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MERC Proposes Comprehensive DSM Reform to Enhance Grid Stability in Maharashtra

The Maharashtra Electricity Regulatory Commission (MERC) has released the Draft Deviation Settlement Mechanism (DSM) and Related Matters Regulations, 2025, aiming to modernize power scheduling, deviation accounting, and financial settlements. The draft covers all generators and consumers linked to the intrastate grid, including renewable and conventional sources, open access users, and energy storage systems.

Deviation will be calculated every 15 minutes as the difference between scheduled and actual energy (in MWh), with special rules for hydro, renewable energy pooling stations, and energy storage. Frequency-based deviation charges apply—rising when the grid is under stress and reducing when it’s over-supplied. Renewables above 1 MW enjoy a ±10% tolerance band; beyond that, penalties increase from Rs0.5 to Rs1.5/kWh. Captive renewable generators are exempt from charges.

Scheduling will follow 96 daily time blocks, with real-time despatch authority vested in the SLDC. Settlement occurs weekly via a State Deviation Pool Account, with late payments attracting 0.05?ily interest. The account will also fund grid studies and reliability upgrades. Security mechanisms include mandatory Letters of Credit and bank guarantees for high-risk or defaulting entities.

The reforms aim to ensure grid discipline, transparent settlements, and better integration of variable renewable energy amid growing demand and policy uncertainty.