In a landmark decision set to benefit millions of power users across Maharashtra, the Maharashtra Electricity Regulatory Commission
(MERC) has approved a multi-year electricity tariff cut for consumers of the Maharashtra State Electricity Distribution Company Ltd (MSEDCL), also known as Mahavitaran.
This unprecedented move follows a petition filed by MSEDCL seeking a review of MERC’s earlier multi-year tariff (MYT) order issued in March 2025, citing significant errors and adverse implications on consumer interests and the utility’s operations. In its order dated 25 June 2025, MERC not only accepted the review but also formally approved tariff reductions across consumer categories for the period FY25-26 to FY29-30.
Five-year Relief Plan for Power Consumers
Under the revised tariff structure, residential consumers using up to 100 units per month—who make up nearly 70% of MSEDCL’s base—will receive the most significant benefit. These consumers will see a 10% reduction in tariff starting FY25-26, with cumulative relief reaching 26% by FY29-30, marking the first time in Maharashtra’s history that electricity tariffs will reduce in a structured, phased manner.
Chief minister (CM) Devendra Fadnavis, in a social media post, called it a 'historic achievement', stating: “For the first time in the state’s history, electricity tariffs will be reduced — starting with a 10% cut in the first year, and a total 26% reduction in phases over the next five years.”
It is important to note that this tariff revision applies only to MSEDCL consumers across Maharashtra, excluding Mumbai, where electricity distribution is handled separately by BEST, Tata Power and Adani Electricity.
From Hike Petitions to Relief Petitions
MERC's order is particularly noteworthy because MSEDCL's petition broke from tradition. Historically, power utilities often approach MERC with requests for tariff hikes—typically, in the range of 8%-10%. However, MSEDCL filed a petition for tariff reduction, citing errors in projections, disallowed expenditures and technical miscalculations in the original March 2025 MYT order.
In a detailed 86-page ruling, MERC accepted many of MSEDCL's claims, acknowledging errors and omissions that would have negatively impacted consumers and the financial viability of the state-run distributor.
Key Approvals and Corrections in the MERC Order
The commission’s revised ruling includes several crucial corrections that influenced the new tariff trajectory:
- Approval of Rs55,624 crore in capitalisation for infrastructure schemes that were previously disallowed, including those funded entirely by state grants or consumer contributions.
- Revision of agricultural sales estimates, incorporating a scientifically calculated 9.1% technical loss rate using CYMDIST software. This adjustment alone resulted in a significant shift in power purchase and sales projections.
- Inclusion of O&M costs for assets created via grants which had earlier been overlooked. The correction adds around Rs8,300 crore to the overall annual revenue requirement (ARR).
- Correction of power procurement estimates, rectifying errors such as unrealistic plant dispatch models, inaccurate assumptions for solar generation, and technical oversights like ignoring ramp-up and ramp-down limitations of thermal power stations.
The commission acknowledged that failure to address these issues would have resulted in steep fuel adjustment charges (FAC) and potential financial instability for MSEDCL.
Judicial Backing and Regulatory Precedents
MERC relied on judicial precedents, including the Supreme Court’s ruling in UPPCL vs NTPC (2009), affirming the commission’s inherent powers to amend, revise, or correct tariffs, even suo-motu. MERC noted that such review petitions do not require a fresh public hearing when public consultation has already taken place in the original tariff proceedings.
Additionally, the order referenced procedural allowances under the MERC Transaction of Business Regulations, 2022, and MYT Regulations, 2024, which empower the commission to correct clerical or arithmetical mistakes without fresh notifications.
Financial Impact and Benefit
The approved corrections amount to over Rs1.2 lakh crore in adjusted power purchase projections and capital expenditure (capex) plans, significantly altering the financial landscape for the state’s power utility. Importantly, these adjustments enable MSEDCL to sustain its distribution operations while reducing tariff pressure on consumers.
With the commission approving revised sales projections and a more realistic power procurement model, the burden of unexpected FAC hikes is expected to reduce, providing both price stability and predictability for consumers.
MERC's order paves the way for a more transparent and responsive regulatory approach in Maharashtra’s power sector. With demand expected to rise due to electric vehicle adoption, data centres and green hydrogen initiatives, the order provides MSEDCL the financial headroom to invest in critical infrastructure without passing the burden onto consumers.
The commission also directed that these approvals would be subject to true-up exercises, ensuring that any surplus or deficit arising from the assumptions can be rectified with carrying or holding costs in future tariff cycles.
Maharastra continues TO PAY HIGHEST Power Tariffs in entire country as farmers continue to get FREE POWER FIR PUMPS & after every few years their dues are cancelled during Elections