The Karnataka Electricity Regulatory Commission (KERC) has released a draft notification introducing new regulations on Demand Flexibility (DF) and Demand Side Management (DSM) in the state. Dated October 13, 2025, the draft titled “Framework for Demand Flexibility (DF) / Demand Side Management Regulations, 2025” highlights the importance of managing energy demand efficiently to ensure stability and reliability in the power system. The new framework emphasizes that DSM is not only a tool for energy conservation but also a critical part of overall energy efficiency planning for the state’s distribution network.
According to the draft, the main objective of the new regulations is to enable Distribution Licensees to effectively manage peak electricity demand and reduce energy consumption during high-demand periods. It also aims to shift energy use strategically to off-peak hours, thereby balancing the load on the grid. For consumers, this approach offers several advantages, such as lower electricity bills, improved efficiency of appliances and systems, and better reliability of power supply. The Commission believes that empowering both utilities and consumers through DSM and DF will enhance Karnataka’s overall energy management capabilities.
The new draft builds on the earlier KERC Demand Side Management Regulations introduced in 2015. Those earlier rules were created to address energy shortages and manage demand through conservation measures and efficient electricity usage. The 2015 regulations focused on reducing greenhouse gas emissions and saving scarce conventional energy resources. These goals continue to remain central to the new 2025 draft. KERC has reaffirmed that energy efficiency must be a continuous process, with regular assessment and integration into the state’s resource planning framework.
One of the technical elements highlighted in the draft concerns the use of the societal discount rate for evaluating DSM program costs. The draft specifies that the societal discount rate should be used when calculating the Societal Cost Test (SCT) for DSM measures, as provided under Regulation 9. This calculation method allows for a more comprehensive understanding of a program’s cost-effectiveness by including indirect benefits, such as the reduction of greenhouse gas emissions. KERC’s inclusion of environmental benefits in economic assessments shows a broader and more sustainable approach to evaluating DSM projects.
To ensure that savings from DSM programs are measured and verified accurately, the draft framework aligns with international best practices. It refers to the International Performance Measurement and Verification Protocol (IPMVP), which provides a set of standardized methods to evaluate energy savings in facilities. Annexure 3 of the draft explains four IPMVP options—A, B, C, and D—each offering different levels of measurement and verification. These methods include stipulations, short-term measurements, regression analysis, and computer simulations to quantify energy savings. The choice of method will depend on the project’s nature and the expertise of the evaluating authority involved.
Through this framework, KERC aims to establish a more comprehensive, transparent, and measurable system for assessing and managing energy demand. The inclusion of both financial and environmental factors in the evaluation process demonstrates a strong focus on sustainability. By promoting efficient use of electricity and enabling flexible demand management, the Commission intends to create a smarter and more responsive energy ecosystem in Karnataka. The draft marks a significant step toward aligning the state’s energy management goals with national priorities for energy efficiency and decarbonization.
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