The Meghalaya State Electricity Regulatory Commission (MSERC) has started suo motu proceedings to determine the generic tariff for small hydro power projects in the state for the financial year 2026-27. The order was issued on June 18, 2026, under the leadership of Chairman Shri Chandan Kumar Mondol. The proposed tariff will apply to small hydro projects with capacities ranging from 5 MW to 25 MW, as Meghalaya is expected to witness the development of several such projects in the coming years.
According to the Commission, the proposed levelized generic tariff has been fixed at Rs. 6.02 per kWh for the entire operational life of these projects. Under the applicable regulations, a small hydro project is defined as a hydro power station with an installed capacity of up to 25 MW at a single location. The useful life of these projects has been set at 40 years from the date of commercial operation. The current control period for the tariff regulations will continue until March 31, 2028.
The Commission has proposed a single-part tariff structure that combines all major fixed cost components into one tariff. These include return on equity, interest on loan, depreciation, interest on working capital, and operation and maintenance (O&M) expenses.
For tariff calculation, MSERC has fixed the normative capital cost at Rs. 1,200 lakh per MW. The financing structure assumes a debt-equity ratio of 70:30, resulting in a normative debt of Rs. 840 lakh per MW and equity of Rs. 360 lakh per MW. The interest rate on loans has been considered at 10.71%, which is based on the State Bank of India’s average one-year MCLR plus 200 basis points.
The loan repayment period has been set at 15 years. During this period, depreciation will be charged at 4.67% annually. For the remaining 25 years of the project life, depreciation will reduce to 0.80% per year. The normative return on equity has been fixed at 15%, which is grossed up to 18.18% for the first 20 years and 23.06% for the remaining period based on applicable tax rates.
The operational assumptions include a net Capacity Utilization Factor (CUF) of 45% and auxiliary consumption of 1%. For FY 2026-27, the baseline O&M expense has been calculated at Rs. 40.91 lakh per MW, with an annual escalation rate of 5.25%.
The Commission has also stated that any excess generation beyond the approved capacity factor can be sold in the market, provided local consumer beneficiaries are given the first right of refusal. MSERC has invited comments, suggestions, and objections from stakeholders on the proposed tariff before finalizing the order.
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