Taking a stern view of grid indiscipline, the Central Electricity Regulatory Commission (CERC) has made certain changes to the regulations currently governing the unscheduled interchange (UI) regime and has notified the revised regulations, which will be applicable for grid injection and withdrawals commencing on or after May 3, 2010. Through this amendment, the apex regulator has provided that under-declaration and over-injection, beyond the permissible quantities, will be disincentivized via capped pricing, to prevent misuse of the UI mechanism by generating stations. This is expected to draw a significant chunk of UI transactions to the regular market, thus increasing its liquidity.
Moreover, in order to more effectively curb the tendtiency of some states to heavily overdraw and deprive other states of their legitimately purchased electricity, an additional UI surcharge of 40%, on the normal UI rate of Rs 8.73 per unit, will also now be applicable at grid frequencies below 49.5 Hz. To further deter grid overdraw, the additional UI surcharge applicable during periods of grid frequency below 49.2 Hz will be 100% of the normal rate.
Further, to ensure timely payment of UI charges, CERC has directed that any utility that defaults in remitting payment even once will be mandated to open a Letter of Credit in favour of system operator, while the amount paid in UI account will now be first adjusted towards any interest amount due. According to CERC, these provisions should result in reduced defaults.
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