CERC Issues Clarifications and Amendments to DSM Regulations, Effective December 2024

The Central Electricity Regulatory Commission (CERC) has issued clarifications and amendments to its DSM Regulations, 2024 (Deviation Settlement and Related Matters) (First Amendment), which will come into effect on December 23, 2024.

These amendments address several key concerns raised by stakeholders and outline new provisions to ensure grid stability and maintain the reliability of India’s electricity grid.

The CERC emphasised that the injection of infirm power, which refers to electricity injected into the grid before a generating unit or block becomes operational, should be strictly limited to testing and commissioning activities. This power must be scheduled with prior approval from the concerned Regional Load Despatch Centres (RLDCs). The prolonged injection of infirm power without safeguards could lead to grid instability and imbalance between generation and load. The Commission reiterated that no payments should be made for the injection of infirm power before the completion of a successful trial run, a critical milestone that ensures the safe integration of new units into the grid.

Further addressing concerns regarding deviations from scheduled power generation, the Commission clarified that charges for over-injection or under-injection of infirm power after the trial run will be zero if the system frequency exceeds 50.05 Hz. This provision is designed to maintain the balance of grid frequency and avoid unnecessary penalties.

Several stakeholders, including Mahindra Susten, WBSETCL, and NTPC, amongst others submitted comments on the draft amendment. Mahindra Susten sought clarification on whether entities penalised under the existing DSM Regulations could be subject to the revised provisions under the new amendment. The Commission responded by confirming that the revised provisions would be applicable from December 23, 2024, and any penalty notices issued prior to this date would not be amended. It also addressed the issue of penalties, indicating that the amendments would not have retrospective applicability.

WBSETCL suggested implementing the DSM amendment starting from December 2, 2024, as it falls on a Monday, but the Commission maintained the December 23 date for the final implementation.

The Tehkhand Waste to Electricity Project requested an extension of the concessions provided to Waste-to-Energy (WtE) projects under the DSM Regulations of 2022, urging the Commission to reconsider provisions affecting WtE projects in the 2024 amendment. However, the Commission did not make any immediate changes to this provision.

NTPC raised several suggestions, including the introduction of an interest charge on delayed payments from the DSM pool account. The utility proposed that if deviations in payments are not settled within ten days after the statement’s issuance by the Regional Power Committee (RPC), a late payment surcharge of 0.04 percent per day should apply. NTPC also called for compensation for deviations in power ramps at the Reference Charge Rate and suggested equitable incentives for generators supporting grid stability through over-injections or under-injections.

In response, the Commission acknowledged the suggestions but made it clear that they were beyond the scope of the current regulatory amendment.

Regarding the Pumped Storage Plants (PSPs), which have tariffs determined under Section 62 of the Electricity Act, 2003, the Commission clarified that the reference charge rate for these plants will be governed by the provisions outlined in the CERC Tariff Regulations, 2024. This ensures that PSPs are appropriately integrated into the DSM framework.

Adani Green, Adani Power, and APP (Adani Power Projects) raised concerns about the discrimination against solar power generators, especially in the context of the four-attempt restriction for completing the trial run. They urged the Commission to treat solar power generators on par with wind power generators by removing the trial run limitations. However, the Commission did not introduce any changes to this provision in the current amendment.

In the Commission’s official statement, it was clarified, “This amendment will come into effect from December 23, 2024. Accordingly, the computation of DSM, including incentives and penalties, will be governed by the provisions of the amended regulations for the period starting from December 23, 2024. For the period prior to December 23, 2024, DSM calculations, including applicable incentives and penalties, will continue to be carried out as per the provisions of the Principal Regulations and relevant notifications issued on September 15, 2024, October 22, 2024, and November 29, 2024. This amendment will not have retrospective applicability.”

This amendment, which aims to improve grid security, incentivise grid-supporting behaviour, and streamline penalty structures, will come into force without retrospective applicability, ensuring a clear transition for all stakeholders.