The state government issued a necessary stay order at around 2 pm, just one and a half hour before the MERC was to hear a petition filed by BSES demanding a relief from the payment of standby charges of nearly Rs 181.5 crore to Tata Power. According to the state government's order dated March 22, 2000, both Tata Power and BSES were directed to equally share arrears of Rs 363 crore toward standby charges. BSES was to pay Rs 181.5 crore standby charges for the 250 KVA back-up facility provided by Tata Power.

The government's move has come in the wake of its decision to grant power under section 22 (2) (n) of the State Electricity Regulatory Commission Act, to decide disputes between utilities and adjudicate. Interestingly, the state government had directed the BSES to refer the standby charges issue to the MERC, and accordingly BSES had filed its petition requesting an adinterim stay, prohibiting Tata Power to refrain from disconnection of its back up facility to BSES' interconnection located at Borivli in north Mumbai.

The BSES had alleged that the March 22, 2000 order was quite illegal.However, following the state government's order, the MERC chairman P Subrahmanian during the hearing on BSES' petition before admission, said that the question of disconnection by Tata Power does not arise as there is no tearing urgency in the matter.

The MERC members Mr Venkat Chary and Mr Jayant Deo sought explanation from BSES on admitting its petition and its apprehension over the disconnection.Responding to the MERC queries, BSES senior council KS Cooper said that if Tata Power withdraws its threat, the company had no reason to refer the case to MERC. However, over the standby charges, BSES maintained that it had religiously paid its share to the Tatas and an additional amount of Rs 30 crore recently, without any "prejudice and in good faith."

BSES pleaded that the Tatas are charging BSES more as standby charges, despite their being included in the demand charge agreement.

MERC member Mr Venkat Chary proposed that till the outcome of the hearing was decided, standby charges amounting to nearly Rs 274 crore be set aside in a new bank account to be paid to MSEB only after the matter was resolved. MERC members asked BSES to contribute toward this account. However, it was opposed by BSES on the grounds that it would be impossible for it to do so.Similarly, MSEB chairman Vinay Bansal prayed for an access to such bank account during the hearing as MSEB was in need of cash. He said that the MSEB has been a sufferer as it has been losing Rs 56 lakh a day toward standby charges and added that Tata Power had not stopped the payment toward standby charges for 1999-00 from April this year.

The regulator has adjourned the case for Dec 6 to hear the arguments from Tata Power, MSEB, and two consumer rights organisations - Mumbai Grahak Panchayat and Prayas.