MERC Revises Energy Banking Rules and Time-of-Day Framework in Modified Multi-Year Tariff Order

The Shift to the Modified MYT Order

The Maharashtra Electricity Regulatory Commission (MERC) has issued its final decision in Case No. 75 of 2025, significantly altering the state’s power pricing landscape through a modified Multi-Year Tariff (MYT) Order. Finalized on June 25, 2025, this order concludes a de novo review mandated by the Supreme Court of India. The fresh proceedings were initiated after the Bombay High Court set aside an earlier review for violating the principles of natural justice—specifically for failing to provide stakeholders a proper hearing. Following extensive public consultations involving approximately 2,000 stakeholder submissions, the Commission’s revised order seeks a statutory balance between the financial stability of the Maharashtra State Electricity Distribution Company Limited (MSEDCL) and the evolving requirements of the state’s energy consumers.

Breakdown of the New ‘Slot-Wise’ Energy Banking Rules

A central pillar of the modified order is a transition to a restrictive “slot-wise” energy banking framework for renewable energy. This replaces the previous flexible withdrawal system with a structure that aligns banking with the principle that energy should only be drawn within the same or a lower-tariff time block.

The new drawal permissions are strictly defined by three time blocks:

• Normal Hours (00:00–09:00): Energy banked during this period can be utilized during Normal or Solar hours but is strictly prohibited for drawal during Peak hours.
• Solar Hours (09:00–17:00): Consumption of energy banked during this period is restricted exclusively to the same time block, creating an effective “no-banking” scenario for excess daytime generation.
• Peak Hours (17:00–24:00): Energy banked during this period maintains the highest flexibility and can be utilized across all time slots.

In a significant win for MSEDCL’s technical modeling, the Commission acknowledged the limitations of earlier Excel-based power procurement projections. The utility successfully argued that previous models failed to account for the “Technical Minimum” of thermal plants—the operational necessity to maintain a baseline generation level even when demand drops. Consequently, the Commission allowed MSEDCL to utilize its proprietary software for projections, approving a total power purchase requirement of 1,059,067 MUs for the fifth control period.

Revised Time-of-Day (ToD) Framework and Tariffs

The Commission has overhauled the ToD rebate and premium structure to incentivize daytime consumption and better integrate increasing solar capacity into the grid.

For FY 2025-26, the revised ToD framework is as follows:

The Commission explicitly removed the previous 10% night-time rebate (00:00–06:00), shifting the regulatory focus toward utilizing solar availability during the day. Furthermore, the Commission approved a critical revision to the Agricultural Sales Index. By adopting a technical loss level of 9.1% (calculated via CYMDIST software) instead of the previous 18% estimate, the Commission revised the index to 1,537 kWh/HP/Annum. This adjustment is vital for MSEDCL’s financial recovery and more accurately reflects actual agricultural consumption.

Consumer Impact: C&I vs. Residential

The modified order delivers varied impacts across consumer segments, with the heaviest regulatory shifts targeting high-load users.

• Commercial and Industrial (C&I) Consumers: Users with loads above 10 kW face the full weight of slot-wise banking restrictions. Additionally, as the state’s rooftop solar capacity has crossed 5,178 MW, the Commission has triggered the implementation of Grid Support Charges (GSC). Crucially, these charges now apply to all generated units, including those used for self-consumption, rather than just exported power.
• Hotel Industry Reclassification: In a notable reversal, the Commission moved the hotel industry back to the “Commercial” category from “Industrial.” The Commission cited a “mistaken reading” of the State Tourism Policy 2024 in its previous order, noting that the policy intended for the state to provide refunds rather than for the regulator to change tariff classifications.
• Residential Consumers: Standard residential users and HT Group Housing Societies remain exempt from the restrictive slot-wise banking rules for rooftop solar.
• Residential Rebates: LT-Residential consumers will see a specific solar-hour rebate trajectory, starting at ₹0.80/kWh for FY 2025-26 and increasing annually to reach ₹1.00/kWh by FY 2029-30.

Implementation Timeline and Legal Context

The modified order is the result of a rigorous legal and consultative process designed to ensure transparency and administrative fairness.

• Effective Date: The new tariff rates and energy banking provisions are effective from July 1, 2025.
• Legal Background: The ‘de novo’ review process was necessitated by the Bombay High Court’s intervention, which found the original review violated natural justice by bypassing necessary stakeholder hearings. The subsequent process included six regional hearings and the evaluation of nearly 2,000 submissions.
• Interim Period: For the period prior to July 1, 2025, the rates established in the 2023 Mid-Term Review (MTR) Order remained applicable to avoid retrospective financial shocks.

Conclusion

The Commission’s modified order represents a complex statutory balancing act. By revising technical loss assumptions for the agricultural sector and allowing for more sophisticated power procurement modeling, the MERC has addressed critical utility stability concerns. Simultaneously, the aggressive restructuring of ToD rebates and the introduction of GSC for self-consumption highlight a regulatory priority to manage grid efficiency and ensure that the cost of maintaining grid infrastructure is shared fairly as the state moves toward higher solar penetration.