JSERC proposes market-linked intra-state DSM framework for Jharkhand
The Jharkhand State Electricity Regulatory Commission (JSERC) has released draft regulations proposing a new market-linked framework for settlement of deviations in generation, drawal and injection within the state’s power system, replacing the existing intra-state Deviation Settlement Mechanism (DSM).
Issued as the draft JSERC (Intra-State Deviation Settlement Mechanism and Related Matters) Regulations, 2026, the regulations were published on July 24, 2026. The proposed framework aligns broadly with the Central Electricity Regulatory Commission’s (CERC) DSM Regulations, 2024, while introducing state-specific provisions on deviation limits, persistent deviations and payment security to address Jharkhand’s operational requirements.
According to the Commission, the revised framework reflects changes in electricity markets, increasing renewable energy integration, open access transactions and the growing role of energy storage systems in grid operations.
Market-linked settlement
A key feature of the draft regulations is the introduction of market-linked deviation charges. Instead of a fixed pricing mechanism, the “Normal Rate of Charges for Deviation” will be linked to prevailing market prices, including the weighted average Area Clearing Price (ACP) of the Integrated Day-Ahead Market (I-DAM) and Real-Time Market (RTM) segments of power exchanges, along with ancillary service charges.
“The objective of linking deviation charges with market signals is to ensure that the commercial settlement of deviations reflects the economic cost of balancing the power system during the relevant time block,” the Commission said in its Statement of Reasons.
The Reference Charge Rate (RR) for sellers will be determined using approved energy charges, applicable power exchange prices or the weighted average ACP, depending on the nature of the transaction.
Coverage
The proposed regulations will apply to all sellers with an installed capacity of 10 MW or above connected to the intra-state transmission system, including renewable energy generators other than wind and solar, open access generators and captive generators.
All buyers, including distribution licensees and full open access consumers, will also be covered.
Wind and solar generating stations have been kept outside the scope of the regulations and will continue to be governed by the JSERC (Forecasting, Scheduling, Deviation Settlement and Related Matters of Solar and Wind Generation Sources) Regulations, 2016.
Deviation charges
Under the draft framework, deviation for a seller will be calculated as the difference between scheduled generation and actual injection, while for buyers it will be the difference between scheduled and actual drawal.
For generating stations other than Run-of-River (RoR) hydro projects and Municipal Solid Waste-based plants, deviation charges will vary according to system frequency. At normal grid frequency of 49.97 Hz to 50.03 Hz, both over-injection and under-injection within the prescribed Deviation Volume Limit (VLS) will attract charges equivalent to 100% of the RR.
The commercial treatment changes as frequency moves outside the normal operating range. During lower-frequency conditions, charges increase to discourage deviations that could affect grid security, while at higher frequencies, incentives for over-injection are progressively reduced, including zero receivables above 50.05 Hz and a payment obligation by sellers when frequency reaches 50.10 Hz or higher.
Deviation limits
The Commission has also proposed deviation volume limits to discourage excessive deviations from schedules.
General sellers will be permitted deviations of up to 10% of Declared Generation Schedule (DGS) or 100 MW, whichever is lower, while RoR hydro stations will be allowed deviations of up to 15% of DGS or 150 MW.
Separate limits have been prescribed for buyers based on scheduled drawal. Higher commercial penalties, including charges of up to 200% of the Normal Rate (NR), have been proposed for buyers drawing power beyond the prescribed limits during low-frequency conditions.
Persistent deviations
A new provision requires every state entity to reverse the direction of its deviation at least once after every six time blocks to prevent continuous over-drawal or under-drawal.
Failure to comply will attract an additional charge equivalent to 20% of the applicable deviation charges for each violation.
According to JSERC, the provision is intended to discourage persistent deviations and prevent the DSM mechanism from being used as a substitute for planned power procurement.
Settlement mechanism
The proposed regulations strengthen payment security by requiring entities with payment defaults to establish a Letter of Credit (LC) equivalent to 110% of their average weekly DSM payment liability.
Deviation charges will be settled weekly through a State Deviation Pool Account to be maintained and operated by the State Load Despatch Centre (SLDC). Delayed payments will attract a surcharge of 0.04% per day.
Hydro and storage
Recognising their different operating characteristics, the Commission has proposed separate deviation settlement provisions for Run-of-River hydro stations and Energy Storage Systems (ESS).
For RoR hydro projects, deviation charges will not be linked to system frequency. Over-injection up to 15% of DGS or 150 MW will be settled at the RR, while injections beyond that limit will not receive any payment. Under-injection beyond the prescribed limits will attract progressively higher charges.
For ESS operating in charging mode, over-drawal will be treated as under-injection, while under-drawal will be treated as over-injection for the purpose of deviation accounting and settlement.
Gaming provisions
The draft regulations also strengthen provisions against deliberate gaming, persistent deviations and mis-declaration.
JSERC will have the authority to initiate inquiries either suo motu or on the basis of petitions. Where gaming is established, the Commission may order recovery of undue gains, disallow deviation charges otherwise receivable or impose additional commercial consequences.
Consultation
In its Statement of Reasons, JSERC said the proposed framework has been developed in response to the notification of the CERC DSM Regulations, 2024, the growth of market-based electricity trading through RTM and I-DAM, and increasing operational complexity arising from demand growth, renewable energy integration, open access transactions and energy storage systems.
The Commission stated that while the regulations broadly follow the CERC framework, state-specific provisions relating to deviation volume limits, sign-change requirements and treatment of persistent deviations have been incorporated to address the operational requirements of Jharkhand’s power system.
The draft regulations have been published for comments, objections and suggestions under Section 181(3) of the Electricity Act, 2003.
The featured photograph is for representation only.
