The document provides an overview of CERC regulations issued in 2022 related to the electricity sector in India. It summarizes the key provisions of the Deviation Settlement Mechanism (DSM) Regulation 2022 and Ancillary Services Regulation 2022. The DSM Regulation 2022 aims to incentivize zero deviation from schedules by grid entities through penalties for over-injection and under-injection beyond certain thresholds. It outlines deviation charges and rates calculated based on examples for different station scenarios. The Ancillary Services Regulation 2022 replaces existing mechanisms with performance-based secondary reserves and bid-based tertiary reserves.

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CERC ( DSM)2022
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2. CERC Regulations Issued in CY 2022
Notified Regulations to be operational in CY-22
• Deviation Settlement Mechanism and Related Matters (DSM) Regulations,2022
Replaces (Deviation Settlement Mechanism)Regulation 2014
• Ancillary Services (AS) Regulations,2022
Replaces (Ancillary Services )Regulation 2015
• Connectivity and General Network Access to the Inter State Transmission System (GNA) Regulation 2022
Replaces (Connectivity and open Access)Regulation 2009
Draft Regulations
• Indian Electricity Grid Code (IEGC) Regulations 2022
Would Replaces (IEGC)Regulation 2010

3. Deviation Settlement Mechanism –Need for Revision
 Existing mechanism incentivises the entities for strategic deviation from the schedule .
 Entities used to make some profits by deliberate deviations by over-injection and by Under-injection as
deviation rate depends upon the frequency of the grid
To limit deviations by entities , following additional provisions brought in with subsequent amendments of DSM
Regulations (05 no's of Amendments)
 Deviation rate Capped at 303.04 p/unit for Generator
 Additional Deviation penalty
 Deviation Volume Limit penalty
 Sign change violation penalty
Concerns for Grid Stability
Undesirable Deviations are still there in the Grid, so for controlling the same DSM Regulation 2022 ,which
mandates for zero deviation from entities

4. CERC ( DSM ) Regulation 2022
• CERC notified Regulation on “Deviation Settlement Mechanism and Related Matters” on 14.03.2022.
Commencement of Regulation 05/12/2022
• OBJECTIVE -
 For a secure and stable operation of the grid, every grid connected regional entity shall adhere
to its schedule and shall not deviate from its schedule.
 Any deviation shall be managed by the Load Despatch Centre as per the Ancillary Services
Regulations
• SCOPE-
Applicable to all the Grid connected regional entities and other entities engaged in interstate
sale and purchase of Electricity

5. CERC ( DSM ) Regulation 2022
• Deviation –( General Seller )
Deviation(MWh) = AG – SG
% Deviation= 100 *(AG – SG)/SG
SG = (ISGS+URS+DAM+RTM
+SCED+RRAS+AGC)
• Normal Deviation Rate ( Penalty per unit of deviation) —
Maximum of Wt. average DAM or RTM or AS of that time block
Time block 1 ( DAM,RTM,AS : Rs 4, 3, 3.8 ) ---- Normal Deviation Rate Rs 4 per Unit
Time block 2 ( DAM,RTM,AS : Rs 4, 6 ,3 ) ---- Normal Deviation Rate Rs 6 per Unit
.
.
Time block 96 ( DAM,RTM,AS : Rs 4, 2 , 4 ) ---- Normal Deviation Rate Rs 4 per Unit

6. CERC ( DSM ) Regulation 2022
• Deviation Charges ( General Seller )--
OVER-INJECTION
Beyond 2%
Up to 2%
UNDER-INJECTION
Up to 2%
2% to 10 %
No penalty, generators will get Reference
charge rate(ECR)
Penalty @10% of Deviation Rate to be paid
by generator to Pool Account
Reference Charge rate(ECR) to be paid
back to Pool account by generator
@ 120 % Normal Deviation rate to be
paid in Pool account
>10 %
@ 150 %Normal Deviation rate to be
paid in Pool account
Impact on generators for any deviation will depends upon the Deviation Rate(Market rate of the block ) as well as
ECR of the stations

7. CERC ( DSM ) Regulation 2022
• Case Study I (Low ECR station operating in off peak period ) -ECR ( INR 2.OO ),Max of(DAM,RTM)- (INR 2.00)
OVER-INJECTION
Beyond 2%
Up to 2%
UNDER-INJECTION
Up to 2%
2% to 10 %
@10% of Deviation
Rate
@ 120 %Deviation
rate
Generator will get
ECR @( INR2.00 )
per unit
Impact on NTPC
Loss of ECR @( INR2.00)
+Penalty( 0.2)=@ 2.20 per
unit
ECR@ (2.00) to be
returned back to pool
account
Penalty(2.40)- ECR Saving
(2.00)= Net loss@ 0.40 per unit
>10 % @ 150 %Deviation
rate
Penalty(3)- ECR Saving (2.00)=
Net loss@ 3.00 per unit
No loss , No
gain
No loss , No
gain

8. CERC ( DSM ) Regulation 2022
• Case Study II –( Low ECR station operating in normal period ) - ECR ( INR 2.OO ),Max of(DAM,RTM)-( INR 4.00)
OVER-INJECTION
Beyond 2%
Up to 2%
UNDER-INJECTION
Up to 2%
2% to 10 %
@10% of Deviation
Rate
@ 120 %Deviation
rate
Generator will get
ECR @( INR2.00 )
per unit
Impact on NTPC
Loss of ECR @( INR2.00)
+Penalty( 0.4)=@ 2.40 per
unit
ECR@ (2.00) to be
returned back to pool
account
Penalty(4.80)- ECR Saving
(2.00)= Net loss@ 2.80 per unit
>10 % @ 150 %Deviation
rate
Penalty(6)- ECR Saving (2.00)=
Net loss@ 4.00 per unit
No loss , No
gain
No loss , No
gain

9. CERC ( DSM ) Regulation 2022
• Case Study III –( Low ECR station operating in peak period ) - ECR ( INR 2.OO ),Max of(DAM,RTM)-( INR 8.00)
OVER-INJECTION
Beyond 2%
Up to 2%
UNDER-INJECTION
Up to 2%
2% to 10 %
@10% of Deviation
Rate
@ 120 %Deviation
rate
Generator will get
ECR @( INR2.00 )
per unit
Impact on NTPC
Loss of ECR @( INR2.00)
+Penalty( 0.8)=@ 2.80 per
unit
ECR@ (2.00) to be
returned back to pool
account
Penalty(9.60)- ECR Saving
(2.00)= Net loss@7.60per unit
>10 % @ 150 %Deviation
rate
Penalty(12)- ECR Saving (2.00)=
Net loss@ 10.00 per unit
No loss , No
gain
No loss , No
gain

10. CERC ( DSM ) Regulation 2022
• Case Study IV (Medium ECR station in off peak ) -- ECR ( INR 4.OO ), Max of(DAM,RTM) as ( INR 2.00)
OVER-INJECTION
Beyond 2%
Up to 2%
UNDER-INJECTION
Up to 2%
2% to 10 %
@10% of Deviation
Rate
@ 120 %Deviation
rate
Generator will get
ECR @( INR4.00 )
per unit
Impact on NTPC
Loss of ECR @( INR4.00)
+Penalty( 0.2)=@ 4.20 per
unit
ECR@ (4.00) to be
returned back to pool
account
Penalty(2.40)- ECR Saving
(4.00)= Net loss@ -1.60 per unit
>10 % @ 150 %Deviation
rate
Penalty(3)- ECR Saving (4.00)=
Net loss@ -1.00 per unit
No loss , No
gain
No loss , No
gain

11. CERC ( DSM ) Regulation 2022
• Case Study V (Medium ECR station in normal period) --ECR ( INR 4.OO ), Max of(DAM,RTM) as ( INR 4.00)
OVER-INJECTION
Beyond 2%
Up to 2%
UNDER-INJECTION
Up to 2%
2% to 10 %
@10% of Deviation
Rate
@ 120 %Deviation
rate
Generator will get
ECR @( INR4.00 )
per unit
Impact on NTPC
Loss of ECR @( INR4.00)
+Penalty( 0.4)=@ 4.40 per
unit
ECR@ (4.00) to be
returned back to pool
account
Penalty(4.80)- ECR Saving
(4.00)= Net loss@ 0.80 per unit
>10 % @ 150 %Deviation
rate
Penalty(6)- ECR Saving (4.00)=
Net loss@ 2.00 per unit
No loss , No
gain
No loss , No
gain

12. CERC ( DSM ) Regulation 2022
• Case Study VI (High ECR station at normal period ) -- ECR ( INR 6.OO ), Max of(DAM,RTM) as ( INR
4.00)
OVER-INJECTION
Beyond 2%
Up to 2%
UNDER-INJECTION
Up to 2%
2% to 10 %
@10% of Deviation
Rate
@ 120 %Deviation
rate
Generator will get
ECR @( INR6.00 )
per unit
Impact on NTPC
Loss of ECR @( INR6.00)
+Penalty( 0.4)=@ 6.40 per
unit
ECR@ (6.00) to be
returned back to pool
account
Penalty(4.80)- ECR Saving
(6.00)= Net loss @ - 1.20 per
unit
>10 % @ 150 %Deviation
rate
Penalty(6)- ECR Saving (6.00)=
Net loss@ 0.00 per unit
No loss , No
gain
No loss , No
gain

13. Implications- Thermal Stations
Over
injection
Under
injection
Low ECR High ECR
+2%
-2%
Little opportunity for stations with +MC
Only Loss
> +2%
< -2%
Some opportunity, when
DSM price is less than ECR
Little opportunity, DSM price
would be more than ECR
most of the time

14. CERC ( DSM ) Regulation 2022
 Deviation charges for infirm Power shall be zero.( No payment would be received for
infirm power – all Coal cost required to be capitalised – FC would be increased by 7-8
paise) .
 Start-up power before COD shall be payable at Deviation Rate.
 Power for running the Auxiliary equipment’s during shut down shall be payable at
Deviation Rate .
Other Provisions of DSM Regulation 2022

15. Ancillary Services Regulation
Primary Reserve
Ancillary Services
(PRAS)
•Mandated in Grid Code
•3rd Party testing. 1% RoE
reduction if failed during
ramp assessment.
Secondary Reserve
Ancillary Services
(SRAS)
•AGC - Real time command
to Genco.
•Started in 2019; Suo Motto
Order by CERC
•Added to final SG; Mark-up
payment @50 paise/unit for
5 min energy
Tertiary Reserve
Ancillary Services
(TRAS)
•AS regulations 2015
•Administered by RLDC
based on given conditions
in AS regulations 2015
•RRAS Up @ 50 paise/unit,
RRAS down @ 25% of ECR.
Ancillary
Services
Regulation
2022
Market orientation
Current AGC and RRAS AS mechanisms to be replaced by SRAS and TRAS,
SRAS would be Performance based and TRAS would be bid based.
Existing Provisions

16. Ancillary Regulation 2022
Secondary Reserve AS (SRAS)
• Mark-Up payment linked to Performance
• Accounting: 15 min Energy added to final Schedule; 5 min Energy used for providing the markup
incentive.
• Performance (75-95 %) - 40 paise/unit
Tertiary Reserve AS (TRAS)
• Procured through bidding in DAM and RTM and deployed on Real-time
• TRAS UP - MCP for quantum deployed; Commitment money if not deployed @10 % of MCP, < 20
p/unit.
• TRAS Down - Generator will refund @ Pay bid for the quantum deployed
• Emergency deployment of TRAS by NLDC –TRAS Up @ 110 % of ECR, TRAS Down with
return of @ 90% of ECR (10% of ECR is left with Generator)
SRAS Incentive
Performance
(%)
Incentive
(P/kWh)
>95 50
75-95 40
60-75 30
50-60 20
20-50 10
<20 0
Tuning of CMC Control loops required in all stations for AGC performance.

17. CERC ( DSM ) Regulation 2022
• ACCOUNTING --
Every Thursday , RLDC shall provide the data for deviation of previous week(Monday to
Sunday) to RPC .
RPC prepare and issue the statement of charges to all regional entities by ensuing
Tuesday.
Regional entities to pay the due amount within 07 days otherwise LPS@0.04%per-day
ALL MONEY THAT WILL COME FROM DSM WILL BE POOLED TO “DEVIATION AND ANCILLARY POOL
ACCOUNT”
“DEVIATION AND ANCILLARY POOL
ACCOUNT”
Deviation
amount + AS
down
AS UP
Payments to Generators
for over-injection. Payment
to buyers for unde-
rinjection

18. Thank You