"This is a serious loss of revenue for MSEB," its chairman Vinay Bansal said in a letter addressed to the state energy secretary on December 27, 2000. The letter was submitted by MSEB counsel Shyan Diwan to the division bench during a hearing on the Tata Power petition challenging the interim order on payment of standby charges by the Maharashtra Electricity Regulatory Commission (MERC).

Simultaneously, MSEB said that by the state government's silence on additional standby charges for 495 mw Saphale project by BSES, it "fails to seek additional compensation for MSEB and Tata Power from BSES for loss of cross subsidy/potential revenue."

Mr Bansal reiterated that the government had achieved a finality on the quantum and rate for standby charges payable by the BSES through its March 22, 2000 order. The representation of BSES were duly considered two-three times and after application of mind on October 4, 2000, the state government affirmed the decision to charge standby charges unequivocally. "This decision protected the MSEB's commercial interest since we were to receive Rs 156 core or more per year," he added.

Mr Bansal had pointed out that the government had informed Tata Power and BSES on March 22, 2000 that the latter would have to pay standby charges for 1999-00 at Rs 550 per kva per month for 275 mva. The BSES representation was again rejected by the state government on June 6, 2000 and on August 5, 2000. The state government after a crucial meeting in this regard with the minister of power issued an order on October 4 to BSES stating that "the decision of March 22, 2000 had to be carried out, otherwise in one week licence is to be cancelled."

MSEB counsel also submitted the letter addressed by the then state energy secretary UK Mukhopadhyay to former MSEB chairman YS Bhave on October 27 on clearance under section 44 for BSES project at Saphale. Mr Mukhopadhyay had directed that "MSEB may now issue consent letter to the BSES project under section 44 of the Electricity Supply Act, 1948 subject to the modification of the condition referred in the letter of MSEB to BSES on July 18, 2000." He added that the reference to the fact that the issue regarding the standby charges is being referred to the MERC for final decision needs to be brought on record for this purpose.

Furthermore, Mr Bansal also showed the lacunae in the state government's directives to the board to issue a "conditional" no objection certificate to BSES for its Saphale project. "Meantime, it will be necessary for the MSEB to amend or withdraw the no objection to BSES for Saphale project granted under section 44 of the Electricity (Supply) Act in its existing form, because it is against MSEB's commercial interests."