Himachal Pradesh Prepares to Amend Deviation Settlement Mechanism Regulations

There are likely to be additional charges for sustained deviation


The Himachal Pradesh Electricity Regulatory Commission (HPERC) has issued draft amendments to its regulation on deviation settlement mechanism.

The amendments have been proposed in line with the Central Electricity Regulatory Commission’s (CERC) fifth draft amendment to the deviation settlement regulations which were introduced recently to accommodate the latest developments in the electricity sector.

Stakeholders have 30 days to respond with comments and suggestions to the draft amendment. The draft will become final on the first day of the week starting immediately after the date of publication in the state’s official gazette.

Keeping with the times, HPERC has proposed the concept of area clearing price: the price of a time block electricity contract established on the power exchange after considering all valid purchase and sale bids after dividing the market across constrained transmission corridors.

The commission has also proposed the inclusion of clauses related to daily base deviation settlement mechanism: the sum of charges for deviations for all time blocks in a day payable or receivable, excluding the additional charges.

It also wants to include clauses pertaining to day-ahead market (DAM), simple average area clearing price (discovered daily by the NLDC for the DAM), and time block deviation settlement mechanism which is the charge for deviation for the specific time block in a day, excluding the additional charges.

Now, in addition to the charges, the state entity will also be liable to pay the additional charges in case of violation of the requirements in relation to sustained deviations. HPERC has proposed a 0.2 MW deviation limit in any direction (positive or negative) for a time block of up to 10 MW, for time block of up to 25 MW, the maximum permissible deviation is 0.5 MW. For deviation of the time block up to 100 MW, the deviation of 1 MW is allowed and for time block of more than 100 MW, the permissible deviation is 5 MW. Each violation will attract an additional charge of 10% on the time block deviation settlement mechanism.

Moreover, if the sustained deviation from schedule continues for 12, time blocks on or before March 31, 2020, the state entity (buyer or seller), will correct its position either by changing the sign of its deviation from the schedule or by restricting the sustained deviation to the permissible limits.

From the first to the fifth violation, each violation will attract an additional charge of 3% of the daily base deviation settlement mechanism. Then from sixth to 10th violation, the violations will attract an additional charge of 5% and from the 11th violation onwards, for each violation, an additional charge of 10% of daily base deviation settlement mechanism will apply.

In 2019, states like Gujarat and Rajasthan have also come up with new deviation settlement regulations.

Saumy Prateek Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.