Both Mantralaya and MSEB sources say that BSES will be given the NOC only when it pays the standby charges. TEC, which has been pursuing the matter of standby charges with the MSEB, has also requested the latter to not take a hasty decision while giving BSES an NOC. However, BSES sources said that it has sought a fresh representation before MSEB on the issue.

According to an agreement reached between MSEB, TEC and BSES, BSES was to pay Rs 3.5 crore per month as standby charges to TEC for standby demand upto 275 MVA. It was later agreed that BSES would pay Rs 9 crore for a period of four months from December 1998 to March 1999 to TEC as standby charges.

TEC and BSES have an arrangement according to which BSES has to purchase a minimum of 2,875 million units from the TEC and pay the demand charges at Rs 5.5 per KVA per month for a minimum demand of 275 MVA. It was also decided that BSES and TEC would enter into a fresh agreement taking into consideration certain commercial and operational aspects.

The TEC has been a bulk licensee serving Mumbai while BSES and Bombay Electricity Supply and Transport (Best) are TEC's distributors. MSEB and TEC have agreed on standby charges based on 550 MVA standby demand. This is equivalent to the largest single machine capacity of 500 MW in TEC's system.

BSES was made to pay standby charges after the commissioning of its Dahanu thermal power project. The TEC had insisted on a commercial arrangement before agreeing to an inter-connection in Borivli, a suburb in north Mumbai.Moreover, BSES will have to fulfill another condition laid down by the MSEB, ie, it will have to make its own arrangement for the evacuation of power to the area of supply. Furthermore, BSES will have to make necessary arrangements to furnish real time data with respect to this power station to chief load despatch, MSEB Kalwa station for integrated control of the state grid. Furthermore, MSEB has made it clear that it will not purchase power from BSES. However, if after meeting its own power requirement for its area of supply, "there is any surplus power, the MSEB may consider absorbing it at its own discretion".

BSES will have to make arrangements for inter-connection with the grid at MSEB's Padghar sub station. Only power generated by BSES will be paid for at average fuel cost. If any power is drawn by BSES from the MSEB, the latter will charge the same at MSEB's tariff applicable to TEC from time to time.

BSES will be responsible for obtaining fuel linkage as MSEB will not recommend the latter's application for fuel linkage to the state or the central governments. MSEB has further said that the BSES would complete its 495 MW project in two phases as per the recommendations of the Kukde committee. Each phase would be commissioned after a one year gap, taking into account future demand in the licensed area.