The Uttarakhand Electricity Regulatory Commission (UERC) has issued the Draft Uttarakhand Electricity Regulatory Commission (Ancillary Services) Regulations, 2026, proposing a framework for procurement deployment, and paying for ancillary services at the state level.

Stakeholders can submit their feedback by July 3, 2026. The draft regulations aim to maintain grid frequency close to 50 Hz, restore frequency within the allowable band specified in the Grid Code, relieve transmission congestion, support smooth power system operations, and ensure grid safety and security.

The proposed framework will apply to intra-state entities, including entities with energy storage resources and entities capable of providing demand response, if they qualify to provide ancillary services.

Scope of Ancillary Services

The draft classifies ancillary services into primary reserve ancillary service (PRAS), secondary reserve ancillary service (SRAS), tertiary reserve ancillary service (TRAS), and other services related to power system operation, such as load following, reactive power support, and black start capability.

While the proposed regulations provide detailed provisions for SRAS and TRAS, the mechanism for PRAS and other ancillary services will continue to be governed by the State Grid Code or separate regulations.

The framework is aligned with the Electricity Act, 2003; the UERC State Grid Code Regulations, 2016; the Indian Electricity Grid Code, 2023; the UERC Deviation Settlement Mechanism Regulations, 2024; and the UERC Multi-Year Tariff Regulations, 2024.

SLDC in Reserve Management

The State Load Despatch Center (SLDC) must coordinate with distribution companies and state generating stations to collect the information required to estimate the quantum of secondary and tertiary reserves needed at the state level.

The SLDC must publish the reserve requirement on its website. It must also publish reassessed secondary and tertiary reserve requirements on a day-ahead basis and, if any, incremental requirements in real time.

A generating station, an entity with energy storage resources, or an entity capable of providing demand response on a standalone or aggregated basis and connected to the intra-state transmission system will be eligible to provide SRAS.

Eligible providers must have a bidirectional communication system with the SLDC, as well as metering, supervisory control, data acquisition, and telemetry. They must be able to provide a minimum response of 1 MW.

Generating stations providing secondary reserves must be enabled for automatic generation control. Providers must be capable of responding to a secondary reserve signal within 30 seconds, delivering the entire capacity obligation within 15 minutes, and sustaining the response for at least 30 minutes. Secondary reserves must be gradually replaced by tertiary services within 30 minutes.

The draft provides that secondary reserves may be activated and deployed by the SLDC when the Area Control Error of the state exceeds the minimum threshold of 10 MW in either direction, or any other limit notified by the Commission after reviewing secondary reserve performance.

For TRAS, a generating station, energy storage resource, or demand response entity connected to the intra-State transmission system may qualify if it can vary active power output, drawal, or consumption in response to dispatch instructions from SLDC. It must be capable of providing TRAS within 15 minutes and sustaining it for at least the next 60 minutes.

The SLDC may operate secondary reserves through tie-line bias control, flat frequency control, or flat tie-line control, depending on grid requirements.

Payment and Incentive Structure

The Regulation provides that SRAS-Up providers will be paid their declared energy charge or compensation charge from the Regional Deviation and Ancillary Service Pool Account, while SRAS-Down providers will pay back to the pool account at the applicable rate.

No commitment charge has been proposed for SRAS capacity that is identified but not activated, although the Commission has left scope to introduce such a mechanism in the future.

A performance-linked incentive framework has been proposed.

Providers achieving at least 95% performance against secondary control signals will receive an incentive of ₹0.50 (~$0.0052)/kWh. Incentives decline to ₹0.40(~$0.0042)/kWh for performance between 75% and 95%, ₹0.30  (~$0.0031)/kWh for 60% to 75%, ₹0.20 (~$0.0021)/kWh for 50% to 60%, and ₹0.10 (~$0.0011)/kWh for 20% to 50%.

No incentive will be payable for performance below 20%. Generating stations that receive an incentive will receive an incentive after adjusting for normative auxiliary consumption. Providers recording performance below 20% for two consecutive days may be disqualified from SRAS participation for one week.

Market-Based Procurement for TRAS

The draft proposes procuring TRAS through the Day-Ahead and Real-Time Ancillary Service Markets. Eligible providers, including generating stations, entities with energy storage resources, and entities capable of providing demand response, must be able to provide TRAS within 15 minutes and sustain the service for at least 60 minutes.

Price discovery for TRAS-Up will follow the uniform market-clearing price principle, subject to market splitting in case of congestion. The highest Energy-Up bid corresponding to the TRAS-Up requirement will set the market-clearing price.

Price discovery for TRAS-Down will follow the pay-as-bid principle. Energy-Down bids will be ranked from highest to lowest, and providers will be selected in that order to meet the estimated requirement.

TRAS-Up providers will receive the applicable market-clearing price for the quantum of energy instructed for dispatch. They will also receive commitment charges at 10% of the applicable market-clearing price, subject to a ceiling of ₹0.20 (~$0.0021/kWh, for TRAS-Up cleared in the Day Ahead Ancillary Service Market or Real Time Ancillary Service Market but not instructed for dispatch.

TRAS-Down providers must repay the Deviation and Ancillary Service Pool Account at their Energy-Down bid rate for the capacity instructed for dispatch.

Settlement Mechanism and Emergency Provisions

The regulations require that all payments and settlements to be routed through the Regional Deviation and Ancillary Service Pool Accounts.

The pool account will bear the cost of SRAS-Up energy charges, SRAS incentives, TRAS-Up dispatch payments and commitment charges, while credits will come from payments made by SRAS-Down and TRAS-Down providers.

Weekly settlement of liabilities will be carried out by the National Load Despatch Center (NLDC), the Regional Load Despatch Centers (RLDCs), the Regional Power Committees (RPCs), and SLDC as applicable. No transmission charges, transmission losses, or transmission deviation charges will apply to SRAS and TRAS transactions.

The draft also includes provisions for reserve shortfalls and emergency situations. Generating stations regulated under Section 62 of the Electricity Act that have requisitioned surplus power may be deemed available for ancillary services.

Such stations will incur energy charges and applicable incentives for SRAS deployment, while TRAS-Up deployment, due to market shortfalls, will be compensated at 110% of energy charges.

In emergency conditions, NLDC, RLDC, or SLDC may direct generating stations to provide ancillary services, with compensation based on tariff-determined energy charges or declared compensation charges.

The SLDC has been directed to prepare, within three months of the regulations’ notification, a detailed procedure for Commission approval covering operational, metering, communication, settlement, and market participation requirements.

Recently, UERC clarified that the Power Transmission Corporation of Uttarakhand is not required to execute a separate connection agreement directly with consumers seeking a new EHV connection, an enhancement or reduction of load, or a change in the distribution licensee.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.