CERC Amends February 6 Order On DSM Regulations To Cover High Price-DAM 

The Central Electricity Regulatory Commission (CERC), in a suo-motu petition, amended its earlier Order of February 6, 2023, relating to its (Deviation Settlement Mechanism and Related Matters) Regulations, 2022. The CERC said it was done to include the changes in DSM Regulations and extend the same for the High Price-Day Ahead Market (HP-DAM). 

In its February 6 order, the regulatory body talked about the normal rate of charges for deviations for a time block as specified in Regulation 7 of the DSM Regulations of 2022. The Order had said that the normal rate of charges in such a deviation should be equal to the higher of (the weighted average ACP of the Day Ahead Market segments of all the Power Exchanges and the weighted average ACP of the Real-Time Market segments of all the Power Exchanges, for that time block.

The latest Order of the CERC, dated April 9, 2023, added the provisions for the HP-DAM too. The new Order, while talking about the HP-DAM concerning the charges, said, “Provided that for a Seller whose bid is cleared in the HP-DAM, the Normal Rate of Charges for Deviation by way of ‘under-injection’ for a time block shall be equal to the highest of [the weighted average ACP of the HP-DAM Market segments of all the Power Exchanges; or the weighted average ACP of the Day Ahead Market segments of all the Power Exchanges; or the weighted average ACP of the Real-Time Market segments of all the Power Exchanges, for that time block] for the quantum of power sold through HP-DAM.”

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The new Order also discussed the ‘reference charge rate’ for sellers bidding in the HP-DAM. The Order said, “In para 27 of the said Order dated February 6, 2023 (Relaxation of Regulation 8 of the DSM Regulations, 2022), for a seller whose bids are cleared in the HP-DAM, the ‘reference charge rate’ specified for Deviation by way of ‘under-injection’ shall be equal to [the weighted average ACP of the HP-DAM segments of all Power Exchanges, for that time block] for the quantum of power sold through HP-DAM.”

The new directions by the CERC will come into effect from midnight of April 10 and will remain in force until further orders by the Commission. The CERC said it was essential to align the normal rate of charge for Deviation with that of HP-DAM to avoid any possibility of arbitrage between HP-DAM and DSM. 

The CERC released the DSM Regulations in March 2022 to pave the way for a regulatory mechanism for the treatment and settlement of Deviation from the schedule of drawal or injection of electricity to ensure the grid’s reliability, security and stability. 

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“These regulations seek to ensure, through a commercial mechanism, that users of the grid do not deviate from and adhere to their schedule of drawal and injection of electricity in the interest of security and stability of the grid,” the objectives of the DSM Regulations said. These regulations apply to all the grid-connected regional entities and other entities engaged in the inter-state purchase and sale of electricity.