MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai – 400 005 Tel. 022 22163964/65/69 Fax 22163976 Email: [email protected] Website: www.merc.gov.in MAHARASHTRA ELECTRICITY REGULATORY COMMISSION (GRID INTERACTIVE ROOFTOP RENEWABLE ENERGY GENERATING SYSTEMS) REGULATIONS, 2019 STATEMENT OF REASONS Dated:30 December, 2019 Introduction The Maharashtra Electricity Regulatory Commission (MERC or Commission) notified the MERC (Net Metering for Roof-top Solar Photo Voltaic Systems) Regulations, 2015 [hereinafter referred as MERC Net Metering Regulations, 2015] in September 2015. The Commission notified the first amendment to MERC Net Metering Regulations, 2015 in July 2017, and extended the scope of the Regulations to all grid connected Renewable Energy (RE) Generating Systems. The Commission formulated the draft MERC (Grid Interactive Rooftop Renewable Energy Generating Systems) Regulations, 2019 (hereinafter referred as “Draft Grid Interactive Rooftop RE Regulations, 2019”). While formulating the Draft Grid Interactive Rooftop RE Regulations, 2019, the Commission has been guided by the FOR-Model Regulations, 2019, relevant Regulations of this Commission and Regulations specified by other State Electricity Regulatory Commissions (SERCs) etc., as well as Petitions filed by different entities seeking modifications in the MERC Net Metering Regulations, 2015. The Commission has proposed modifications in the draft to certain clauses vis-à-vis the clauses specified in the MERC Net Metering Regulations, 2015 (as amended in July 2017) based on Statement of Reasons for MERC (Grid Interactive Rooftop RE) Regulations, 2019 Page 1 of 68 the experiences in implementation of the Net Metering Regulations, and in order to simplify/clarify/amend certain provisions as considered reasonable. The rationale for the changes proposed were elaborated in the Explanatory Memorandum published along with Draft Grid Interactive Rooftop RE Regulations, 2019. Generally, only clauses where any addition/modification is proposed in draft Regulations were discussed in Explanatory Memorandum. In the draft Grid Interactive Rooftop RE Regulations, 2019, the Commission has endeavoured to balance the interest of consumers, RE Generating Companies, and Distribution Licensees. Based on the analysis, possible regulatory options have been discussed in the Explanatory Memorandum. Accordingly, the draft Grid Interactive Rooftop RE Regulations, 2019 along with Explanatory Memorandum was published on the Commission’s website www.merc.gov.in in downloadable format on October 26, 2019. A Public Notice was also published in daily newspapers Marathi (Maharashtra Times and Loksatta) and English (Indian Express and Times of India), inviting comments, objections and suggestions from all stakeholders by November 18, 2019, which was subsequently extended till November 25, 2019 in order to encourage public participation in the process of framing of these Regulations. A total of around 3800 stakeholders responded to the Notice on the Draft Grid Interactive Rooftop RE Regulations, 2019. The Commission appreciates the efforts taken by large numbers of stakeholders in providing their comments/suggestions, which has helped the Commission in finalising these Regulations. The list of stakeholders who offered their comments/suggestions on the draft Regulations and Explanatory Memorandum, which have been considered by the Commission while finalising the Regulations, is placed at Annexure-I. The main comments and views expressed by the stakeholders through their written submissions and the Commission’s views thereon have been summarized in the following paragraphs. It may be noted that all the suggestions given by the stakeholders have been considered, and the Commission has attempted to elaborate all the suggestions as well as the Commission’s decisions on each suggestion in the Statement of Reasons, however, in case any suggestion is not specifically elaborated, it does not mean that the same has not been considered. Further, some stakeholders have suggested changes on Syntax/phrase/addition of word(s)/rewording related changes, cross-references, etc., which have been suitably incorporated, wherever necessary. Wherever possible, the comments and suggestions have been summarised clause-wise, along with the Commission’s analysis and ruling on the same. However, in some cases, due to overlapping of the issues/comments, two or more clauses have been combined in order to minimise repetition. Statement of Reasons for MERC (Grid Interactive Rooftop RE) Regulations, 2019 Page 2 of 68 The Commission has also made certain suo-motu consequential changes in order to ensure consistency between clauses. Also, it may be noted that the Regulation numbers given in this Statement of Reasons are those mentioned in the draft MERC Grid Interactive Rooftop RE Regulations, 2019. The Commission has also made the corresponding changes in Annexures to the Regulations. The SOR is organised in such a way that it is summarising the main issues raised during the public consultation process, and the Commission’s analysis and decisions on them which underlie the Regulations as finally notified. The detailed Clause-wise approach is discussed as under: 1.1 Short title, extent and commencement 1.1.1 Proposed in Draft MERC Grid Interactive Rooftop RE Regulations, 2019 “1.1 These Regulations may be called the Maharashtra Electricity Regulatory Commission (Grid Interactive Rooftop Renewable Energy Generating Systems) Regulations, 2019. ...” 1.1.2 Comments Received Prayas Energy Group suggested to add an additional Clause 1.4 regarding the operating period of the Regulations, which could be for five years, thus, providing regulatory certainty to all stakeholders. It will also ensure revision of Regulations with likely changes in technologies and market developments. Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) submitted that the period of 3- 4 years is sufficient time for the consumers to make the necessary arrangement for migrating to new Rooftop RE Regulations and also enable the consumer to recover the investment within such period. It is suggested that RE Generating Systems, which were commissioned during the applicability of the MERC Net Metering Regulations, 2015, shall continue to be governed by the aforesaid Regulations only for a period of 3 years from the date of applicability of the MERC Grid Connected Rooftop RE Regulations, 2019 and not till the validity of Agreement. Also, in case of enhancement of RE system already installed by Eligible Consumer under MERC Net Metering Regulations, 2015, the provisions of new Regulations shall be applicable. Priya Mahajani and Others requested to clarify that the existing Net Metering contracts will continue as per existing Regulations until they expire and will not have any new commercial conditions attached to them after finalization of the present Draft Regulations. They suggested that the above clause could be in line with Regulation 38.3 of MERC (Distribution Open Access) (First Amendment) Regulations, 2019. Statement of Reasons for MERC (Grid Interactive Rooftop RE) Regulations, 2019 Page 3 of 68 Some stakeholders suggested that the provisions of the MERC Net Metering Regulations, 2015 should be made applicable for all Applications submitted to and duly acknowledged by the Distribution Licensee. 1.1.3 Analysis and Commission’s Decision As regards the request for clarity that the existing Net Metering contracts will continue as per existing Regulations until they expire, the same is already specified in the Draft MERC Grid Interactive Rooftop RE Regulations, 2019, under Proviso to Clause 20, as under: “Provided that Renewable Energy Generating Systems commissioned during the applicability of the Maharashtra Electricity Regulatory Commission (Net Metering for Rooftop Solar Photo Voltaic Systems) Regulations, 2015, shall continue to be governed by the aforesaid Regulations till validity of the Agreement signed under the aforesaid Regulations.” Hence, no further clarification is required on this aspect. As regards the suggestion that the provisions of the MERC Net Metering Regulations, 2015 should be made applicable for all Applications submitted to and duly acknowledged by the Distribution Licensee, the MERC Grid Interactive Rooftop RE Regulations, 2019 shall come into force from the date of publication in the Official Gazette. The Commission is of the view that it would not be appropriate to make the MERC Grid Interactive Rooftop RE Regulations, 2019 applicable to installations that are already in place. Hence, the Regulations shall have prospective effect. However, in order to avoid ambiguity in interpretation the nature of prospective effectiveness, viz., commissioned plants or Applications received or Applications accepted, etc., the Commission has added a Clause specifying that these Regulations shall be applicable to all Grid Interactive installations for which Applications are received on or after the notification of these Regulations. Thus, the MERC Net Metering Regulations, 2015 will be applicable for the pending applications. This is a significant concession, as normally new Regulations are applicable for all generation facilities that are commissioned after the date of notification of the Regulations. However, in this case, considering the time needed after the submission of application for the agencies for securing financial closure, procuring the material, installing the system and getting