The Central Electricity Regulatory Commission (CERC) has issued the Central Electricity Regulatory Commission (Deviation Settlement Mechanism and Related Matters) Regulations, 2024.

These regulations seek to ensure, through a commercial mechanism, that grid users do not deviate from their schedule of drawal and injection of electricity in the interest of security and stability of the grid.

These regulations will apply to all grid-connected regional entities and other entities engaged in the inter-state purchase and sale of electricity.

Computation of Deviation

Deviation in a time block for general sellers

• Deviation-general seller (DGS) (in MWh) = [(Actual injection in MWh) – (Scheduled generation in MWh)]
• Deviation-general seller (DGS) (in %) = 100 x [(Actual injection in MWh) – (Scheduled generation in MWh)] / [(Scheduled generation in MWh)]

Deviation in a time block for wind–solar (WS) sellers

From the date of commencement of these regulations to March 31, 2026

• Deviation-WS seller (DWS) (in MWh) = [(Actual Injection in MWh) – (Scheduled generation in MWh)]
• Deviation-WS seller (DWS) (in %) = 100 x [(Actual Injection in MWh) – (Scheduled generation in MWh)] / [(Available Capacity)]

From April 1, 2026

• Deviation-WS seller (DWS) (in MWh) = [(Actual Injection in MWh) – (Scheduled generation in MWh)]
• Deviation-WS seller (DWS) (in %) = 100 x [(Actual Injection in MWh) – (Scheduled generation in MWh)] / [(X% of Available Capacity) + (100-X) % of Scheduled Generation)

The Commission will stipulate’ X’ through separate orders after public consultation.

Deviation in a time block for buyers

• Deviation- buyer (DBUY) (in MWh) = [(Actual drawal in MWh) – (Scheduled drawal in MWh)]
• Deviation- buyer (DBUY) (in %) = 100 x [(Actual drawal in MWh) – (Scheduled drawal in MWh)] / [(Scheduled drawal in MWh)]

Normal Rate of Charges for Deviations

The Normal Rate (NR) of charges for deviation for a particular time block will be the highest of A, B or C, where A, B and C are as follows:

• A is the weighted average Area Clearing Price (ACP) (in paise/kWh) of the Integrated-Day Ahead Market segments of all the power exchanges
• B is the weighted average ACP (in paise /kWh) of the Real-Time Market segments of all the power exchanges
• C is the sum of:

1/3 [ Weighted average ACP (in paise/kWh) of the Integrated-Day Ahead Market segments of all the Power Exchanges]

1/3 [ Weighted average ACP (in paise/kWh) of the Real-Time Market segments of all the Power Exchanges]

1/3 [Ancillary Service Charge (in paise/kWh) computed based on the total quantum of Ancillary Services (SRAS UP and TRAS UP) deployed and the net charges payable to the Ancillary Service Providers for all the Regions]

In case of ACP’s non-availability for any time block on a given day, ACP will be considered for the corresponding time block of the last available day.

Charges for Deviation

The deviation charges for a standalone Energy Storage System (ESS) are aligned with those applicable to a general seller, except Run-of-River generating stations and generating stations based on municipal solid waste. When an ESS operates in charging mode, deviations are handled distinctly: overdrawal is treated as under-injection, and under-drawal is treated as over-injection, with charges settled accordingly.

The deviation charges and computation formulas for standalone ESS functioning as pumped hydro storage projects will mirror those for a WS seller based on solar resources. This arrangement is effective from the initiation of the regulations until March 31, 2026.

In the case of a WS seller with an ESS connected at the same interconnection point, the deviation charges vary based on the operating condition.

When the solar, wind, or hybrid generating station injects power, the applicable charges are those for a WS seller of the respective category.

When only the ESS injects power, the charges applied are those for a standalone ESS.

For drawal by the ESS based on a drawal schedule from the grid, the charges are also those applicable to a standalone ESS.

There will be no charges for deviation when injecting infirm power. However, if infirm power is scheduled after a trial run as specified in the Grid Code, any deviation from the scheduled infirm power will incur charges applicable to a general seller or a WS seller.

For drawing start-up power before the Commercial Operation Date of a generating unit or for drawing power to run auxiliaries during the shutdown of a generating station, the deviation charges will be based on the reference charge rate, the contract rate, or if neither is available, the weighted average ACP of the Day Ahead Market segments across all Power Exchanges for the respective time block.

Inter-regional deviations caused by over-drawal, under-drawal, over-injection, or under-injection will be computed notionally at the normal deviation charge rate. For cross-border transactions, deviations caused by over-drawal, under-drawal, over-injection, or under-injection will be charged or paid at the normal rate, subject to volume limits applicable to the respective category of seller or buyer, excluding RE-rich or Super RE-rich States.

In the event of a forced outage or partial outage of a seller, deviation charges will be based on the reference charge rate for up to eight time blocks or until the schedule is revised, whichever is sooner.

For a seller whose bids are cleared in the High Price Day Ahead Market (HP-DAM), the reference charge rate for deviation due to under-injection for the power sold through HP-DAM will be the weighted average ACP of the HP-DAM Market segments across all Power Exchanges for that time block.

If a state has a net injection at the regional periphery, the deviation charges for that state will be the same as those applicable to a buyer.

Charges for Deviation and Ancillary Service Pool Account

Every Thursday, Regional Load Despatch Centers must provide deviation data, as per Regulation 6, for the previous week ending on Sunday midnight to the Secretariat of the respective Regional Power Committees. Upon receiving this data, the Secretariat will prepare and issue the statement of deviation charges for the previous week to all regional entities by Tuesday. Note that intra-state entity DSM accounting will not be performed at the regional level.

The Secretariat of the Regional Power Committees must maintain separate books for the principal and interest components of deviation charges. The respective Regional Load Despatch Center will maintain and operate a Deviation and Ancillary Service Pool Account. The National Load Despatch Centre (NLDC) will formulate a detailed procedure for this account within a year of the regulations’ commencement, subject to the Commission’s approval.

The Deviation and Ancillary Service Pool Account will receive credits from:

• Payments for deviation charges and late payment surcharges
• Payments from SRAS Providers for SRAS-Down, TRAS Providers for TRAS-Down, and other charges as notified by the Commission

The account will be charged for:

• Payments to sellers for over-injection and to buyers for under-drawal
• Costs of dispatched SRAS-Up and TRAS-Up, including variable, energy, or compensation charges and incentives for SRAS
• Other charges, as notified by the Commission

In case of a deficit in the pool account of a region, surplus amounts from other regions’ pool accounts will be used to settle the balance. If the surplus is insufficient, the balance will be recovered from drawee DICs until March 31, 2026, in a 50:50 ratio based on drawal at the ISTS periphery and GNA, and from April 1, 2026, based on the shortfall of reserves allocated by NLDC.

NLDC will develop a detailed procedure for recovering charges and allocating the deficit among DICs, subject to the Commission’s approval.

Schedule of payment of charges for deviation

Deviation charges must be paid within ten days of the Regional Power Committee issuing the statement. A late payment surcharge of 0.04% per day will apply for delays.

Regional entities that failed to pay deviation charges on time during the previous financial year must open a Letter of Credit (LC) equal to 110% of their average weekly payable liability for deviations from the previous year within two weeks of the new financial year.

If a regional entity fails to pay the deviation charges into the Deviation and Ancillary Service Pool Account within ten days, the Regional Load Despatch Centre can encash the LC to cover the default amount. The regional entity must then replenish the LC within three days.

In December 2022, CERC reverted to a frequency-linked DSM as an interim measure to protect grid stability, which had been under pressure for three weeks due to a regulation change. The grid frequency had deviated dangerously away from the acceptable range of 49.90 -50.05 Hz.

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