CERC proposes new regulations for Power System Development Fund

The Central Electricity Regulatory Commission (CERC) has issued new regulations for Power System Development Fund (PSDF). The fund, which was formed to make the power transmission system more free flowing, improve the grid’s voltage profile and renovate transmission and distribution systems, has always been in question for underutilisation. The fund comprises credits received from a variety of charges collected which include congestion charges, surplus deviation settlement charges, reactive energy charges and additional transmission charges arising out of the explicit auction process in short-term open access advance bilateral transactions.

CERC has proposed that the PSDF be utilised for funding transmission infrastructure projects in response to feedback by the load despatch centres to relieve congestion in interstate and intrastate transmission systems affecting the inter-state transmission systems (ISTS). The fund will also be utilised for the installation of shunt capacitors, series compensators and other reactive energy generators for improvement of voltage profile in the grid. Further, it proposes renovation and modernisation of transmission and distribution systems for relieving congestion using the fund.

Regarding the approval of funds from PSDF, the CERC proposes that the central government should frame procedures or guidelines, either directly or through the nodal agency, for application, processing, sanction, disbursal, appraisal and monitoring of funds from PSDF. The new regulations will come into effect from the date of their publication in the Official Gazette.

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