The Central Electricity Regulatory Commission (CERC) has proposed a major revision to congestion charge rates for inter-state electricity transmission, marking the first significant update to this framework in more than fifteen years. The move reflects the changing dynamics of India’s power sector and aims to strengthen grid discipline and reliability.
Congestion charges were originally introduced in 2009 as a commercial mechanism to manage grid stability. These charges discourage utilities and power generators from overdrawing or under-injecting electricity beyond the available transmission capacity. Under the earlier framework set in 2010, the congestion charge was fixed at a flat rate of Rs 5.45 per unit. This rate was derived from the difference between the maximum Unscheduled Interchange (UI) charge and the rate at a system frequency of 50 Hz, serving as a deterrent against grid stress.
However, the Commission observed that India’s power sector has evolved significantly since then. The country has seen rapid growth in renewable energy capacity, along with the introduction of advanced market mechanisms such as the Real Time Market (RTM). These developments have changed how electricity is generated, traded, and consumed, making the existing congestion pricing structure outdated.
During the consultation process, several stakeholders, including NTPC Green Energy Limited and ASSOCHAM, raised concerns about the applicability of the old system. They pointed out that renewable energy projects, which are classified as “must-run” and depend on weather conditions, face challenges in accurately forecasting generation. These stakeholders suggested that such projects should be exempt from congestion charges. ASSOCHAM also emphasized that the transition from the Unscheduled Interchange mechanism to the Deviation Settlement Mechanism (DSM) requires an updated regulatory approach.
Despite these concerns, the Commission has decided not to exempt renewable energy generators from congestion charges. It maintained that grid security is a shared responsibility and that all participants, regardless of their energy source, must adhere to operational discipline to ensure system reliability.
The proposed framework introduces a dynamic pricing mechanism instead of a fixed charge. Under this new approach, congestion charges will be calculated as 1.5 times the applicable DSM-related rate, which could be the Reference Charge Rate, Contract Rate, or the Normal Rate of Charges for Deviation. To maintain stability and avoid excessive volatility, the Commission has proposed a minimum charge of Rs 3 per unit and a maximum cap of Rs 10 per unit.
At the same time, certain exemptions will continue. For instance, if congestion arises due to forced outages of transmission lines after schedules have already been finalized, affected entities may not be penalized.
The Commission has invited comments and suggestions from stakeholders on the proposed changes. Feedback can be submitted until April 6, 2026, after which the CERC will conduct a public hearing before finalizing the revised congestion charge framework.
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