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<p>CERC has issued Volume 2 of Expert Committee Report on Review of the Principles of Deviation Settlement Mechanism (DSM), Including Linkage with Frequency. DAM price of the power exchange having a market share of 80% or more in energy terms on a daily basis to be linked to the DSM price. If there is no single power exchange having a market share 80% or more, then, the weighted average DAM price to be used for linking to the DSM price. Daily average (ACP) in the DAM should be used as the basis for market linked DSM price at 50 Hz for the time being and not the time block ACP which could have high volatility. Frequency band for the purposes of the DSM price vector may be taken as 49.85-50.05 Hz to begin with.</p> <p>A time period of 6 months may be given as an advance notice period to the utilities to gear up. At the end of 6-month period, the frequency band for DSM price vector should be changed to 49.90-50.05 Hz so as to align with the IEGC mandated operational frequency band (as amended from time to time). The average daily ACP be used as a reference and linked to the DSM rate at 50 Hz. The DSM rate vector will be dynamic and slope determined by joining the identified price points at 50 Hz. (daily average ACP), low frequency of 49.85 Hz (` 8 per unit) and 50.05 Hz (zero) on a daily basis.&nbsp;</p> <p>Further, in energy terms, the total deviation from schedule during a day should not be in excess of 3% of the total schedule for the drawee entities and 1% for the generators and additional charge of 20% of the daily base DSM payable/receivable shall be applicable in case of the said violation. Comparison of the existing DSM price vector Linking of DSM prices to DAM prices may be implemented for 6-months on a pilot basis from 01st April, 2018.</p>