The Central Electricity Regulatory Commission (CERC) has reiterated that the approved methodology in the National Load Despatch Centre’s (NLDC) detailed procedure applies to all deficits in the Deviation Settlement Mechanism (DSM) Pool Account starting September 16, 2024.

It directed the distribution companies (DISCOMs) to ensure timely payment of dues to avoid delays in compensating ancillary service providers and maintain grid stability.

Notified in August 2024, the regulations provide a process for addressing deficits in the Deviation and Ancillary Service Pool Account (DSM Pool Account) under Regulation 9(7). Following the notification, the NLDC submitted a detailed procedure for recovering dues in two categories:

• Legacy dues – dues accumulated before September 16, 2024.
• Current dues – dues accrued on or after September 16, 2024.

CERC approved this procedure to enable efficient recovery of dues. However, NLDC reported that some DISCOMs had either not paid their dues or partially paid them. The DISCOMs questioned the fairness of recovering legacy dues, arguing that the procedure did not explicitly mention provisions for such recovery.

The Commission emphasized that the DSM Pool Account is critical for ensuring payments to ancillary service providers and maintaining grid security. Delays in payments can discourage service providers, potentially affecting grid operations.

CERC referred to its earlier Staff Paper on ‘Grid Security Charge,’ which highlighted the growing deficit in the DSM Pool Account due to high demand and insufficient reserves. The explanatory memorandum to the DSM Regulations also noted a ₹4 billion (~$46.2 million) deficit as of March 2024, underlining the need for a robust recovery framework.

In December last year, Mercom noted that India’s renewable energy generators lack access to the sophisticated forecasting tools needed to meet the DSM regulations’ 15-minute accuracy demands. Most available forecasting models only offer predictions in broader hourly intervals, which are insufficient for the precision required by the new rules. Additionally, these tools often fail to account for hyper-local weather conditions—particularly relevant for wind farms, where even slight variations in wind speed across small distances can lead to significant deviations from the forecasted output.

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