Presentation On DSM Regulation (Fourth Amendment)

“ Deviation Settlement Mechanism”
(Fourth Amendment)
Effective from 01.01.2019
Prepared By: Nitin Gupta

Table of Contents
 Objective of the Regulation.
 Highlight’s of Previous DSM Regulation and
Additional Deviation Charges.
 Deviation Settlement Mechanism (Fourth
Amendment).
 Major Difference B/W Previous DSM Regulation
and Fourth Amendment).
 Important Highlight’s of Deviation Settlement
Mechanism (Fourth Amendment).
 Illustrations.
Objective
• The objective of this regulations is to maintain
grid discipline and grid security as envisaged
under the Grid Code through the commercial
mechanism for Deviation Settlement through
drawl and injection of electricity by the users
of the grid.
Deviation Settlement Mechanism and Related
Matters, Regulation 2014
(Previous Regulation)
• This Regulation was came in to force on

17.02.2014.
• At Frequency 50.05 Hz= 0 Rs/kWh
• At Frequency 50.00 Hz= 1.78 Rs/kWh
• At Frequency 49.70 Hz= 8.24 Rs/kWh
Additional Deviation Charges Limit
• Deviation Between Schedule and Actual
Injection:
• Up to 12% -Normal Deviation Charge
• 12% to 15%- UI Charges + 20% of UI Charges
• 15% to 20%- UI Charges + 40% of UI Charges
• More than 40%- UI Charges + 100% of UI
Charges
Deviation Settlement Mechanism (Fourth Amendment)
• This regulations may be called the Central

Electricity Regulatory Commission (Deviation
Settlement Mechanism and related matters)
(Fourth Amendment) Regulations, 2018.
• This Regulation shall come in to force with

effect from 01.01.2019.
QUESTION
“What is the Major Difference Between Previous

DSM Regulation and DSM (Fourth
Amendment)”…….??
7
Previous DSM Regulation DSM Regulation (Fourth Amendment)
UI price is linked with Average Day Ahead
UI Price is Fixed as per CERC Regulation
Price of Exchange
Maximum UI Price is 8.24 Rs/kWh Maximum UI Price is 8 Rs/kWh
At Frequency 50 Hz = UI Price is 1.78 At Frequency 50 Hz = UI Price is Average

Rs/kWh Day Ahead Price of the Exchange
Frequency Range is 49.70 Hz to 50.05

Frequency Range is 49.85 Hz to 50.05 Hz
Hz
Provision of Sign Change is after every Provision of Sign Change is after every 6
12 time blocks time blocks
Charges for Deviation as per Fourth Amendment.
• Charges for deviation below 49.85 Hz is fixed at 800

Paisa/unit and for frequency 50.05 Hz and above,
charges for deviation is 0 Paisa/unit.
• Charges for deviation at 50.00 Hz will be Daily Average

Area Clearing Price (ACP) discovered at DAM. (Max
celling is 800 paisa/unit)
• DSM rate vector will have a dynamic slope determined

by joining the identified price points at 50 Hz (Daily Avg.
ACP), frequency below 49.85 Hz (800 Paisa/unit) and
50.05 Hz (0.00 Paisa/unit on daily basis)
9
 Important
Highlight’s of
UI price is linked with ACP
Deviation
Settlement
Mechanism Non Availability of ACP
(Fourth
Amendment).
Total Deviation in a Day
Impact of Sign Change

UI price is linked with ACP
• The Deviation Settlement Mechanism (DSM) rate vector
will have a dynamic slope determined by joining the
identified price points at 50 Hz. (daily simple average ACP),
frequency of 49.85 Hz (Rs. 8 per unit) and 50.05 Hz (zero)
on a daily basis.
• Cap Rate for all generators (Irrespective of Fuel Source)

(i) For CERC Regulated Generated-@Energy Charges for
previous month.
(ii) For other generator-@ 303.04 paisa/kWh
11
Non Availability of ACP
• In case of non-availability of daily simple

average ACP due to no-trade on a given day,
daily simple average ACP of the last available
day shall be considered for determining the
DSM charge.
Total Deviation in a Day
• The total deviation from schedule in energy
terms during a day shall not be in excess of 3%
of the total schedule for the drawee entities
and 1% for the generators and additional
charge of 20% of the daily base DSM payable /
receivable shall be applicable in case of said
violation.
• This clause will be applicable after 1 year or as
per CERC further order.
Effect of Sign Change
• In the event of sustained deviation from schedule
in one direction (positive or negative) by any
regional entity (buyer or seller), such regional
entity shall have to change sign of their deviation
from schedule, at least once, after every 6 time
blocks.
• Violation of this clause, shall attract an additional

charges of 20% on the daily base DSM
payable/Receivable as the case may be.
Explanation (Effect of Sign Change)
• To illustrate, the change of sign should take place at
least once after every six time blocks. Accordingly, the
entity, starting from time block t1, should change the
sign after time block t6.
• In case, sign change does not take place immediately
after time block t6, but takes place from time block t7
up to time block t12, additional charge shall be levied
equivalent to one violation.
• In case, sign change does not take place immediately
after time block t12, but takes place from time block
t13 up to time block t18, additional charge shall be
levied equivalent to two violations.
Graphical Representation B/W Previous UI Rate and New UI
Rate (As per IEX Avg. Price)
for 05.11.2018
Frequency Vs. Price
New UI Price (As per IEX Avg. Price) Existing UI Price
900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.91
49.77
49.9
49.8
49.7
50.05
50.04
50.03
50.02
50.01
49.99
49.98
49.97
49.96
49.95
49.94
49.93
49.92
49.89
49.88
49.87
49.86
49.85
49.84
49.83
49.82
49.81
49.79
49.78
49.76
49.75
49.74
49.73
49.72
49.71
49.69
50
Hz.
for 06.11.2018
Frequency Vs. Price

900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.91
49.77
49.9
49.8
49.7
50.05
50.04
50.03
50.02
50.01
49.99
49.98
49.97
49.96
49.95
49.94
49.93
49.92
49.89
49.88
49.87
49.86
49.85
49.84
49.83
49.82
49.81
49.79
49.78
49.76
49.75
49.74
49.73
49.72
49.71
49.69
50
Hz.
for 07.11.2018
Frequency Vs. Price

900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.91
49.77
49.9
49.8
49.7
50.05
50.04
50.03
50.02
50.01
49.99
49.98
49.97
49.96
49.95
49.94
49.93
49.92
49.89
49.88
49.87
49.86
49.85
49.84
49.83
49.82
49.81
49.79
49.78
49.76
49.75
49.74
49.73
49.72
49.71
49.69
50
Hz.
for 08.11.2018
Frequency Vs. Price

900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.91
49.77
49.9
49.8
49.7
50.05
50.04
50.03
50.02
50.01
49.99
49.98
49.97
49.96
49.95
49.94
49.93
49.92
49.89
49.88
49.87
49.86
49.85
49.84
49.83
49.82
49.81
49.79
49.78
49.76
49.75
49.74
49.73
49.72
49.71
49.69
50
Hz.
for 09.11.2018
Frequency Vs. Price

900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.91
49.77
49.9
49.8
49.7
50.05
50.04
50.03
50.02
50.01
49.99
49.98
49.97
49.96
49.95
49.94
49.93
49.92
49.89
49.88
49.87
49.86
49.85
49.84
49.83
49.82
49.81
49.79
49.78
49.76
49.75
49.74
49.73
49.72
49.71
49.69
50
Hz.
for 10.11.2018
Frequency Vs. Price

900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.91
49.77
49.9
49.8
49.7
50.05
50.04
50.03
50.02
50.01
49.99
49.98
49.97
49.96
49.95
49.94
49.93
49.92
49.89
49.88
49.87
49.86
49.85
49.84
49.83
49.82
49.81
49.79
49.78
49.76
49.75
49.74
49.73
49.72
49.71
49.69
50
Hz.
for 11.11.2018
Frequency Vs. Price

900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.91
49.77
49.9
49.8
49.7
50.05
50.04
50.03
50.02
50.01
49.99
49.98
49.97
49.96
49.95
49.94
49.93
49.92
49.89
49.88
49.87
49.86
49.85
49.84
49.83
49.82
49.81
49.79
49.78
49.76
49.75
49.74
49.73
49.72
49.71
49.69
50
Hz.
Graphical Representation B/W Previous UI Rate and New UI Rate (As per IEX
Avg. Price) as per Actual Frequency and DSM Price in 96 Time Block
Frequency Vs. Price (96 Time Blocks) for 05.11.2018
900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.94
49.97
49.95
49.9
49.8
49.98
49.98
49.92
49.91
49.89
49.96
49.93
49.95
49.92
49.96
49.94
49.98
49.92
49.96
49.82
49.94
49.97
49.97
49.93
49.89
49.95
50.06
49.99
50.01
49.96
49.91
49.88
49.95
49.96
49.89
49.97
50.04
50.02
50.02
50.04
49.96
49.99
49.97
49.98
49.98
49.99
50
50
Hz.

700
600
500
400
Paise/kWh
300
200
100
Hz.
600
500
400
Paise/kWh 300
200
100
Hz.
800
700
600
500
Paise/kWh 400
300
200
100
0
49.98
50.03
49.95
50.03
50.01
49.99
49.92
49.94
49.96
49.96
49.92
49.99
49.98
50.01
50.01
50.02
49.98
49.96
49.92
49.94
49.94
49.99
49.97
49.96
50.01
50.04
50.02
50.04
49.96
49.97
49.98
49.99
49.88
50.02
50.02
50.02
50.08
50.04
49.98
49.98
50.05
49.95
49.98
49.92
49.99
50
50
50
Hz.
800
700
600
500
Paise/kWh 400
300
200
100
0
49.93
49.98
49.99
49.92
49.98
49.94
49.93
49.94
49.96
49.93
49.95
49.96
49.94
49.89
50.04
49.98
49.95
49.88
49.92
49.94
50.02
50.05
49.99
49.93
49.92
49.95
50.05
50.04
50.08
49.96
49.91
49.97
49.92
49.98
49.93
49.98
49.96
50.02
50.02
49.96
50.06
49.89
49.94
49.92
49.96
50
50
50
Hz.
900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.91
49.88
49.99
49.9
49.95
49.99
49.94
49.92
49.88
49.89
49.93
49.97
49.97
49.94
49.93
50.03
50.06
49.96
49.88
49.98
49.87
49.98
49.99
49.97
49.95
49.97
49.95
49.99
50.07
49.95
50.02
49.89
50.01
49.93
49.97
50.01
49.98
50.04
50.01
49.99
49.97
50.02
49.93
49.95
49.92
49.99
50
50
Hz.
Graphical Representation B/W Pre UI Rate and New UI Rate (As per IEX Avg.
Price) as per Actual Frequency and DSM Price in 96 Time Block
900
800
700
600
500
Paise/kWh
400
300
200
100
0
49.9
49.9
49.9
49.9
49.98
49.98
49.93
49.96
49.95
49.95
49.89
49.95
49.95
49.92
49.98
49.88
50.01
50.03
49.99
49.93
49.92
49.91
49.95
49.88
49.95
50.01
50.06
50.01
50.05
49.96
49.87
49.96
49.95
49.98
49.97
50.04
49.99
50.03
49.98
49.99
49.88
49.94
50.02
49.93
49.99
49.97
50.01
50
Hz.
Grey Area of the DSM (4th Amendment)
1. In case Schedule is 500 MW and Unit got

tripped, then RLDC revised our schedule
to Zero MW. In that Case: Schedule=0,
Actual Injection=0 but to run Axillary
system, we have to draw some power
from the grid. In that case we over drawl
the power from the Grid. And we
continuously in Negative Sign.
In that case we have to pay penalty for
non changing of Sign.
30
Grey Area of the DSM (4th Amendment)
2. In case our total Schedule is 500 MW out of

which we are selling 100 MW in exchange.
In case of tripping, all schedule has been revised by
RLDC except exchange schedule.
So we are continuously under injecting the power.
In that case as per sign reversal rule, we are
continuously in Negative Sign.
In that case we have to pay the penalty in term of
DSM Charges and Non-compliance of Sign
Change Rule.
31
Precaution taken by Plant
1. Plant should maintain their schedule

irrespective of Frequency.
2. Plant should have to change the Sign of
Injection after each 6 time block.
3. In case of tripping, Plant should inform to
RLDC immediately and schedule should be
revised with in 4 time block.
4. Proper forecasting and planning mechanism
need to be developed.
32
Future of DSM
1. As per Fourth Amendment, DSM price is

linked with Average Area Clearing Price of
DSM, but in future CERC linked DSM price
with 15 Min Area clearing price of DAM.
2. Frequency Band will more tightened to avoid
deviation.
3. No Margin for Generators/Utility for Over
injection/Under Injection and Over
Drawl/Under Drawl.
33
THANK YOU
34

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“ Deviation Settlement Mechanism”

Prepared By: Nitin Gupta

• This Regulation was came in to force on

• This regulations may be called the Central

• This Regulation shall come in to force with

“What is the Major Difference Between Previous

Maximum UI Price is 8.24 Rs/kWh Maximum UI Price is 8 Rs/kWh

At Frequency 50 Hz = UI Price is 1.78 At Frequency 50 Hz = UI Price is Average

Frequency Range is 49.70 Hz to 50.05

• Charges for deviation below 49.85 Hz is fixed at 800

• Charges for deviation at 50.00 Hz will be Daily Average

• DSM rate vector will have a dynamic slope determined

Impact of Sign Change

• Cap Rate for all generators (Irrespective of Fuel Source)

• In case of non-availability of daily simple

• Violation of this clause, shall attract an additional

Frequency Vs. Price

Frequency Vs. Price

Frequency Vs. Price

Frequency Vs. Price

Frequency Vs. Price

Frequency Vs. Price

Frequency Vs. Price (96 Time Blocks) for 06.11.2018

1. In case Schedule is 500 MW and Unit got

2. In case our total Schedule is 500 MW out of

1. Plant should maintain their schedule

1. As per Fourth Amendment, DSM price is

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