MERC dismissed MSEDCL's plea to change FAC allocation method between Agricultural and Non-Agricultural consumers; ABR-based allocation rejected
Case of Maharashtra State Electricity Distribution Co. Ltd. seeking modification of the post facto approvals of the Commission concerning the Fuel Adjustment Charges vetting Reports dated 26 July 2020 for Quarter II and dated 4 August 2020 for Quarter III of FY 2019-20.
MSEDCL sought modification of MERC's post facto FAC vetting approvals for Q2 (dated 26 July 2020) and Q3 (dated 4 August 2020) of FY 2019-20. MSEDCL wanted FAC amounts allocated between Agricultural (Ag) and Non-Agricultural (Non-Ag) consumers based on 'weighted average of ABR and Sales' instead of the Sales MU-based method used by the Commission, claiming Sales-based allocation overburdened Ag consumers and caused a Rs. 912.66 Crore adjustment need going back to April 2018.
- Petition (Case 192 of 2020) dismissed in entirety
- Commission held Sales-based FAC allocation is correct and consistent with MYT Regulations 2015/2019
- Rejected MSEDCL's ABR-based allocation, finding it double-applies cross-subsidy (once via ABR allocation, again via 'k' factor)
- Confirmed Q2 disallowance of Rs. 182.16 Crore (approved Rs. 918.45 Cr vs proposed Rs. 1100.61 Cr)
- Upheld Q3 directive: refund Rs. 1225 Crore to non-Ag consumers and recover Rs. 1037 Crore from Ag consumers
- Disallowed MSEDCL's proposed retrospective adjustment of Rs. 912.66/912.70 Crore between Ag and Non-Ag categories, noting FY2018-19 was already trued up and such fundamental methodology change required prior Commission approval, not mere intimation
- MSEDCL to continue FAC allocation strictly on Sales MU basis as per existing MYT Regulations formula (ZFAC Cat = k × per-unit FAC)
- No retrospective re-allocation of Rs. 912.66 Crore between Ag/Non-Ag categories to be implemented
- MSEDCL directed to comply with Q3 order: recover Rs. 1037 Cr from Ag and refund Rs. 1225 Cr to Non-Ag consumers as originally approved
- Any future change to FAC computation methodology must be sought via specific Petition for prior Commission approval, not mere intimation letter
- Commission's ruling to apply to subsequent FAC vetting periods (Q3, Q4 FY19-20) where similar approach was adopted
- • C&I (Non-Ag) consumers must continue bearing the refund/recovery adjustments as per Sales-based FAC methodology; the Rs. 1225 Crore refund to Non-Ag consumers stands confirmed
- • No relief for Non-Ag categories from cross-subsidy embedded via 'k' factor in FAC billing — confirms continued differential FAC burden favoring Ag consumers
- • Establishes precedent that discoms cannot unilaterally alter tariff/FAC computation methodology without prior Commission approval — relevant for C&I consumers monitoring future FAC true-ups
- • Reinforces that FAC pass-through mechanics (formula, k-factor, allocation) remain governed strictly by MYT Regulations, giving C&I buyers predictability on FAC cross-subsidy treatment
This is a procedural/methodological dispute rather than a rate case with direct tariff line-item impact for C&I buyers, but it matters for predictability: MERC has firmly closed the door on discoms retrospectively re-engineering FAC allocation formulas outside the Regulations. For C&I consumers already absorbing higher FAC burden via the 'k' factor cross-subsidy design, this order preserves status quo — confirming the Rs. 1225 Crore refund to Non-Ag consumers stays intact. Developers and OA users should note the Commission's clear signal that any future FAC/tariff methodology change requires a specific approved Petition, reducing risk of ad-hoc retrospective adjustments hitting their bills.
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.