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Transmission send State Grid Code Regulation 2021-03-02 15:05:04


Telangana State Electricity Regulatory Commission (Deviation Settlement Mechanism and related matters) Regulation, 2020

Keywords: Grid Code Regulations, Annual Fixed Charges, Ramp-up, Ramp-down, Spinning Reserve, Grid Coordination Committee, STU, capacity factors, Solar Rooftop Systems, Intra-state Transmission, Ancillary Services, Merit Order Despatch

Highlights -

TSERC notified draft for Deviation Settlement Mechanism (DSM) on 28th December, 2020. This Regulation will come into picture from 1st March, 2021. Key facets of this Regulation are given below:
Objective – The objective of this regulation is to maintain grid discipline and grid security (Regulation 3).

CER Opinion -

❖ Need for an objective definition of ‘gaming’ (Regulation 2.1(p)): The objective definition of ‘gaming’ should clearly identify the basis for assessing ‘intentional mis-declaration’ of the schedule. As an alternative, tightening of the deviation limit during the peak hours (when DSM prices are expected to be higher) can also reduce the incentive for gaming through over injection by the generators/under-drawl by the buyers.

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Renewable send Tariff 2021-02-19 13:38:05


RERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2020

Keywords: RoE, CAPM & Three factor IoWC, RE Storage

Highlights  -

RERC notified Draft for Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2020 which will be applicable from 1st April, 2020 – 31st March, 2023. Highlights of the proposed regulations are as follows:

❖ Different norms and eligibility criteria to be specified for Non-fossil fuel based Co-generation project, MSW, RDF based power project and Small Hydro project.
❖ Parameters for new RE technologies such as Floating Solar Project, Renewable Hybrid Energy Project and RE Project with Storage to be specified in line with the CERC RE Tariff Regulations, 2020.

CER Opinion -

Despatch principle for Treatment of Biomass, Biogas and Biomass Gasifier based power plant (Clause - 14.4):

❖ Removal of Biomass, Biogas and Biomass Gasifier based power plants from ‘MUST RUN’ status and subjecting these to Merit Order Despatch principle would reduce their PLF in comparison to the one used for the calculation of tariff. Further, as tariff for such plants is of a single-part nature, these plants would face viability issue. Such plants would have to compete with conventional plants, particularly coal-based power plants, which have two-part tariff, and thus comparatively lower variable part of tariff.
Unless Biomass, Biogas and Biomass Gasifier based power plant also have a two-part tariff structure, these plants should continue to have must-run status. Regulatory approach should be to tighten some of the efficiency benchmarks especially those related to heat rate, auxiliary consumption and O & M costs.

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Renewable send Tariff 2020-11-27 17:55:51


CERC Terms and Conditions for Tariff determination from Renewable Energy Sources (RES) Regulation, 2020

Keywords: RoE, CAPM & Three factor IoWC, RE Storage

Highlights -

CERC issued draft for Terms and Conditions for Tariff determination from Renewable Energy Sources (RES) Regulation, 2020 for the control period 2020-21 to 2022-23. Highlights of the proposed regulations are given below:

❖ 'Floating solar project', 'Grid Code', 'Pumped storage hydro project', 'State Nodal Agency', and 'Storage' have now been defined. Further, the regulations also provides for the 'treatment for over generation'.

❖ Loan tenure is proposed to be increased from 13 years to 15 years.

The CERC Document can be accessed here.

CER Opinion:

❖ RoE: Pre-tax vs Post-tax (Section 19): - Clause 2 of Section 16 should be modified as –“The normative Return on Equity shall be 14%, to be grossed up st by prevailing rate of Minimum Alternate Tax (MAT), as on 1st  April preceding the CoD, for the entire Tariff Period”. (underlined text to be included)

- The cost on equity estimated by the CAPM approach is a post-tax estimate. A recent study at CER, IITK using CAPM and multi-factor models using a comprehensive data for over 125 infrastructure companies between 1998-2018, estimates the cost on equity for RE sector to range between 12.87-16.58%, on a post-tax basis. The estimate referred to in the Statement of Reasons (SoR) is also a post-tax estimate. Against the estimated post-tax cost of equity of 12.87% (using CAPM), the proposed RoE works out to 16.96% (after grossing up with 15% MAT plus 12% surcharge, and 4%  ecss).

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Electricity send Acts 2020-11-27 17:50:51


Electricity Act, 2003 Amendment 2020 [Draft]

Keywords: ECEA, DSL, DBT, APTEL, Payment Security Mechanism

Highlights -

The Ministry of Power on 17th Apr, 2020 issued draft for amendment to the Electricity Act, 2003. A brief summary of the proposed Amendments are given below:

❖ National Renewable Energy Policy (NREP) (Section 3A): Central Government, in consultation with State Governments, will prepare NREP to promote RE generation, and prescribe RPO for renewable and hydro energy.

❖ Cross Border Trade of Electricity (CBTE) (Section 49A): Central Government to frame rules and guidelines, and CERC will formulate regulations to facilitate CBTE. 

The MoP Document can be accessed here.

CER Opinion:

1) Standard Guidelines for Distribution sub-licensee (DSL) and franchisee
❖ The set of standard guidelines for award of DSL and franchisee should be formulated by the Central Government in consultation with State Government and the SERCs. These guidelines should define the mode of award for DSL (outright sale, lease, etc.), role of competitive bidding, duration, commercial arrangements, sharing of risk and regulatory provisions thereof. 
❖ Visibility of operations and regulatory purview for franchisee also needs to be enhanced. 
❖ SERCs would need to amend distribution license and the relevant regulations to segregate the provisions applicable to the distribution licensee and the distribution sub-licensee. For example, the provisions related to the sub-licensed areas would now need to be excluded from the original licensed areas to avoid multiplicity of accountability. 
❖ Will the respective SERC be able to cancel DSL in case of its failure to meet the provisions of the Act and regulations of the respective SERC? 

2) PPA allocation to DSL
❖ Commercial arrangement for award of DSL should also specify if the sub-licensee would be allocated the existing PPAs, or provided electricity at pooled price by the existing holding/bulk supply company of the state or would be allowed to make own arrangement for power purchase. 
❖ As the DSL would not require a license for power trading, would it be allowed to make its own power procurement? If so, the existing distribution licensee will be saddled with expensive PPAs unless the same is allocated to the DSL. 

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Fundamentals of Renewable Energy: Economics, Policy and Regulation send Renewable Energy Development 2020-11-27 17:43:59


MNRE: Draft Guidelines for Implementation od Off-Grid Solar Power Plants in RESCO model under MNRE Programme

Keywords: RESCO model, upfront, SNA/IA, CFA

Highlights -

The Ministry of New and Renewable Energy (MNRE) on 18th May, 2020 released draft guidelines for implementation of off-grid solar power plants under RESCO model. Key highlights are given below: 
❖ The scheme is applicable only for North-eastern States and extended till 31 Mar, 2021. 
❖ Off-grid solar power plants up to 25 kWp can be installed in areas without or unreliable electricity access.  
The MNRE Document can be accessed here.

CER Opinion:

❖ The guidelines should provide a framework to identify the size/number of such projects from a list of pre-identified districts having under electrified/unreliable supply. 
❖ A transparent and fair process for the 'Swiss Challenge' approach, which allows for identification for prospective sites by a developer, may be adopted for procurement under this scheme. 

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Fundamentals of Renewable Energy: Economics, Policy and Regulation send RE Policy and Regulation 2020-07-06 15:17:36


WBERC’s Draft for Amendment to Cogeneration and Generation of Electricity from Renewable Sources of Energy Regulations

Keywords: Renewable Energy, Cogeneration, Net-metering, Solar Rooftop, RPO Regulations, RPO Targets, West Bengal, Solar REC, Non-solar REC

Highlights -

The WBERC notified draft for the amendment to Cogeneration and Generation of Electricity from Renewable Sources of Energy Regulations, 2013. Highlights are below:

1. Consumer can install rooftop system of 1 kW or above capacity (up to total sanctioned load or contract demand) can claim net-metering/net-billing benefits.
2. DISCOMs are proposed to procure 100% of energy from waste to energy plants in their respective areas.
3. Unmet solar RPO obligation above the 85% of total RPO can be met by non-solar energy, and vice-versa.

CER Opinion -

1. RPO trajectory for the state should be specified in advance so as to provide opportunity to obligated entities to make appropriate investments or plan to procure RE/REC.
2. In case the tariff for RE has been discovered under section 63 of EA, 2003 and has been adopted by the commission, the same should not be subjected to the price cap under regulation 6.0.
3. An RPO compliance framework, supported with penalty in proportion to the shortfall, would help ensure that obligated entities take adequate steps to meet their RPO target including through purchase of RECs.

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Distribution send Standard of Performance 2020-06-08 11:44:55


CSERC Standard of Performance (SoP) in Distribution of Electricity Regulation, 2020

Keywords: Standard of Performance, DISCOMs, ARR, Consumer Awareness, SoP Compensation.

Highlights -

The Standard of Performance (SoP) regulation issued by CSERC on 15th May 2020 allows variation across geographical areas of DISCOM, and across DISCOMs. A summary is below:
1. If the licensee fails to maintain SoP, it is liable to compensate consumer at rates specified in the regulation, which cannot be claimed in ARR.
2. To spread awareness regarding SoP among consumers and staff, the licensee to make manuals available at offices and on the website, display guaranteed standards of performance at local offices.
3. The licensee is to submit quarterly report on the level of performance achieved, and on the number of cases in which compensation was payable and the amount paid/payable in each case to the commission.

CER Opinion -

1. A SoP index can be developed based on key performance parameters for each feeder and consumers connected to it, which should be used for implementing a penalty/incentive framework for the associated employees.
2. Given that DISCOM would manage a system of complaint registration and follow thereof, such a system should have a mandatory audit trail with due communication (SMS/email) to the consumers.
3. The commission may periodically review the current level of performance and setup multi-year benchmarks for SoP.

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Transmission send State Grid Code Regulation 2020-05-25 13:40:47


MERC’s Draft for State Grid Code Regulations, 2020

Keywords: Grid Code Regulations, Annual Fixed Charges, Ramp-up, Ramp-down, Spinning Reserve, Grid Coordination Committee, STU, capacity factors, Solar Rooftop Systems, Intra-state Transmission, Ancillary Services, Merit Order Despatch

Highlights -

MERC released draft State Grid Code Regulations (MEGC, 2020) on 1st Mar 2020. MEGC, 2020 is applicable to all generators in the state connected to intra-state transmission system (InSTS), transmission licensee in the state including STU, Maharashtra SLDC, distribution licensees including deemed distribution licensees, Indian Railways, OA consumers and EHV consumers connected to InSTS. Major highlights of the proposed regulations are below:

1. STU is to explore and evaluate alternate options if capital expenditure for any new transmission system exceeds threshold limit of ₹100 crore or as declared by the Commission from time to time.

2. SLDC need to maintain the spinning reserve margin equivalent to 3% of the system peak demand and 3% of installed capacity for the generators to manage ramp up.

3. The generating company can de-rate the capacity or can go for repeat trial run. The demonstrated capacity, in case of derating, will be equal to or greater than 105% of de-rated capacity for thermal InSGS and 110% for hydro generating station.

CER Opinion:

1. The investment approval framework should include a cost-benefit analysis considering economic efficacy of the investment and the system security over medium to long-term. Excess investment towards reliable of power supply needs to be controlled to avoid burden on consumers.

2. Clause 30.6 requires 'instantaneous' picking up of the generation to 105/110% in case of ‘sudden fall in system frequency’, which should be specified.

3. Framework for procurement and payment for spinning reserve capacity margin and its recovery from system participation (specially load serving entities) should be specified.

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Renewable send REC Framework 2020-05-25 13:33:49


CERC's Proposal for Determination of Forbearance Price and Floor Price for the REC Framework

Keywords: REC Framework, Floor price, Forbearance Price, Solar REC, Non-solar REC, RPO

Central Electricity Regulatory Commission (CERC), via notification dated 31st Mar 2020, proposed to adopt forbearance price and floor price of Renewable Energy Certificates (REC) as given in the table:


Solar REC (₹/MWh)

Non-Solar REC (₹/MWh)

Forbearance Price



Floor Price



CER Opinion:

1. As the proposed REC floor price for solar/non-solar RECs is zero, reference to floor price as a part of REC framework under the principle REC Regulations can be deleted.

2. Given that SERCs are allowing excess solar (non-solar) RPO quantum to be adjusted against non-solar (solar) RPO, fungibility between solar and non-solar RECs is clearly visible and should be institutionalized.

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Distribution send Open Access 2020-05-25 13:03:20


HERC: Guidelines for certifying or refusing to certify non-availability to Transmission/Distribution system or Unscheduled Load Shedding

Keywords: Open Access, Captive plants, Independent Power Producers, Contract Demand, Inter-state sale, Intra-state sale.

Highlights -

HERC drafted guidelines for certifying or refusing to certify non-availability to transmission or distribution system for OA consumers. Major highlights of the proposed regulations are below:

1. Surplus capacity to be offered to LTOA, MTOA, and STOA in respective order. In case of system enhancement, the applicant will pay the Distribution Capacity cost for grant of LTOA.
2. Consumers capacities of 10 MW and above will be eligible for connectivity at 33 kV or above, rest at below 33 kV.
3. In case of unnotified outage on account of transmission/distribution system, the licensee will compensate the OA consumer the charges payable by consumer to the generating company or the lowest tariff applicable to the consumer category, whichever will be lower.

CER Opinion:

1. To discourage withholding and to bring competitiveness in allocation of unused transmission/distribution capacity, the unused transmission capacity should automatically be released to the SLDC.
2. In case of refusal of OA application, SLDC should provide alternate slots/lower capacity or a timeline for available capacity in future.
3. In case of failure of power evacuation and compensation for wheeling and transmission charges, a mechanism to pass on the benefit to the buyer should be introduced.

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System Operation & Forecasting send Data Collection 2020-05-25 12:55:10


CEA proposes amendment to Furnishing of Statistics, Returns and Information Regulations, 2007

Keywords: Captive Projects, Independent Power Producers, industrial Consumers, Power Purchase Agreement, The Electricity Act 2003, National Electricity Policy, 2005, National Tariff Policy, 2016, REC, Wind Projects, Solar Projects, Hybrid Projects, Electricity Demand.

Highlights -

The Central Electricity Authority (CEA) has proposed amendment to Furnishing of Statistics, Returns and Information Regulations, 2007. The CEA proposes to add four new formats (Format 21A, Format 21B, Format 66 and Format 67) for furnishing of the information in the Regulations.

CER Opinion:

1. Scope for format 21A and 21B should be defined in such a manner that the two tables are mutually exclusive. As per given definition, there would be common CPPs whose data would be reported in both tables.
2. In the format 21A, unit of Electricity Demand should be MVA instead of MW as industrial contract demand is considered in MVA
3. ‘Variable charges’ may be used in place of ‘fuel charges’ in column 16 of the format 66.

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Power Markets send Real Time Market (RTM) 2020-04-12 11:23:28


POSOCO's "Draft Procedure for Collective Transactions through Real Time Market (RTM)"

Keywords: NLDC, RLDC, SLDC, Energy Trading, IEX, PXIL, Load Curtailment, Congestion Management

Highlights -  

POSOCO released draft procedure for scheduling collective transactions in RTM. The draft addresses issues related to processing of application, treatment of losses, congestion management, and revision of schedule, etc. Major highlights are below:

1. Proposal for allocation of transmission corridor to exchanges based on ratio of their shares in the cleared volume in DAM, subject to minimum 10% for exchange having smaller share.  

2. It is proposed that the exchange should submit scheduling request to the NLDC 3 time blocks ahead for delivery of the power.

3. Proposal for the SLDCs to schedule transactions for state utilities/intra-state entities, given the exchange should send detailed breakup of each point of injection and drawl to respective SLDCs two time blocks ahead of delivery time.

4. In case of transmission constraints or threat to grid security, short term transaction to be curtailed first, followed by medium and long-term.

CER Opinion:

1. POSOCO should evaluate the impact of the allocation scheme and identify the pattern of underutilization of allocated transmission capacity and seek suggestions to address the same.

2. More clarification is required for cases where a beneficiary/generator can trade in RTM for the ‘same’ capacity, a single standing clearance, if required, would suffice.

3. If the respective ERC order for intrastate transmission charges or the SLDC system operating charges is not available, the procedure specifies such charges to be applicable. Legal aspects of such a ‘determination’ should be reviewed to avoid any issues later.

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Renewable send Solar Power Procurement 2020-04-07 19:31:44


GERC's "Tariff Framework for Procurement of Power by Distribution Licensees and Others from Solar Energy Projects and Other Commercial Issues for the State of Gujarat"

Keywords: Open access regulation, Captive power plant, Cross-subsidy Surcharge, Transmission Charge, Wheeling charges, Third Party Sale, Solar power, Power procurement, REC, Competitive bidding, Energy Banking, Banking charges, RE Forecasting

Summary -

The GERC notified discussion paper for tariff framework concerning procurement of solar power by DISCOMs and other stakeholders. The discussion paper proposes competitive bidding for all solar projects, including small projects of 5 MW or less capacity. A brief summary is below:


1. For projects below 5 MW capacity, proposal to determine tariff through competitive bidding in different time period of 6 months of the year.

2. Proposes a maximum allowed capacity at 50% of contracted load for captive use, third party sale, and projects under national solar mission.

3. Wheeling and cross subsidy charges between 50% to 100% as applicable to normal OA consumers, are proposed for different category of projects.


CER Opinion

1. Linking tariff determination of small project (below 5 MW) with larger projects is a positive step, but the commission should also consider the significant diseconomies of scale for smaller projects while finalizing tariff.

2. We suggest that the basis for linking of tariff for small project can be pegged at a rate bit higher than the prevailing mark-up.

3. A large number of small scale projects can be bundled together to form a competitive market for smaller PV projects and offering them for bidding. This can address issues related to economies of scale.  

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Renewable send Renewable Power Procurement 2020-03-26 11:14:26


TNERC's "Consultative Paper for Procurement of Solar and Wind Power by Distribution Licensee and Related Issues"

Keywords: Open access regulation, Captive power plant, Cross-subsidy Surcharge, Transmission Charge, Wheeling charges, Third Party Sale, Solar power, Power procurement, REC, Competitive bidding, Wind power, Energy Banking, Banking charges, RE Forecasting


The TNERC notified consultative paper for procurement of solar and wind power by DISCOM, which proposes competitive bidding for solar power procurement, and to levy 100% transmission and wheeling charges, line losses, and cross-subsidy surcharge. Further, it proposes to impose stand by charges, grid availability charges, charges for higher harmonics, reactive power charges, power factor disincentives, and capping of contracted capacities for open access consumers including captive users. Additionally, multiple energy banking options are proposed for wind projects according to their commissioning dates.  

CER Opinion:

1. Removal of exemptions for wheeling and intrastate transmission charges would only reduce the cost advantage for Captive and OA consumers but would not eliminate it. 
2. Withdrawing exemptions is not likely to contribute to the financial gap and may not enhance the 'financial performance' of the utilities. 
3. Additionally, the intermittency issues of RE can be addressed by tightening the state's grid code and regulations for forecasting and deviation settlement.
4. Capping excess generation for OA consumers including captive users can be addressed by allocating equivalent RECs or by paying equivalent REC price.

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Renewable send Open Access and Captive Generation 2020-03-23 17:59:36


APERC's "2nd Draft Amendment to Open Access Regulation"

Keywords: Open access regulation, Captive power plant, Cross-subsidy Surcharge, Transmission Charge, Wheeling charges, Third Party Sale, RE Forecasting

(Open Access and Captive  Generation) Summary: 

The APERC notified draft for 2nd amendment to its open access regulation 2005, which proposes to impose 100% transmission and wheeling charges, distribution losses, and cross-subsidy surcharge for captive use or third-party sale.

CER Opinion:

1. Concern regarding RE intermittency issues could be addressed by tightening forecasting regulations along with the application of deviation settlement mechanism (DSM) can help ameliorate this impact to some extent. 
2. Removing exemptions may only reduce benefits for captive and open access consumers, 
3. The small revenue generated by relaxing exemption may not have much effect on DISCOMs financial performance. 

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