MERC dismisses Lloyds Metals' plea for 25% start-up demand charges, holding it is a consumer, not an independent generator, and must approach CGRF
Case filed by M/s Lloyds Metals & Energy Ltd seeking directions to Maharashtra State Electricity Distribution Company Limited for levying demand charges at the rate of 25% applicable for Start-up power requirement of generating plants as per Tariff Order of Commission in Case No.48 of 2016 and in Case No.195 of 2017
LMEL, an HT consumer since 1995 with a 30 MW waste-heat recovery cogeneration plant (2010) co-located with its sponge iron unit, sought MERC directions to MSEDCL to bill demand charges at 25% of normal HT rates (as per Tariff Orders in Case 48/2016 and 195/2017) applicable to start-up power for generators, retrospectively from November 2016, plus refund of excess demand charges with interest under Section 62(6). LMEL also sought reduction of contract demand from 3600 kVA to 500 kVA, which MSEDCL had refused citing a 10% of evacuation-capacity technical norm. MSEDCL argued LMEL is merely a consumer under industrial agreements (2013, 2016) with no separate start-up power contract, making this a consumer-licensee dispute under CGRF jurisdiction, not MERC's.
- Case No. 106 of 2020 dismissed
- Held LMEL's co-located cogeneration plant (waste heat + coal-fired boiler) is not an independent generating station; it is a 'consumer' under EA 2003 since electricity is consumed for sponge iron production
- 25% concessional demand charge for start-up power (per Case 48/2016 & 195/2017) held inapplicable to LMEL's cogeneration unit
- Noted subsequent agreements (20 Dec 2013 and 21 July 2016, current CD 3600 kVA) were for 'industrial power' only, with no mention of start-up power, superseding the 2010 start-up agreement
- Ruled MERC lacks jurisdiction over consumer-licensee disputes; LMEL directed to approach CGRF for its grievances on contract demand reduction (3600 kVA to 500 kVA) and alleged wrong tariff application
- Clarified no findings made on merits, including limitation issue; CGRF to decide as per law if LMEL approaches it
- LMEL to approach the Consumer Grievance Redressal Forum (CGRF) for disputes on contract demand reduction and tariff applicability
- CGRF to examine LMEL's claims (including limitation issue) strictly on merits and in accordance with law
- No retrospective refund or 25% demand charge benefit granted by MERC; any such relief must be pursued via CGRF
- LMEL's option to take a separate connection/agreement for start-up power (as suggested by MSEDCL) remains open for prospective treatment, but was not directed by the Commission
- Standby arrangement under MYT Order dated 30 March 2020 available as an alternative for CPP users like LMEL
- • Co-located captive/cogeneration plants supplying self-consumption needs will be treated as 'consumers', not generators, for tariff purposes—denying them concessional start-up power demand charges under existing agreements
- • C&I units with CPPs must ensure agreements explicitly and separately contract for 'start-up power' (ideally via separate connection) to claim the 25% concessional demand charge; industrial-purpose agreements will override past start-up clauses
- • Disputes over contract demand reduction, billing category and tariff application between consumers and DISCOMs fall under CGRF jurisdiction, not MERC—affecting how C&I consumers should route grievances
- • RE/cogeneration developers relying on grid support for plant stability should note that grid-support consumption is treated as regular consumption, impacting demand charge exposure and CT/metering technical norms (10% of evacuation capacity) for start-up sanctioning
This order is a caution for captive/cogeneration developers: co-location with the parent industrial process (sponge iron, waste heat) collapses the generator-consumer distinction, and MERC will default to treating such units as consumers unless a wholly separate start-up connection/agreement exists. Any prior agreement referencing start-up power gets extinguished once a fresh 'industrial purpose' agreement is signed—so contract language and connection structuring matter far more than actual plant behaviour. C&I units with cogeneration/CPP assets should proactively restructure agreements (separate metering, explicit start-up demand clauses) to preserve concessional tariff eligibility, and route billing/demand disputes through CGRF rather than MERC directly.
Growthifye does not take responsibility for the accuracy of this information. Values are compiled from tariff orders published on the websites of State Electricity Regulatory Commissions and distribution licensees (plus CEA / MoP / Grid-India), parsed automatically and shown with their source. Always verify against the signed order before any commercial decision. This one-pager is a Vidura-assisted summary of the official order; the signed order prevails.