plant to Indian Railways for use in other states. The CERC bench, comprising Chairperson Shri Jishnu Barua and Members Shri Ramesh Babu V. and Shri Harish Dudani, dismissed the petition filed by Ratnagiri Gas and Power Private Limited ( RGPPL ), holding that the charges for using the intra-state transmission system fall under MERC 's jurisdiction in the absence of a specific 'contract path' agreement.

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Background of the Dispute

The case, Petition No. 344/MP/2020 , was initiated by RGPPL , which operates a gas-based power plant in Maharashtra . Following a Ministry of Power allocation, RGPPL supplies 540 MW of power to Indian Railways , out of which 330 MW is transmitted for use outside Maharashtra to various railway zones.

RGPPL 's grievance was against the Maharashtra State Electricity Transmission Company Limited ( MSETCL ), which was levying transmission charges determined by MERC . RGPPL contended that since the 330 MW of power was for inter-state use, the charges should be based on a 'contract path' methodology previously approved by the Western Regional Power Committee (WRPC) in 2010. This method, RGPPL argued, resulted in a much lower rate of ₹0.73 Lakhs/MW/month and had been applied in similar cases involving power supply to Goa, Daman & Diu, and Dadra & Nagar Haveli. RGPPL sought a refund for the excess charges levied since April 2017.

Arguments of the Parties

Petitioner ( RGPPL ): RGPPL 's counsel, Ms. Swapna Seshadri , argued that the use of MSETCL 's lines (Dabhol-Nagothane-Padghe) for inter-state power supply constituted an "intervening transmission system," placing the dispute squarely within CERC's jurisdiction under Section 79 of the Electricity Act, 2003. They asserted that the financial burden of the high charges ultimately fell on RGPPL , as Indian Railways would deduct these amounts from their payments. They heavily relied on a prior CERC order (in Petitions 153 & 154/MP/2018) where the 'contract path' method was upheld for other entities.

Respondents ( MSETCL and MSEDCL): MSETCL argued that it had no direct agreement with RGPPL and that its contract was with Indian Railways . It contended that the Long-Term Open Access (LTOA) granted to Indian Railways was for the entire Maharashtra intra-state network, not a specific, identifiable 'contract path.' Therefore, the charges were correctly calculated as per MERC 's tariff orders. Maharashtra State Electricity Distribution Company Limited (MSEDCL) intervened, stating that any reduction in charges for Indian Railways would unfairly increase the tariff burden on other state consumers, as MSEDCL pays nearly 86% of the state's transmission costs.

Legal Principles and Court's Analysis

The Commission meticulously distinguished the present case from the precedent cited by RGPPL . The central issue boiled down to the nature of the agreements governing the power transmission.

The CERC noted:

"The reliance of the Petitioner on the Order dated 04.02.2021 in Petition 153/MP/2018 and 154/MP/2018 is misplaced since in the referred cases, there was an express BPTA between MSETCL and the other party identifying the contract path."

In contrast, the Commission found that in the current case: * The Long Term Open Access (LTOA) agreements and the Bulk Power Transmission Agreement ( BPTA ) between MSETCL and Indian Railways did not specify any 'contract path.' * The agreements explicitly referenced the applicability of MERC 's regulations and tariff orders for determining transmission charges. * The Power Purchase Agreement (PPA) between RGPPL and Indian Railways placed the responsibility of obtaining open access and paying transmission charges on the Railways, without stipulating a specific charging methodology.

The judgment clarified:

“We are of the considered view that since Indian Railways has obtained LTOA for drawl of power from RGPPL power plant and the BPTA entered into between Indian Railways and MSETCL does not specify any contract path or does not contain any reference to WRPC letter dated 17.08.2010, the contention of Petitioner to levy charges for intra-State transmission system based on WRPC letter dated 17.08.2010 does not hold any water.”

Final Decision and Implications

Concluding its analysis, the CERC held that Indian Railways is a Transmission System User (TSU) within Maharashtra 's network and is liable to pay charges as determined by MERC . The Commission directed RGPPL to approach the appropriate state body for any grievance.

"Therefore, if the petitioner has any issue with the determination of transmission charges for use of the Intra State Transmission System (InSTS) by the Indian Railways in terms of LTOAs, in that case, the Maharashtra Electricity Regulatory Commission ( MERC ) is the appropriate Commission to adjudicate upon the matter."

The petition was disposed of accordingly. This ruling reinforces the jurisdictional boundaries between Central and State electricity commissions, emphasizing that the terms of contractual agreements like LTOAs and BPTA s are paramount in determining the applicable regulatory authority and tariff framework.