The Rajasthan Electricity Regulatory Commission (RERC) has announced a demand flexibility portfolio obligation (DFPO) target of 0.25% for state distribution companies (DISCOM) for the financial year (FY) 2026-27.

The Commission has also issued DFPO targets of 1% for FY 2028, 1.5% for FY 2029, and 2% for FY 2030.

The DFPO targets were issued under the Rajasthan Electricity Regulatory Commission (Demand Flexibility (DF)/Demand Side Management (DSM)) Regulations, 2026.

The draft framework was issued in January 2026.

DISCOMs may either meet the DFPO targets through their own programs or by procuring power from registered aggregators.

Demand flexibility is the ability of demand-side loads to vary consumption patterns hourly or on other time scales, making electricity more affordable for consumers. It also involves reducing or deferring system costs or end-use consumption, which can be adjusted as a demand-response measure.

The distribution companies can avail themselves of incentives of ₹2 million (~$21,590.4) for every MW achieved in excess of the DFPO, and a penalty of ₹2 million (~$21,590.4) for every MW achieved below the DFPO. The first year of the regulations’ implementation will not be subject to disincentives.

The regulations will complement supply-side strategies to help DISCOMs avoid/reduce/postpone costly capacity additions and power purchases and instead procure cheaper renewable power.

The DF/DSM portfolio will be structured on a rolling basis for the multi-year tariff/aggregate revenue requirement period.

The DISCOMs must work collaboratively with the state load dispatch center (SLDC) while preparing load research reports and during the program development phase to properly identify network-constrained zones and forecast system requirements.

They must engage in consultations with the SLDC to ensure necessary coordination regarding the planning, design, and implementation of demand control/effective measures for DF/DSM programs. They must also provide the SLDC with timely advance information regarding actions that ensure demand flexibility.

DF/DSM Portfolio

The DF/DSM portfolio will comprise findings from detailed load research, the workings of the possible DF programs to be implemented, and the DFPO targets.

The DSM portfolio must include a five-year strategy and roadmap towards fulfillment of these DFPO portfolio obligations.

It must promote load shifting and demand response programs, and provide appropriate tariff-based incentives or rebates to all high- and low-tension consumer categories that participate in the demand response program by installing smart meters.

DISCOMS must submit the DF/DSM program portfolio and implementation action plan annually.

They must also implement DF/DSM programs that add to the resource adequacy portfolio and include demand flexibility to provide quick ramp-up and ramp-down services, reduce peak demand, and reduce associated costly power purchases.

DF/DSM Programs

The regulations outline several demand flexibility and demand-side management measures across sectors.

They include time-based and selective pumping for lift irrigation programs, municipal corporations, urban local bodies, and rural drinking water programs.

The regulations include grid-to-vehicle and vehicle-to-grid integration through smart charging infrastructure for electric vehicles, as well as behind-the-meter battery energy storage systems in line with RERC battery energy storage system regulations.

They promote the use of heat pumps and thermal energy storage systems across residential, hospital, hotel, commercial, and industrial buildings.

Additionally, DF/DSM programs cover efficient refrigeration and cold storage programs and encourage consumers to replace old or inefficient appliances with energy-efficient alternatives.

They also entail monitoring of harmonic levels in the grid and ensuring centralized procurement of demand flexibility from the aggregators.

The framework encourages shifting agricultural electricity consumption to periods when solar or wind power is available, including through solar agriculture or the PM-KUSUM program.

It also encourages consumers to participate in utility-led aggregation models, such as virtual net metering and group net metering, and to adopt advanced business models, such as cooling-as-a-service and integrated building management systems.

The regulations also clarified that fossil-fuel-based diesel generators can participate as demand flexibility or DSM resources.

The DISCOMs can propose recovering all justifiable costs incurred by them for DF/DSM activities. A percentage of the DISCOM’s budget will be allocated to funds under the DF/DSM cell.

They must conduct cost effectiveness assessment of the DF/DSM program to validate the total resource cost and ratepayer-impact measures.

Independent verification agencies can be engaged to evaluate the effectiveness of the programs. DISCOMs must also evaluate the impact of the regulations, evaluate the process, and their effect on the market.

In February 2026, RERC notified the Second Amendment to the Electricity Supply Code and Connected Matters Regulations, 2025, introducing significant changes to the rules governing the recovery of dues from permanently disconnected consumers, timelines for the restoration of supply, and connection charges for loads up to 150 kW.

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