CERC defers DSM reserve-sharing mechanism by six months

The Central Electricity Regulatory Commission (CERC) has extended the timeline for implementing a key provision under the Deviation Settlement Mechanism (DSM) Regulations, 2024. The order, issued suo motu on March 30, 2026, delays the shift to a reserve-shortfall-based deficit sharing mechanism by six months.

The decision follows operational constraints in establishing a framework for quantifying and settling grid reserves, as flagged by Grid India and the National Load Despatch Centre (NLDC).

Current mechanism to continue till October 2026

Under Regulation 9(7) of the DSM Regulations, any deficit in the Deviation and Ancillary Service (DAS) Pool Account not covered by surpluses in other regional accounts is recovered from Designated Inter-State Transmission System (ISTS) Consumers (DICs).

Until March 31, 2026, this recovery was to be split equally. Fifty per cent is based on each DIC’s drawal at the ISTS periphery, and the remaining 50 per cent is linked to their Gross Notional Allocation (GNA).

The Commission has now directed that this existing mechanism will continue until October 4, 2026.

Revised timeline for new framework

The DSM Regulations had earlier provided for a shift from April 1, 2026 to a reserve-shortfall-based approach. Under this, deficits would be allocated based on the shortfall of reserves assigned by NLDC to each DIC.

However, Grid India and NLDC indicated that the methodology for assessing reserve requirements, measuring actual reserves, and settling them is not yet in place.

Invoking its powers under Regulation 12 to remove difficulties, CERC has deferred the implementation. The revised mechanism will now take effect from October 5, 2026.

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