Central Electricity Regulatory

Commission
(Deviation Settlement Mechanism)

By
Sanjay Satyajeet

NTPC School of Business 10-Jul-19 1

 Objective Of The Government:

These
regulations
is the two
Major Grid So that,CERC
major grid
disturbance on 17 Feb,
On 30 and failures on
occurred in The Govt. 2014 has
31 July 30th and
July, 2012 felt the need replaced the
2012, two 31st July
resulting strengthen UIRegulation
large-scale 2012, which
into the Grid 2009 with
power forced
complete Security and Deviation
blackouts regulatory
black out in improve grid settlement
occurred in bodies to
four regions stability mechanism
India take step to
of the regulation
stop such
country 2014
incident to
happen
again

NTPC School of Business 10-Jul-19 2

 Regulatory Developments related to DSM regime

• CERC has started the implementation of DSM Regulations from February, 2014.
• Deviation Settlement Mechanism (DSM) and related matters and their amd.

CERC DSM CERC DSM CERC DSM

Regulation, 2nd Amd 4th Amd
2014 Regulation Regulation

Feb,2014 Dec,2014 Aug,2015 May,2016 Jan,2019

CERC DSM CERC DSM
1st Amd 3rd Amd
Regulation Regulation

NTPC School of Business 10-Jul-19 3

 Provisions Made In The DSM
Regulation:
 Redefined frequency range and rates.

 Volume limits and deviation limits for generator and buyer

 Cap Rate applicable

 Charges & Additional Charges

 Methodology for calculation of deviation charges.

NTPC School of Business 10-Jul-19 4

 Deviation Settlement Mechanism 2014
 Objective of DSM is to enhance grid discipline and grid security.
 Volume Limits have been implemented in the present regulation Now there are
volume limits too which are 12% of schedule or 150 MW whichever is less.
 Permissible deviation shall be applicable at the inter-State boundary of the
respective State.
 Cap Rates are redefined in the present regulation, now the cap rate for generating
stations using fuel which comes under APM is reduced to 303.04 Paise/Kwh

NTPC School of Business 10-Jul-19 5

 DSM Preliminary Process
 Each day of 24 hours starting from 00.00 hours be divided into 96 time
blocks of 15 minutes each
 Each generating station is to make advance declaration of its capacity for
generation in terms of MWh delivery ex-bus for each time block of the
next day
 Based on the above declaration, concerned RLDC shall communicate to
the various beneficiaries their respective shares of the available
capability
 On monthly basis, RLDC Should prepare and publish on its website the
records of the Deviation Accounts, specifying the quantum of over-
drawl/under-injection and corresponding amount of Charges for Deviation
payable or receivable for each buyer and seller for all the time-blocks
when grid frequency was "49.90Hz and above" and "below 49.90" Hz
separately.”

NTPC School of Business 10-Jul-19 6

 From Buyer /Seller Point Of View:
 No over drawal permissible when grid frequency is below 49.70 Hz.
 Over drawal possible only when grid frequency is “49.70 Hz and above”.
 No under injection permissible when grid frequency is below 49.70 Hz.
 No over injection permissible when grid frequency is 50.10 Hz and
above.
 No volume limit for infirm power.
 No volume limit for drawal before COD when grid frequency is 49.7 Hz
and above.

NTPC School of Business 10-Jul-19 7

 Regulation 5.Deviation Charges
 Deviation charge for Under drawal and Over-Injection for excess
of Permissible Deviation to be 0 except infirm power.
 Charges receivable for under drawl by buyer and over injection by seller, while charges
are payable for over drawl by buyer and under injection by seller.
 Charges for each step increment of frequency is 35.60 paise/unit in the frequency
range of 50.05-50.00 Hz and 20.84 paise/unit in frequency range between 50.00Hz
to not below 49.70 Hz.
 Resulting in charges at 50.05Hz @ 0.00 paise/unit, at 50.04Hz @ 35.60
till 50.00 Hz @ 178 paise/unit and then from 49.99Hz onwards charges will increase
at a rate of 20.84 till 49.7Hz @ 824.04 paise/unit.

NTPC School of Business 10-Jul-19 8

 Additional Charge For Deviation:
 If 12% of schedule<Under injection/Over drawal <=15% of schedule and

150MW< Under injection/Over drawal <=200MW then Additional Charge For

Deviation would be 20% of deviation price vector in the time block for all, except

for stations under APM.

 15% of schedule< Under injection/Over drawal <=20% of schedule and

200MW< Under injection/Over drawal <=250MW 200MW then Additional Charge

For Deviation would be 20% of deviation price vector in the time block for all, except

for stations under APM.

NTPC School of Business 10-Jul-19 9

 20% of schedule< Under injection/Over drawal and 250MW< Under injection/Over

drawal 200MW then Additional Charge For Deviation would be 20% of deviation

price vector in the time block for all, except for stations under APM.

 Additional Charges for Deviation shall not be applicable for net over

drawls by a region as a whole from other regions

NTPC School of Business 10-Jul-19 10

Role Of RPC:
 Calculate Total Actual drawal/injection, Schedule drawal/injection and
Deviation charges including additional Deviation charges for each regional
entity for each day of the week
 Calculate Total Actual drawal/injection, Schedule drawal/injection and
Deviation charges including additional Deviation charges for each regional
entity for entire week
 RPCs to prepare and issue statement of Deviation including Additional Charges
for Deviation by every Tuesday for 7 day period ending on penultimate Sunday
 All payments including interest , if any, to be credited to “Regional Deviation
Pool Account Fund” and Fund to be operated and maintained by RLDCs

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 Other Important Clauses:
 Any Additional Charge for Deviation collected from a regional entity shall
be retained in the “Regional Deviation Pool Account Fund” of the
concerned region where the regional entity is located
 Any surplus amount in the Deviation Pool Account Fund on the last day of
the month shall be transferred to PSDF in first week of the next month
 In the event of sustained deviation from schedule in one direction (positive
or negative) by any regional entity, such regional entity (buyer or seller)
shall have to make sign of their deviation from schedule changed, at least
once, after every 12 time block
 To illustrate, if a regional entity has positive/negative deviation from
schedule from 07.30 hrs to 10.30 hrs, sign of its deviation from schedule
shall be changed in the 13th time block i.e. 10.30 to 10.45 hrs from
positive to negative or negative to positive as the case may be

NTPC School of Business 10-Jul-19 12

 Other Important Clauses:
 Any Additional Charge for Deviation collected from a regional entity shall
be retained in the “Regional Deviation Pool Account Fund” of the
concerned region where the regional entity is located
 Any surplus amount in the Deviation Pool Account Fund on the last day of
the month shall be transferred to PSDF in first week of the next month
 In the event of sustained deviation from schedule in one direction
(positive or negative) by any regional entity, such regional entity (buyer
or seller) shall have to make sign of their deviation from schedule
changed, at least once, after every 12 time blocks
 To illustrate, if a regional entity has positive/negative deviation from
schedule from 07.30 hrs to 10.30 hrs, sign of its deviation from schedule
shall be changed in the 13th time block i.e. 10.30 to 10.45 hrs from
positive to negative or negative to positive as the case may be

NTPC School of Business 10-Jul-19 13

 Schedule of Payments
 Payment to be made within 10 days of issue of statement by RPC
 For delay of more than 2 days i.e beyond 12 days of issue of statement by
RPC, simple interest @ 0.04% to be levied for each day of delay
 Payments to receivable entities to be made within 2 working days of
receipt of payments in the fund
 In the event of delay of payment by Payable entities, the receivable
entities shall be paid from the balance in the fund. If sufficient fund not
there, payment to be made on pro rata basis

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 Payments Not Received Within 12 Days
 Utilities defaulting at any time in previous FY shall open an LC equal to
110% of its average payable weekly liability in favour of the concerned
RLDC within a fortnight of date these regulations come into force
 Utilities defaulting at any time in current FY shall open an LC equal to
110% of its weekly outstanding liability in favour of the concerned RLDC
within a fortnight from the due date of payment
 LC to be increased to 110% of the payable weekly liability for Deviation
in any week during the year, if it exceeds the previous LC amount by
more than 50%
 For payments not received within 12 days, RLDC entitled to encash the
LC to the extent of default which has be recouped within 3 days

NTPC School of Business 10-Jul-19 15

 Thank you

NTPC School of Business 10-Jul-19 16