CERC

(Deviation Settlement Mechanism

and related matters)
Regulations 2014

Power System Operation Corporation

Background
• Prior 2002
– No mechanism to handle real time energy imbalance
– Booking of energy drawal at the end of the month .. REA
• Real time imbalance settlement
– ABT Order .. 1999
– Frequency linked real time pricing mechanism
– Facilitates Grid Discipline
– Promotes Economy exchange/Merit order despatch
• Part of IEGC and Tariff Regulation.. Till 2008
• Separate UI Regulation
– Principle Regulation: Since 1.4.2009
– Subsequent amendments since 3.5.2010
– Next amendment implemented since 17th Sep 2012 (was to be implemented from
2nd April 2012 but implementation was stayed by Hon’ble Madras High Court.
Implemented since 14.9.12
• Deviation Settlement Mechanisms and related matters 2014… Applicable from
17.2.14

08/18/22 2
 A Typical Dispatch

Surpluses/Deficits - Balance supply and demand

Forecast Contingency Real-time

Day Ahead, Deviation

PX
Buy Buy
Sell Sell
MW

ADVANCE SHORT TERM BILATERAL CONTRACTS

FIRM SHARES IN ISGS

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hours
Regulation 5( UI charges)
• UI Charges payable for:
– Over drawal by buyers and beneficiaries
– Under injection by sellers and Generating stations

• UI Charges receivable for

– Under drawal by the buyers and beneficiaries
– Over injection by sellers and Generating stations

• Shall be worked out on the average frequency in 15 minutes time block

• Weekly UI:
– Period: Monday to Sunday
– Account to be issued : By every Tuesday

08/18/22 4
Definitions & Interpretations
• Beneficiary: means a person purchasing electricity
generated from a generating station

• Buyer means a person including beneficiary purchasing

electricity through a transaction.
– Deviation (for a Buyer) = Total Actual Drawal – Total
Scheduled Drawal
 Definitions & Interpretations
• Seller means a person including generating station
supplying electricity through a transaction.
– Deviation (for a seller) = Total Actual Injection – Total
Scheduled Generation

• All the generation / drawal are as measured by interface

meters

• Gaming means an intentional mis-declaration of declared

capacity for undue commercial gain
Objective & Scope
• Objective
– To maintain grid discipline and grid security as envisaged
under grid code through the commercial mechanism for
deviation settlement through drawal and injection of
electricity by the users of the Grid.
• Scope
– Applicable to all sellers & buyers with LTA / MTOA / STOA in
Inter-state transmission of electricity
• This Regulation is applicable with effect from
– 17th February 2014
• Compliance with instructions of Load Despatch Centre
– Not with standing anything specified in this Regulation, the
sellers and buyers shall strictly follow the instructions of the
Regional Load Despatch Centre on injection and drawal in
the interest of grid security and grid discipline
Deviation Charge
• Frequency Range :
– 49.85 Hz to 50.05 Hz
• Price Vector :
– For Frequency Step of 0.01 Hz
– 0 paise to 800 piase
• Deviation Charge for each 0.01 Hz step COMPUTED
• “(ca) “Area Clearing Price (ACP)” means the price of a
time block electricity contract established on the Power
Exchange after considering all valid purchase and sale
bids in particular area(s) after market splitting, i.e. dividing
the market across constrained transmission corridor(s).”
•
• “(ga) “Day Ahead Market (DAM)” means a market where
physical delivery of electricity occurs on the next day (T+1)
of the date of transaction (T) and is governed by the
Central Electricity Regulatory Commission (Power Market)
Regulations, 2010 (as amended from time to time), the
Rules and Bye-Laws of the Power Exchanges as
approved by the Commission.”
DSM REGULATIONS
WEF 1ST JAN,2019

PENTAYYA POLAGANI
ii. The maximum ceiling limit applicable for average Daily ACP
discovered in the DAM segment of Power Exchange at 50.00 Hz shall
be 800 Paise/kWh.

iii. Charges for deviation for each 0.01 Hz step shall be equivalent to
the Slope determined by joining the price at 'Not below 50.05 Hz' and
'identified price at 50.00 Hz' in the frequency range of 50.05-50.00 Hz,
and to the Slope determined by joining the 'price identified at 50.00 Hz'
and price at 'below 49.85 Hz' in frequency range 'below 50 Hz' to
'below 49.85 Hz'.

iv. The daily simple average ACP of the Power Exchange having a
market share of 80% or more in energy terms on a daily basis shall be
taken into consideration for linking to the DSM price vector. If no single
Power Exchange is having a market share of 80% or more, the
weighted average day-ahead price shall be used for linking to the DSM
price.
ix. The National Load Despatch Centre (NLDC) shall act as the Nodal Agency to
declare the daily DSM rates and shall display all relevant information on its website.”
3.2 Proviso (i) to clause (1) of Regulation 5 of the Principal Regulations shall be
substituted as under :-

CAP RATE AMENDED TO 303.04 PAISE/KWH FOR

ALL GENERATORS

“The Cap rate for the charges for deviation for the generating stations,
irrespective of the fuel type and whether the tariff of such generating
station is regulated by the Commission or not, shall not exceed 303.04
Paise/kWh.”
“(4)The linkage of deviation charges to
frequency may be reviewed by the
Commission, keeping in view the changing
power market conditions.”

3.9 In clause (5) of Regulation 5 of the

Principal Regulations, the words “RLNG
Rs. 8.24 / kWh sent out” shall be
substituted by “RLNG Rs . 8.00 / kWh sent
out”.
A new clause shall be added after clause (11) of Regulation 7 of the
Principal Regulations, as under :-

“(11a) The additional charge for violation of sign change stipulation shall
be leviable for each such violation during a day.

To illustrate, the change of sign should take place at least once after
every six time blocks. Accordingly, the entity, starting from time block
t1, should change the sign after time block t6. In case, sign change
does not take place immediately after time block t6, but takes place
from time block t7 upto time block t12, additional charge shall be levied
equivalent to one violation. In case, sign change does not take place
immediately after time block t12, but takes place from time block t13
upto time block t18, additional charge shall be levied equivalent to two
violations.

Provided that in case of run of river projects without pondage, payment

of additional charge for failure to adhere to sign change requirement
shall apply from such date as may be notified by the Commission.
Such generators shall, however, be required to follow the sign change
requirement and report to POSOCO the reasons for non-adherence to
NO CHANGE IN CASE OF
VOLUME LIMIT .BOTH FOR
RE RICH STATES AND
NON-RE RICH STATES
 Deviation Charges
For over drawal /underinjection of electricity Equivalent to 20% of the
above L MW and up to L+50 MW in a time Charge for Deviation
block corresponding to average
grid frequency of the time
block.
For over drawal of electricity above L+50 MW Equivalent to 40% of the
and up to L+100 MW in a time block Charge for Deviation
corresponding to average
grid frequency of the time
block.
For over drawal of electricity above L+100 MW Equivalent to 100% of the
in a time block Charge for Deviation
corresponding to average
grid frequency of the time
block

41
A. R. Abhyankar, IIT
Delhi (2016)
VOLUME CAP CEILING (L) FOR RE
RICH STATES

RE GEN UP TO 1000 MW : L
RE GEN BET 1000 AND 3000 MW: L+50
RE GEN > 3000 MW : L+100

VOLUME
:: CAP LOWER LIMIT FOR ALL
STATES : 48 MW
Deviation Charges
For under injection of electricity in excess of 12% and Equivalent to 20% of the Charge
upto 15% of the schedule in a time block for Deviation corresponding to
average grid frequency of the
time block
For under injection of electricity in excess of 15% and Equivalent to 40% of the Charge
upto 20% of the schedule in a time block for Deviation corresponding to
average grid frequency of the
time block
For under injection of electricity in excess of 20% of Equivalent to 100% of the Charge
the schedule in a time block for Deviation corresponding to
average grid frequency of the
time block.

When 12% of Schedule is less than or equal

to 150 MW
23
Deviation Charges
For over drawal /underinjection of electricity Equivalent to 20% of the
above L MW and up to L+50 MW in a time Charge for Deviation
block corresponding to average
grid frequency of the time
block.
For over drawal of electricity above L+50 MW Equivalent to 40% of the
and up to L+100 MW in a time block Charge for Deviation
corresponding to average
grid frequency of the time
block.
For over drawal of electricity above L+100 MW Equivalent to 100% of the
in a time block Charge for Deviation
corresponding to average
grid frequency of the time
block

41
AMENDMENT DATED
28TH MAY,2019
3.1 The following new sub-clauses after sub-clause (d) in clause (2) of
Regulation 5 of the Principal Regulations shall be inserted as under :-

“ (e) The charges for inter-regional deviation and for deviation in respect
of crossborder transactions shall be computed on the basis of the
unconstrained market clearing price in Day Ahead Market.

(f) The charges for deviation in respect of an entity falling in different bid
areas, shall be computed on the basis of the daily average ACP of the
bid area in which such entity has largest proportion of its demand. ”

3.2 Clause (3) of Regulation 5 of the Principal Regulations shall be

substituted as under :-

“ The Cap rate for the charges for deviation for the generating stations,
irrespective of the fuel type and whether the tariff of such generating
station is regulated by the Commission or not, shall not exceed 303.04
Paise/kWh.
“(4) In addition to Charges for Deviation as stipulated
under Regulation 5 of these regulations, Additional
Charge for Deviation shall be applicable for
overinjection/under-drawal of electricity for each time
block by a buyer/seller as the case may be when grid
frequency is ’50.10 Hz and above’ at the rates
equivalent to charges of deviation corresponding to the
grid frequency of ‘below 50.01 Hz but not below 50.0
Hz’, or cap rate for deviation of 303.04 Paise/kWh
whichever is lower."
"In the event of sustained deviation from schedule in one
direction (positive or negative) by any regional entity (buyer or
seller), such entity shall correct its position in the manner as
specified under clauses (a) and (b) of this Regulation.
(a) For the period up to 31.03.2020: If the sustained deviation
from schedule continues in one direction (positive or negative)
for 12 time blocks, the regional entity (buyer or seller), shall
correct its position by making the sign of its deviation from
schedule changed or by remaining in the range of +/- 20 MW
with reference to its schedule, at least once, latest by 13th
time block, such range being a subset of volume limit as
specified under Regulations 7(1) & 7(2) of these Regulations.

Provided that each violation of the requirement under this

clause shall attract an additional charge of 10% of the time
block DSM charge payable or receivable as the case may be.
(1) Illustration to 7(10)(a):-, For the period up to
31.03.2020:
(2) A regional entity having a sustained deviation from time blocks t1 to
t12, shall correct its position either by changing the sign of its
deviation (from positive to negative or negative to positive as the case
may be) or come back in the range of +/- 20 MW with reference to its
schedule latest by the end of time block t13. In case, such sign
change does not take place or it fails to come back in the range of +/-
20 MW by the end of time block t13, but such correction of position
takes place from time block t14 up to time block t24, then the
additional charge shall be levied equivalent to one violation. The
above violation shall attract an additional charge at the rate of 10% of
the time block DSM charge for t13. Further, in case, sign change does
not take place or it fails to come back to the range as aforesaid even
latest by the end of t25, but correction of position takes place from
time block t26 up to time block t36, then the additional charge shall be
levied equivalent to two violations. The above violation shall attract an
additional charge at the rate of 10% of the time block DSM for t13 and
t25 , and so on.
(b) For the period from 01.04.2020: If the sustained deviation from schedule
continues in one direction (positive or negative) for 6 time blocks, the regional
entity (buyer or seller), shall correct its position, by making the sign of its
deviation from schedule changed or by remaining in the range of +/-
Central Electricity Regulatory Commission (Deviation Settlement Mechanism
and related matters) (Fifth Amendment) Regulations, 2019 Page 4
20 MW with reference to its schedule, at least once, latest by 7th time block
such range being a subset of volume limit as specified under Regulations 7(1)
& 7(2) of these Regulations.

Provided that violation of the requirement under clause (b) of this Regulation
shall attract an additional charge as specified in the table below:

Provided further that counting of number of sign change violations under

clauses (a) & (b) of this Regulation shall start afresh at 00.00 Hrs. for each
day.
(2) Illustration to 7(10)(b):-, For the period from
01.04.2020:
A regional entity having a sustained deviation from time blocks t1
to t7, shall correct its position either by changing the sign of its
deviation (from positive to negative or negative to positive as the
case may be) or come back in the range of +/- 20 MW with
reference to its schedule latest by the end of time block t7. In
case, such sign change does not take place or it fails to come
back in the aforesaid range by the end of time block t7, but such
correction of position takes place from time block t8 up to time
block t12, then additional charge shall be levied equivalent to one
violation. Further, in case, sign change does not take place or it
fails to come back in the range as aforesaid latest by the end of
t13, but correction in position takes place from time block t14 up
to time block t18, then the additional charge shall be levied for
two violations and so on. The additional charge shall be at the
rate as specified in clause (b) of this Regulation.
3.1 The following new sub-clauses after sub-clause (d) in
clause (2) of Regulation 5 of the Principal Regulations shall
be inserted as under :- “
(e) The charges for inter-regional deviation and for
deviation in respect of cross-border transactions shall be
computed on the basis of the unconstrained market
clearing price in Day Ahead Market.
(f) The charges for deviation in respect of an entity
falling in different bid areas, shall be computed on the
basis of the daily average ACP of the bid area in which
such entity has largest proportion of its demand.” 3.2
Clause (3) of Regulation 5 of the Principal Regulations shall
be substituted as under :-
“The Cap rate for the charges for deviation for the
generating stations, irrespective of the fuel type and
whether the tariff of such generating station is regulated
by the Commission or not, shall not exceed 303.04
Paise/kWh.”
Provided also that payment of additional charge for failure to
adhere to sign change requirement as specified under
clauses (a) & (b) of this regulation shall not be applicable to:

a.renewable energy generators which are regional entities

b.Run of river projects without pondage c. any infirm injection
of power by a generating station prior to CoD of a unit during
testing and commissioning activities, in accordance with the
Connectivity Regulations.
c. any drawal of power by a generating station for the start-
up activities of a unit.
d. any inter-regional deviations.
e. forced outage of a generating station in case of collective
transactions on Power Exchanges.
DSM Mechanism

10-05-2012 STF-SG 36
DSM Mechanism…

10-05-2012 STF-SG 37
DSM Mechanism…

10-05-2012 STF-SG 38
 RE pays for under‐ RE paid for over‐
@ 130% PPA
injection
@ 120% PPA @ 110% PPA @PPA
injection
@PPA @ 90% PPA @ 80% PPA @ 70% PPA

Error definition: [(Actual generation – Scheduled generation)/Available

Capacity] x 100

39
 Deviation Settlement within tolerance band (+/‐ 15%):
 Receipt from/payment to pool @PPA rate (i.e. in
effect, payment as per actuals)
 Beyond 15%, a gradient band for deviation charges is
as
follows:
Abs Error (% of Deviation Charge
AvC) 10% of PPA rate
15%‐25% 20% of PPA rate
25%‐35% 30% of PPA rate
16 revisions allowed, one for every one‐and‐half‐hour block.
 >35%

40
Deviation Charges for Infirm Power Injection
• Period of Injection: Up to 6 months before CoD or as
extended in CERC(Connectivity, LTA, MTOA) Regulations
• Cap Rate:
Type of Fuel used for generation Deviation Charge
INR per kWh
Domestic Coal / Lignite / Hydro 1.78
APM Gas 2.82

Imported Coal 3.03

RLNG 8.00

• Applicability: To all type of generating stations who is

Regional Entity
• No Deviation limit applicable for injection of infirm power /
Other mandatory Provisions
• Sustained deviation in one direction (either + or -) shall not be
more than for 12 time blocks. It has to be made to (+ve to –ve
or –ve to +ve) at least once in 13th time block.
• Payment of charges & additional charges for Deviation / limit
additional charges shall be levied without prejudice to any
action that may be considered appropriate by commission
under section 142 of the Act for contravention of limit of OD /
UI / UD / OI and sustained deviation beyond 12 time blocks.
• RLDC shall on monthly basis prepare & publish Deviation
accounts on its website specifying the quantum of OD / UI and
corresponding charges payable / receivable for each buyer &
seller all the time blocks when frequency was 49.9Hz & above
and below 49.9Hz separately.
Accounting of Charges for Deviation
• All the Regional Entities shall furnish the meter data by
Tuesday noon of the following week as per IEGC 6.4.21
• RLDC shall provide the processed Deviation data of
Regional Entities on Thursday for the previous week to
RPC secretariat.
• RPC secretariat shall issue the statement of Deviation
Charges & additional charges on the following Tuesday, for
7 days period ending on the penultimate Sunday midnight.
• RPC secretariat shall maintain separate books of accounts
for
– Deviation charges (Principle Component)
– Additional Charges for Deviation (Principle Component)
– Interest Component for Late payment
Regional Deviation Pool Account Fund
• All payments on account of Deviation charges & additional
charges and interest if any shall be credited to the fund
called “Regional Deviation Pool Account Fund” which shall
be maintained by concerned RLDC till further notification
by CERC
• Apportionment of payment received in Regional Deviation
Pool Account Fund shall be as follows:
– First towards any cost / expenses incurred on recovery of
charges for deviation]
– Next towards over dues or penal interest, if applicable
– Next towards normal interest
– Lastly towards charges for deviation & additional charges for
deviation
Schedule of payment of charges for Deviation
• Payment of charges for Deviation shall have High Priority
• The Regional Entity shall pay the charges for deviation with in 10
(Ten) days of issue of statement by RPC secretariat
• Any delay beyond 12 (Twelve) days shall attract simple interest @
0.04% per day of delay.
• The liability to pay interest for the delay remain till interest is not
paid, irrespective of the fact the Regional Entity may have to
receive payments from Regional Deviation Pool Account
• RLDC shall disburse the amount to the Receivable Regional
Entities within 2 (Two) working days of receipt of money to the
Regional Deviation Pool Account
• If the amount available in Regional Deviation Pool Account is
insufficient, disbursement will be made on pro-rata basis
• Any surplus amount in the Regional Deviation Pool Account on
the last day of the month, shall be transferred to “Power System
Development Fund” in the first week of next month
Letter of Credit requirement
• LC value shall be 110% of average weekly liability for
deviations during the last year
• If current weekly deviation charges becomes 50% more
than the LC value, than LC value shall be revised to 110%
of the current weekly deviation charges
• In case of default in payment of deviation & additional
deviation charges in current Financial year, LC value shall
be 110% of default value or the existing LC value which
ever is high & to be submitted within a fortnight.
• RLDC shall be entitled to encash LC if the payment does
not received within 12 days of issue of statement by RPC
& fresh LC shall be opened within 3 days of encashment.
Other Regulatory Provisions
• Power to Relax
– CERC has the power to relax this Regulation by its own or on
application of interested person
• Power to issue Directions
– In case of any difficulty arises during implementation of this
Regulation, CERC has the power to issue directions by its own
or on application of affected party
• Repeal and Savings: On commencement of this Regulation,
– CERC (UI and related matters) Regulations 2009 shall stand
repealed.
– Wherever CERC (UI and related matters) Regulations 2009
referred shall be deemed replaced with CERC (Deviation
Settlement Mechanism and related matters) Regulations 2013.
– Regional UI Pool account continue to operate till the settlement
of past accounts and transfer of balance amount to PSDF