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CERC Reaffirms Methodology for Recovering Legacy Dues in DSM Pool Account

The Central Electricity Regulatory Commission (CERC) has reiterated that the approved methodology outlined by the National Load Despatch Centre (NLDC) for managing deficits in the Deviation Settlement Mechanism (DSM) Pool Account has been effective since September 16, 2024.

Distribution companies (DISCOMs) have been directed to ensure timely payment of dues to avoid delays in compensating ancillary service providers, which is essential for maintaining grid stability.

CERC’s updated regulations, notified in August 2024, established a process under Regulation 9(7) for addressing deficits in the Deviation and Ancillary Service Pool Account. The NLDC categorized the dues into Legacy Dues which accumulated prior to September 16, 2024 & current Dues, which accrued from September 16, 2024, onward.

While CERC approved the NLDC’s recovery procedure, some DISCOMs challenged the fairness of recovering legacy dues, claiming the procedure lacked explicit provisions for this.

The Commission stressed the importance of the DSM Pool Account in ensuring timely payments to ancillary service providers, a cornerstone of grid reliability. Payment delays could deter service providers and disrupt grid operations. CERC also referenced its earlier Staff Paper on ‘Grid Security Charge,’ which noted a growing deficit in the DSM Pool Account. As of March 2024, the deficit had reached Rs4 billion highlighting the urgency for an effective recovery mechanism.