DERC Mandates Energy Compliance For NDMC, Waives INR 12.54 Crore Penalty In Delhi

The Delhi Electricity Regulatory Commission (DERC) has ruled that municipal bodies involved in electricity distribution are required to comply with national energy conservation standards. However, the regulator has decided not to impose a proposed ₹12.54 crore penalty on the New Delhi Municipal Council (NDMC) for its initial non-compliance.

The order was issued on September 3, 2026, by DERC Adjudicating Officer Ram Naresh Singh following a petition filed by the Bureau of Energy Efficiency (BEE). The petition sought penalties against NDMC for failing to submit mandatory energy audit and quarterly energy accounting reports under the Energy Conservation Act, 2001.

According to the BEE, NDMC had repeatedly failed to conduct periodic energy audits, establish a centralized energy accounting cell and submit required compliance reports from the 2020–21 financial year. Energy audits and accounting are intended to identify areas of high network losses, improve electricity distribution efficiency and help reduce the financial burden on consumers.

NDMC challenged the maintainability of the BEE’s petition. The municipal body argued that it is a statutory civic authority and not a corporate designated consumer under the applicable provisions. It also stated that it operates as a deemed distribution licensee under municipal legislation rather than through a conventional licence issued by a state electricity regulator.

NDMC further cited administrative difficulties, including the absence of sanctioned positions for certified energy managers and challenges in coordinating municipal financial procedures with quarterly reporting requirements.

DERC rejected these arguments and held that entities distributing electricity on a significant scale cannot claim exemption from the requirements of the Energy Conservation Act. The regulator observed that energy conservation and proper energy accounting are consistent with the responsibility of public utilities to maintain an efficient electricity supply system.

Despite establishing NDMC’s liability, DERC chose not to impose the proposed penalty. The authority noted that NDMC had started submitting its pending reports and that the enforcement framework was still relatively new. It also observed that imposing a large penalty on one public body and transferring the money to another public authority would ultimately place the burden on taxpayers.

Instead, DERC directed NDMC to establish and operationalize a centralized energy accounting and audit cell within 90 days. The municipal utility must also submit all pending quarterly reports within 90 days and complete its outstanding annual energy audit reports within 120 days.

DERC made it clear that the relief is a one-time opportunity. Any future failure to comply with the Energy Conservation Act could attract strict daily penalties. The commission also directed that such penalties must be borne by NDMC internally and cannot be recovered from consumers through higher electricity tariffs.