CERC Announces Deviation Settlement Mechanism Regulations 2024

The Central Electricity Regulatory Commission (CERC) has issued a new regulation aimed at managing the deviation from the scheduled drawal or injection of electricity by grid-connected entities. This regulation, titled the “Central Electricity Regulatory Commission (Deviation Settlement Mechanism and Related Matters) Regulations, 2024,” establishes a framework to ensure the reliability, security, and stability of the power grid. The regulation mandates that all grid users, including regional entities and those involved in inter-state electricity transactions, adhere to their scheduled electricity usage to maintain grid discipline.

The regulation outlines specific rules for computing and managing deviations, which are defined as the difference between the actual and scheduled drawal or injection of electricity in a given time block. For sellers of electricity, the deviation is calculated based on the actual injection minus the scheduled generation. For buyers, it is the difference between the actual and scheduled drawal. The regulation distinguishes between different types of sellers, including those generating electricity from wind, solar, or hybrid sources, as well as those using municipal solid waste.

Deviation charges are structured to incentivize adherence to schedules. The regulation introduces a “Normal Rate of Charges for Deviation” (NR), which is calculated based on the highest value among the weighted average Area Clearing Price (ACP) of the Integrated-Day Ahead Market, the Real-Time Market, or a combination of these markets along with Ancillary Service Charges. These rates are designed to reflect the cost of balancing the grid when deviations occur.

The regulation further categorizes charges based on the extent of deviation and grid frequency. For instance, if a seller’s deviation is within a specified limit and the grid frequency is within a certain band, charges are applied at the NR. However, if the deviation exceeds the limit or the frequency falls outside the band, higher charges may be imposed. Special provisions are made for Run-of-River (RoR) generating stations and municipal solid waste-based stations, where charges are not directly linked to grid frequency but are based on a percentage of the normal rate or the contract rate.

To manage deviations, the regulation encourages the use of Ancillary Services, which are additional services that help maintain grid stability. These services are deployed by Load Despatch Centres at the national, regional, or state levels, and the associated charges are recovered through the deviation settlement mechanism.

Overall, the regulation aims to promote grid discipline by holding participants accountable for deviations from their scheduled electricity use. By implementing a robust commercial mechanism for settling deviations, the CERC seeks to enhance the security and stability of the power grid, ensuring that electricity supply and demand are balanced in real-time. The regulation is expected to contribute to the efficient operation of the electricity market, reducing the risk of grid disturbances and blackouts caused by unscheduled power flows.