Court Upholds Deviation Settlement Mechanism Order Passed by Rajasthan Commission

Members of Indian Wind Power Association had challenged the state electricity commission’s regulation on forecasting, scheduling, and deviation settlement mechanism


Recently, a petition filed by the Indian Wind Power Association (IWPA) had challenged the validity of the deviation settlement mechanism (DSM) regulations passed by the Rajasthan Electricity Regulatory Commission (RERC) and requested it to be scrapped.

The members of IWPA had pleaded that the DSM charges were high and that they were major sufferers due to unscheduled power cuts, refusal to offtake power by the state power distribution companies (DISCOMs) despite good generation during peak hours.

The other point of contention raised by the petitioners was that they were liable to pay high settlement charges and that the QCAs (Qualified coordinating agencies), which are responsible for coordinating between generators and state load despatch centers, lacked adequate technical expertise and that the selection of QCAs was forced on them.

The Rajasthan High Court reviewed the petition and has now found that the regulations were valid. In its order, the bench said:

“In our considered opinion, the requirement of wind energy generators to provide a week ahead or a day ahead scheduling is well within the powers of RERC to regulate the forecasting, scheduling, and generation of the electricity. Merely because precise forecasting is not possible or feasible as alleged by the petitioners, the provisions requiring such scheduling cannot be held as arbitrary. Similarly, the imposition of deviation charges by Regulation 18 in the event of failure to adhere to the scheduled generation can also not be declared arbitrary.”

“We are of the firm view that, whatever may be the source of generating the power, the principle as far as power to levy charges or fine by whatever name called on account of deviation is concerned, they have been settled and shall remain unaltered.”

As far as the QCAs are concerned, the respondents (RERC and DISCOMs) argued that the petitioners did not have any substantiating evidence in the matter. Also, they did not allow QCAs to be a part of the petition, and therefore, the QCAs could not defend themselves.

The high court accepted that a significant amount of technical expertise would be necessary to evaluate the finer points of the regulation. The court recommended that the petitioners should approach the RERC with their grievances, (including those which have been raised in the petition) for their redressal. The petitioners have been asked to file their petition within a period of 15 days. The court has asked the state load despatch center to refrain from recovering DSM charges until then.

The RERC had issued draft amendments to the 2017 regulations on deviation settlement mechanism for grid-connected power in January 2019.

Recently, the RERC dismissed petitions filed by captive solar project developers seeking relief from applicable wheeling and banking charges. In its order, the commission clarified whether wheeling charges should be levied on the capacity contracted or the energy wheeled.

In October 2018, the commission had released a staff paper on projects registered under renewable energy certificate (REC) mechanism in the state. It had proposed that DISCOMs should purchase the renewable power generated from such projects at the lowest pooled cost notified by the RERC since 2010, that is ₹2.67 (~$0.035)/kWh.