In the Matter of Directions for removal of difficulty in implementation of the CERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2024 – EQ
Summary:
—-
**Key Business Points:**
1. **Extension of existing recovery mechanism** – The current methodology for recovering deficits from Drawee DICs (Distribution/Interface Companies), which uses a 50:50 ratio based on drawal at IST periphery and GNA (General Network Access), will remain in force until **October 4, 2026** instead of the earlier deadline of March 31, 2026.
2. **Deferment of new reserve-based recovery mechanism** – The new mechanism (sub-clause (ii) of Regulation 9(7)), which allocates deficits based on *shortfall of reserves allocated by NLDC to each DIC*, will now become effective only from **October 5, 2026** (postponed from April 1, 2026).
3. **Reason for delay** – Grid India / NLDC reported operational challenges in implementing the new regime, including:
– High reserve requirements
– Lack of robust methodology for quantification and declaration of reserves by SLDCs
– Difficulty in measuring actual reserves
– Need for a clear dispatch and settlement mechanism
4. **Regulatory flexibility invoked** – CERC has used its “Power to Remove Difficulty” (Regulation 12 of DSM Regulations, 2024) to issue this direction, acknowledging that additional time is required to build the necessary framework.
5. **Continued interim stability** – Market participants, DICs, and system operators will continue to operate under the existing, simpler deficit allocation formula for another ~6 months beyond the original cutoff.
6. **Pending procedure** – NLDC is still expected to prepare, with CERC’s approval, a detailed procedure for:
– Recovery of charges during deficit
– Computation of reserve shortfall
– Allocation of deficit among DICs
**Implication for stakeholders:**
No immediate change to current settlement mechanics for DAS Pool deficits until October 2026. Entities should prepare for the new reserve-linked allocation mechanism but with an extended timeline.
—-
For more information please see below link:
