The Punjab State Electricity Regulatory Commission (PSERC) has revised the tariff for Malwa Power Pvt Ltd's (MPPL) 6 MW biomass power plant in Muktsar, Punjab, to ₹5.224 per kWh for an extended 10-year term. According to reports from The Hindu BusinessLine, this represents a 49% increase from the interim rate of ₹3.50 per kWh that Punjab State Power Corporation Limited (PSPCL) had been paying. The tariff is structured into two components: Fixed Tariff: ₹0.97 per kWh and Variable Tariff: ₹4.254 per kWh, with the variable component escalating at 5% annually. This order, dated March 27, 2026, determines the tariff for the extended operational period of the plant, marking an important milestone after the expiry of its initial 20-year Power Purchase Agreement that expired on April 26, 2025.
The revised rate triggers a retrospective recovery mechanism that benefits the company significantly. As reported by The Hindu BusinessLine, between May 2025 and February 2026, MPPL supplied approximately 3.37 crore units at the lower interim rate, entitling the company to recover a differential of approximately ₹5.80 crore. For FY 2026-27, the company projects power generation revenue of ₹24.31 crore from the plant, assuming 85% plant load factor. Combined with its 72,000 MT per annum Biomass Pellet Plant projected to generate ₹23.40 crore annually at 50% capacity, MPPL's total estimated revenue stands at approximately ₹47.71 crore. The higher tariff ensures better cash flow predictability over the extended project life and strengthens the financial sustainability of the biomass project, which might otherwise face pressure due to rising fuel and operational costs.
The favourable tariff order has positively impacted DEE Development Engineers' stock performance. According to The Hindu BusinessLine, shares of DEE Development Engineers rose 4.05% to ₹279.75 on Wednesday following the disclosure of the tariff order. The plant, originally commissioned on April 27, 2005, was under a 20-year Power Purchase Agreement that expired in April 2025, making this tariff revision particularly significant for the company's biomass operations. The 5% annual escalation in variable tariff further ensures that the project remains protected against inflationary pressures, especially in fuel procurement, while the 5% annual escalation provides protection against rising input costs such as biomass fuel.
Despite the positive tariff revision, the company has raised concerns about certain aspects of the new structure and faces ongoing regulatory uncertainty. As reported by The Hindu BusinessLine, management contends that the PSERC applied outdated CERC regulations from 2012 rather than the 2024 norms, which prescribe O&M charges of ₹54.70 lakh per MW. The company has flagged reservations about the fixed cost component of the tariff, which was set at ₹0.97 per kWh, and is evaluating an appeal before the Appellate Tribunal for Electricity (APTEL) in New Delhi to seek an upward revision. The tariff determination process was influenced by proceedings before APTEL in Appeal No. 336 of 2025, where APTEL confirmed PSERC's jurisdiction and directed both parties to approach PSERC for fresh tariff determination. However, the matter remains subject to acceptance by both parties before APTEL, with DEE Development Engineers currently evaluating the order and may take appropriate legal steps, including filing an appeal, if required.
