The Central Electricity Regulatory Commission (CERC) has issued the new CERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2022. These regulations will apply to all grid-connected regional entities and other entities engaged in inter-state purchase and sale of electricity, where the state-level regulations do not exist.

CERC had issued the draft regulations in September 2021, which was open for comments and suggestions. The effective date is to be communicated by the Commission separately.

Deviation charges for over-injection and under-injection of power

Wind and solar

In the case of over-injection by wind and solar power sellers, beyond 5% and up to 10%, the tariff is reduced by 10%. Wind and solar power sellers will not be compensated for over-injection beyond 10%.

For under injection, the sellers will not have to pay any charges for deviation up to 10%. For deviation beyond 10%, the seller will need to pay deviation charges at 10% of the normal rate.

Others

As per the revised regulations, for a general seller of power (other than a run-of-river generating system or a generating system based on municipal solid waste), there will be no charges for deviation up to 2% for over-injection. For deviation beyond 2%, the entity will have to pay deviation charges at 10% of the normal rate for deviation for over-injection.

The normal rate of deviation charges is referred to as the standard charges calculated per kWh, as defined in the regulations.

For under-injection, the entity will have to pay deviation charges for up to 2% deviation at the normal rate. The generator will have to pay deviation charges at the rate of 120% of the normal rate for deviation beyond 2% and up to 10%. For deviation beyond 10 %, the charges would be 150% of the normal rate.

A seller who is a run-of-river generating station does not have to pay any charges for over-injection. For under injection, the entity will have to pay deviation charges at the normal rate for deviation up to 10% and 110% of the normal rate for deviation beyond 10%.

The generating station based on municipal solid waste will not have to pay deviation charges for over-injection. For under-injection, the entity will not have to pay deviation charges for deviation up to 20% of the normal rate. For deviation beyond 20%, the entity will have to pay charges at the normal rate for deviation.

 

Deviation charges for under and over-drawal of power

Power procurers or buyers (other than those with a schedule less than 400 MW in the renewable energy-rich states) will not have to pay deviation charges for under drawal. For over-drawal, the entity will pay deviation charges at the normal rate for deviation up to 10%. For deviation beyond 10% and up to 15%, the buyer will have to pay deviation charges at 120% of the normal rate. For over drawal beyond 15%, the entity will have to pay deviation charges at 150% of the normal rate.

Buyers (with a schedule up to 400 MW) are not required to pay any charges for under-drawal. For over-drawal, the entity will have to pay deviation charges at the normal rate for deviation up to 20%, and for over drawal beyond 20%, the entity will have to pay at 120% of the normal rate.

Buyers in renewable energy-rich states will not have to pay deviation charges for under-drawal. For over-drawal, the entity will have to pay at the normal rate for deviation up to 10%. For over drawal beyond the limit of 10% and up to 15%, the entity will have to pay deviation charges at 120% of the normal rate. For over drawal beyond 15%, the entity will have to pay deviation charges at 150% of the normal rate.

The normal rate of charges for deviation for a time block will be equal to the weighted average ancillary service charge (in paise/kWh) computed based on the total quantum of ancillary services deployed and the net charges payable to the ancillary service providers for all the regions for that time block.

However, for a year from the date of effect of these regulations, the normal rate of charges for deviation for a time block will be equal to the highest of the weighted average area clearing price (ACP) of the day ahead market segments of all the power exchanges, the weighted average ACP of the real-time market segments of all the power exchanges, or the weighted average ancillary service charge of all the regions for that time block.

Reporting

By every Thursday, regional load despatch centers should provide the data for deviation calculated for the previous week ending on Sunday midnight to the secretariat of the respective regional power committees. After receiving the data, the Secretariat of the regional power committee should prepare and issue the statement of charges for deviation prepared for the previous week to all regional entities by the ensuing Tuesday.

Payment of deviation charges

The payment of deviation charges will have a high priority, and the concerned regional entity should pay the due amounts within seven days of the issue of statement of charges for deviation by the Regional Power Committee, failing which a late payment surcharge of 0.04% will be payable for each day of delay.

Any regional entity which at any time during the previous financial year fails to make payment of charges for deviation within the time specified in these regulations will be required to open a Letter of Credit (LC) equal to 110% of their average payable weekly liability for deviations in the previous financial year in favor of the concerned regional load despatch center within a fortnight from the start of the current financial year.

In case of failure to pay into the deviation and ancillary service pool account within seven days from the date of issue of statement of deviation charges, the regional load despatch center will be entitled to encash the LC of the concerned regional entity to the extent of the default and the concerned regional entity will recoup the LC amount within three days.

Post implementation, all deviations will be managed by the load despatch center according to ancillary services regulations. The computation, charges, and related matters regarding such deviation will be dealt with as per the following provisions of the new regulations.

Post the issuing of the draft regulations, various wind and solar energy project developers Mercom spoke to had raised concerns about being charged a penalty for under injection but granted no compensation for over injection of power.

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