The Himachal Pradesh Electricity Regulatory Commission (HPERC) has notified the Deviation Settlement Mechanism (DSM) (Third Amendment) Regulations, 2026, which retain the proposed volume limits for buyers and align them with the Central Electricity Regulatory Commission (CERC) DSM Regulations, 2024.

The Commission rejected stakeholder suggestions to relax or restructure deviation limits.

The amended regulations reaffirm that buyer volume limits will continue to follow the existing framework, which provides for 20% of Buyer Side Deviation (D-BUY) or 40 MW, whichever is lower, for schedules up to 400 MW, with tiered limits for higher schedules.

The regulations will come into force upon publication in the official gazette.

Background

The amendment was initiated to align Himachal Pradesh’s DSM framework with the CERC DSM Regulations, 2024.

HPERC had earlier notified the DSM regulations in May 2024.

As part of the process, HPERC issued a public notice inviting suggestions. The Directorate of Energy and the Himachal Pradesh State Load Despatch Center (HPSLDC) submitted suggestions.

The HPSLDC argued for relaxation of deviation limits, proposing that for buyers with schedules up to 400 MW, the existing limit of 20% or 40 MW should be increased to 40% or 80 MW. It cited the need for greater operational flexibility in a hydro-dominated system and to reduce exposure to higher deviation settlement charges.

The Directorate of Energy proposed broader restructuring of volume limits across different schedule bands, arguing that revised thresholds would simplify implementation, reduce ambiguity, and accommodate seasonal variations, particularly during periods of low scheduling, such as monsoon and summer.

Commission’s Analysis

HPERC rejected the proposed relaxations and structural changes.

The Commission emphasized that state DSM regulations must remain aligned with the CERC DSM Regulations, 2024, particularly because billing at the regional level is carried out based on CERC norms. Any deviation from these limits would lead to under-recovery of charges by state entities.

The Commission rejected HPSLDC’s proposal to double the deviation limits, stating that the existing limits of 20% of DBUY or 40 MW are consistent with national regulations and cannot be altered without affecting financial settlements.

It also rejected the Directorate of Energy’s proposal to modify or expand volume limit categories, reiterating that uniformity with central regulations is essential for accurate accounting and settlement of deviations.

Recently, HPERC reduced tariffs across all consumer categories for the financial year (FY) 2026-27.

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