The filing of statement by the state government will decide the fate of the BSES petition filed at the MERC on December 5 seeking its ruling on the issue of standby charges. BSES had appealed to the MERC to prohibit Tata Power from disconnecting its standby power supply for Mumbai suburbs.

The MERC had expressed its dissatisfaction over the state government's move to keep its order (March 22, 2000) in abeyance. It had sought clarification from the state government whether it wanted to stay or revoke its March 22 order as the matter had been referred to it.

Top state government sources told The Financial Express on Sunday that it would have to seek the legal opinion from the state law and judiciary department as well as advocate general on powers to be delegated to the MERC under the Central Electricity Regulatory Commission Act, 1998, and its implications. The state government has already delegated powers under Section 22 (2) (n) of the same Act to adjudicate upon the disputes and differences between the licencees and refer the matter for arbitration.

Although these powers have been delegated on October 27, 2000, the Tata Power had questioned its validity as the standby charges issue had been settled through the government order of March 22 this year. Interestingly, the state government on the day of hearing on BSES petition (read December 5) kept that order in abeyance on the grounds that the issue had been referred to MERC.

MERC wanted to know from the state government if a dispute between Tata Power and BSES existed on the issue of standby charges and also whether the powers through another Section 22 (2) (P) have also been given to MERC to settle it.

Tata Power had taken a strong objection to the state government's December 5 order and had alleged that it cannot issue such an order as the "issue had been resolved and MERC does not have necessary powers to decide upon the old issues." However, BSES had welcomed the government's order and prayed for the admission of its petition at the MERC.

Ironically, the loss-making Maharashtra State Electricity Board, which is at the receiving end due to the non-payment of standby charges of Rs 274 crore by Tata Power for its standby supply in Mumbai city, had said that the March 22 order be implemented so that it would get its share which it badly needed. Tata Power had expressed its inability to pay Rs 274 crore to MSEB on the grounds that it had not received nearly Rs 181 crore from BSES towards standby charges.

It must be mentioned here that at least on four occasions the state government had rejected BSES demand for relief and had directed to pay the necessary standby charges to Tata Power.

On April 22, 1999, the government had directed BSES to pay Rs 9 crore for four months (December 1998 to March 1999) and made an announcement of the committee to decide standby charges for 1999-2000 and decide the differences in tariff. On July 24, 1999, the previous Shiv Sena-BJP government cleared BSES 495 mw combined cycle power project at Saphale, Thane district. On March 22, 2000, the government asked BSES to pay the same rate as Tata Power for standby charges for 1999-2000 (Rs 550 KVA per month for 275 MVA and for the past period between December 1, 1998 and March 31, 1999, Rs 9 crore standby charges).

Furtheremore, the MSEB board and its chief engineer through separate letters dated April 1 and April 10 asked BSES to pay standby charges to Tata Power. Again on June 6, the state government had rejected the BSES plea and threatened to cancel its licence if the March 22 orders were not followed.

On July 5, the government directed BSES to pay up and asked it to approach MERC for tariff.This was followed by MSEB's letter on July 18 giving no objection certificate to BSES under section 44 of the Electricity Act for its Saphale project subject to a condition that BSES pays standby charges to Tata Power.

However, this move was protested by the Tata Power on July 26 on the grounds that its commercial interests should be protected. Interestingly, on the same day, BSES appealed to the MSEB to keep out of the issue of standby charges and said that MERC would regulate the amounts payable by BSES.

Moreover, the state government served an ultimatum on October 4 to BSES on payment of standby charges or face cancellation of its licence. This was followed by payment of Rs 30 crore by BSES to Tata Power towards standby charges. Tata Power paid the same amount to MSEB.

However, on October 27, the government issued a notification delegating powers to MERC to adjudicate disputes and differences and later MSEB wrote BSES and Tata Power on November 21 asking them to move to MERC for standby charges.