The document covers the newly implemented regulation "Deviation settlement and mechanism" by CERC (central electricity regulatory commission. This regulation has replaced the UI Regulation and mechanism.

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Deviation Settlement Mechanism and Related Matters
CERC Regulation 2014
CERC on 17.02.2014 has replaced the UI regulation 2009 with Deviation settlement mechanism regulation 2014 in
order to strengthen the grid and improve grid stability. This step was taken to ensure that situations of grid failure
like that of 30th
& 31st
July will not happen again. The grid failure has presented a case where some state were using
the UI as a trading platform, during the grid failure states like Haryana, U.P were overdrawing heavily whereas states
like Rajasthan & MP were under drawing from their schedule resulting in frequency varying in the specified range
and at the same time making the grid unstable thus resulting in grid failure.
With this regulation CERC has implemented volume limit for buyer and seller depending on their approved schedule,
range of frequency has tighten, charges for the unscheduled interchange or deviation has increased to ensure a
better demand predictability by states and to avoid UI as a trading platform.
Deviation & Settlement Mechanism will definitely improve the grid discipline and will help the state to initiate
forecasting of demand and schedule in more accurate and stringent manner. Various provisions made in the
regulation such as volume limits, additional charges etc will force the state to procure power through bilateral route
or on day ahead basis which surely help in fund flow and eventually improve the position of power sector.
A summary of the deviation settlement mechanism and its comparison with the previous prevailing UI regulation is
provided below.
1. Title & Commencement: Deviation settlement mechanism & related matters regulation 2014, came into force on
17.02.2014.
2. Reference Regulation:
a. Grant of connectivity, LTOA & MTOA in interstate transmission regulation 2009.
b. Interface Meters (Installation & operation of meters) regulation 2006.
c. Open Access in interstate transmission regulation 2008.
3. Objective of the regulation is to enhance grid discipline & grid security.
4. Applicable on Inter-state transmission of electricity.
5. Charges receivable for under drawl by buyer and over injection by seller, while charges are payable for over drawl
by buyer and under injection by seller.
6. Provisions made in regulation:
a. Redefined frequency range and rates.
b. Volume limits and deviation limits for generator and buyer
c. Cap Rate applicable
d. Charges & Additional Charges
e. Methodology for calculation of deviation charges.
7. Charges and conditions applicable:
a. Charges for each step increment of frequency for each 0.01 Hz step is now equivalent to increment
of 35.60 Paise/unit in the frequency range of 50.05-50.00 Hz & 20.84 Paise/unit in frequency range
between 50.00Hz to not below 49.70 Hz, resulting in charges at 50.05Hz @ 0.00 Paise/unit, at
50.04Hz @ 35.60 till 50.00 Hz @ 178 Paise/unit and then from 49.99Hz onwards charges will
increase at a rate of 20.84 till 49.7Hz @ 824.04 Paise/unit. In UI regulation 2009 charges for each
step of frequency for each 0.02 Hz was equivalent to 16.50 Paise/Unit from 50.20Hz till 50.02Hz, i.e
charges were at 50.20Hz @ 0.00 Paise/unit & at 50.02 @ 148.50 Paise/Unit, and then from 50.00Hz

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onwards each step increment was equivalent to Rs. 28.12 Paise/Unit i.e. charges at 50.00Hz @
165.00 Paise/Kwh till 49.5Hz @ 900.00 Paise/Unit.
b. Cap Rates are redefined in the present regulation, now the cap rate for generating stations using fuel
which comes under APM is reduced to 303.04 Paise/Kwh from 421.50 paise/Kwh for higher or lower
injection than the scheduled generation. Also, now there is no cap rate on generating stations which
are regulated by consumer and are using Gas as fuel under APM.
c. Charges for over injection by seller and under drawl by buyer in excess of 12% of schedule or 150
MW whichever is less shall be 0. Earlier over injection upto 120% of schedule is allowed on the
corresponding frequency rate and in excess of 120% there was a cap rate of 450.00 Paise/Unit,
although it was subject to 105% of declared capacity of plant in a time block and 101% of capacity of
plant in a day.
d. Earlier if the injection of plant increases beyond 105% of its declared capacity in a time block or
101% of declared capacity in a day then charges for such injection will be charged at a rate of 165
Paise/unit. In the present regulation there are no such rules applicable on power plants.
e. Clause for infirm injection before COD of generating unit is almost similar to that of UI regulation
2009, There is no volume drawl or injection limit on generating station although there is a cap rate
on injection which is subject to the fuel used, for APM gas cap rate has increased from earlier charge
of 2.60 Rs/Unit to 5.64 Rs/Unit.
f. Volume Limits have been implemented in the present regulation, earlier there wasn’t any volume
limits on the overall injection or drawl, although based upon different UI volume, charges
corresponding to percentage of prevailing UI charges and Cap Rates were there.
g. Earlier for over drawal when frequency is below 49.80Hz, additional charges were there. Now there
are volume limits too which are 12% of schedule or 150 MW whichever is less. Also, now additional
charges are levied based on the deviation from schedule and not upon the frequency range as was
earlier.
In the present regulation no under injection of electricity by a seller shall be permissible when grid frequency is
"below 49.70 Hz" and no over injection of electricity by a seller shall be permissible when grid frequency is "50.10
Hz and above.
However, additional charges shall be levied now depending on the deviation from schedule more than the allowed
limits i.e. 12% or 150 MW whichever is less and also depends upon the frequency. Different charges are defined for
the frequency range 49.70 Hz and above and below 49.70Hz of frequency.
1. When grid frequency is 49.70Hz and above
a. When 12% is lesser or equal to 150 MW
b. When 12% is more or equal to 150 MW
2. When grid frequency is below 49.7 Hz
Each of the cases will apply for over drawal by a buyer and under injection by a seller when the actual
drawl/injection is higher than the specified limits.
For Over-Drawal by a buyer when frequency is 49.70 Hz or above
When 12%<=150MW When 12% >= 150 MW Additional Charges
a. 12%-15% 150MW to 200MW
+20% charges of deviation charge
corresponding to average grid
frequency of the time block.
b. 15%-20% 200 MW to 250 MW +40% charges of deviation charge

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corresponding to average grid
frequency of the time block.
c. 20% & Above 250 MW and above
+100% charges of deviation charge
corresponding to average grid
frequency of the time block.
For Under-Injection by a seller when frequency is 49.70 Hz or above
When 12%<=150MW When 12% >= 150 MW Additional Charges
a. 12%-15% 150MW to 200MW
+20% charges of deviation charge
corresponding to average grid
frequency of the time block.
b. 15%-20% 200 MW to 250 MW
+40% charges of deviation charge
corresponding to average grid
frequency of the time block.
c. 20% & Above 250 MW and above
+100% charges of deviation charge
corresponding to average grid
frequency of the time block.
For Under-Injection by a seller using fuel coal/gas/lignite under APM & when frequency is 49.70 Hz or above
When 12%<=150MW When 12% >= 150 MW Additional Charges
a. 12%-15% 150MW to 200MW
+20% of 303.04 Paise/Unit or
deviation charge corresponding to
average grid frequency of the time
block whichever is less.
b. 15%-20% 200 MW to 250 MW
+40% of 303.04 Paise/Unit or
deviation charge corresponding to
average grid frequency of the time
block whichever is less.
c. 20% & Above 250 MW and above
+100% of 303.04 Paise/Unit or
deviation charge corresponding to
average grid frequency of the time
block whichever is less.
When grid the frequency is below 49.70Hz, additional charges are levied for over drawal by a buyer or under-
injection by a seller and are equivalent to 100% of 824.04 Paise/unit i.e. 1648.08 Paise/unit for the deviation.
Similarly for generating station using coal/gas/lignite additional charges are equivalent to 100% of the cap rate
(303.04 paise/kwh).
Provided:
1. Additional charge for deviation also be levied for over-injection or under-drawal when grid frequency is
50.10Hz or above at the rates equivalent to charges of deviation corresponding to the grid frequency of
“below 50.01 Hz but not below 50.0 Hz” i.e. 178.00 Paise/unit.
2. No additional charges are levied on generating station prior to COD of unit.
3. These charges and regulation are subject to change depending upon the order, rules, amendments or
regulation of CERC.