DPC may challenge MERC’s jurisdiction

Mumbai, May 27: Enron-promoted Dabhol Power Company (DPC) is likely to challenge the jurisdiction of state electricity regulatory Commission (MERC) to settle a plethora of disputes, including "rescinding" of the PPA with Maharashtra State Electricity Board (MSEB) during the first hearing of the case, scheduled for May 29.

"One cannot deny the possibility of DPC’s legal intention as the multinational strongly believes that the PPA of its $3 billion project, does not come under MERC’s perview at all," legal officials involved in the DPC-MSEB row told PTI here today.

However, MSEB’s legal counsels feel DPC would be unable to prove their point if it took the "jurisdiction" angle.

MERC is a specialised body set up by Parliament in 1998 as part of the power sector reforms to regulate PPAs and procurement processes of transmission and distribution utilities. "This includes the regulation of the price or tariff at which power shall be procured," they contend.

As per section 22 (2)(N) of the Electricity Regulatory Commission Act of 1998, the state regulator has been conferred powers to "adjudicate upon disputes and differences between licensees and ultities and refer the matter for arbitration."
On May 25, MSEB had moved merc challenging the agreement’s legal validity and seeking cancellation of the PPA and claiming nearly Rs 700 crore as damages from DPC.

Terming the move as a "logical step", a state official said MSEB had sought Justice from MERC as it had exclusive legislative jurisdiction to adjudicate disputes between two power utilities.

With such an emphatic regulation, on what grounds would DPC insist that its PPA with MSEB did not come under MERC, the counsels said.

"After all, DPC and Maharastra State Electricity Board are both power utilities and the only dispute redressal forum available is the regulator," they said.

Interestingly, counsels are of the view that if DPC does not attend the hearing or refuses to comply by the regulator’s notice, then MSEB would have to prove its "service of summons" upon which the Commission is entitled to give an ex-parte hearing on the matter.

The 60 page petition, with nearly thousand pages of annexures, prays that MERC should adjudicate MSEB’s disputes with DPC, including the Rs 401 crore rebate payable by the us multinational and mainly misrepresentation of facts involving the ramp-up procedure from a cold start to full capacity.

The loss-making board has also referred numerous notices, the "political force majeure", the preliminary termination notice, DPC’s demand for the escrow cover and its subsequent defaults in ramping up generation as per demand.

Maharastra State Electricity Board has also sought the regulator’s direction over whether it should take up international arbitration, process for which is on, with DPC in London.

"With a suitable order, MERC will now tell us how to deal with the arbitration, escrow cover, damages etc," an Maharastra State Electricity Board official said.