MERC, during a hearing on the MSEB's proposal of fuel and other cost adjustment charges (FOCA), directed the MSEB to submit its communication with the DPC over the Rs 400-crore penalty and related papers.

MERC member Jayant Deo told MSEB officials that the commission had learnt about MSEB's decision to slap Rs 400-crore penalty (rebate) through newspapers and it would like to know the exact situation in this regard.

"How are you going to recover this amount and will it be covered under the fuel cost adjustment?" he queried. The MSEB team, led by its accounts member A Krishna Rao, assured that it would make an affidavit in this regard. MSEB officials said that the DPC has disputed the penalty (rebate) amount and thus it would be taken up at the Disputes Resolution Panel comprising Enron India managing director K Wade Cline and Mr Krishna Rao, at its meeting scheduled for March 16.

"If the matter is not resolved at the Disputes Resolution Panel, Enron may take it up at international arbitration," MSEB officials told the MERC.

Meanwhile, MSEB was grilled by MERC members Jayat Deo and Venkat Chary over its proposal of FOCA charges. Mr Deo wanted to know whether the consumers would have to purchase power at the astronomical cost of Rs 10 per unit after the commissioning of the Dabhol phase-II, Reliance Patalganga and Bhadravati projects. MSEB said its FOCA formula has been prepared to capture the changes in all costs borne by the MSEB (vis-a-vis the costs expected in tariff determination) that are beyond its control.