BENGALURU: The Karnataka Electricity Regulatory Commission (KERC) has issued orders detailing the framework and notification for the Demand Flexibility Demand Side Management (DSM) Regulations, 2026.
The DSM is a critical in energy efficiency and consumption, enabling distribution licencees (Escoms) to manage peak demand, reduce power consumption during peak demand hours and shift usage to off-peak hours. The regulation programme can be implemented by Escoms and consumers. This regulation also helps consumers reduce their electricity bills, improve energy efficiency and enhance overall reliability of the energy system.
KERC has also notified the Framework Resource Adequacy (FRA) Regulations, which mandate Escoms to adopt energy efficiency measures to manage demand.
The notification was issued on March 10, 2026. The order also detailed that the Demand Flexibility Portfolio Obligations (DFPO) should be adhered to by Escoms, while accounting for tariffs. KERC noted that since the tariff order for financial years 2026-28 has already been issued, the financial targets for Escoms will remain the same for 2027 and 2028.
Based on the DFPO percentage of peak demand experienced during the previous financial years, Escoms have calculated the tragectories for the next five years. For the financial year 2026-27 the DFPO is 0.5%, for FY 2027-28 it is 1%, for FY 2028-29-1.5% and 2% for the financial year 2029-30.
The order noted, “Distribution Licensee shall be eligible for an incentive of Rs 20 lakh for every megawatt achieved in excess of DFPO. Similarly, they shall be subjected to a disincentive of Rs 20 Lakh for every MW underachievement of DFPO.”
KERC pointed out that Escoms should implement the demand flexibility and DSM programmes while addressing peak demand and other associated costly power purchases. They should also include the demand response initiatives involving consumers, who should agree to modulate their load shapes.