The Himachal Pradesh Electricity Regulatory Commission (HPERC) has issued Himachal Pradesh Electricity Regulatory Commission (Deviation Settlement Mechanism and Related Matters) (Second Amendment) Regulations, 2025 published on 15 July 2025. The amendment aligns the state’s DSM framework with the CERC (DSM) Regulations, 2024, replacing the earlier 2022 references and enhancing the clarity around deviation pricing, frequency response, and treatment of specific power sellers.
🧾 Legal Backing
The amendment is issued under the powers conferred by:
- Section 181(1) read with clause (zp) of Section 181(2) of the Electricity Act, 2003
- After following due procedure of prior publication
🆕 Key Amendments Introduced
1️⃣ Updated Definition of “Contract Rate” [Clause (k)]
The new definition now classifies contract rate based on the nature of the transaction and regulatory status:
- Regulated sellers (tariff approved under Sections 62, 63, or 86(1)(b)): Contract rate is the approved tariff (Rs/kWh).
- Sellers via Power Exchange: Contract rate is the market-discovered price for that transaction.
- Open access/captive RE sellers: Contract rate is the weighted average of the ACP (Average Clearing Price) from all power exchanges for that time block.
- Multiple contracts: Weighted average of all contract rates.
2️⃣ Updated Definition of “Reference Charge Rate (RR)” [Clause (x)]
RR is the basis for calculating charges for deviations:
- Regulated general sellers: RR is the approved tariff.
- Market sellers: RR is the discovered price in exchanges.
- Open access or captive sellers (non-RE): RR is the average ACP across all power exchanges.
- Multiple transactions: RR is the weighted average of all applicable rates.
3️⃣ New Definition Added – “MSW Seller” [Clause (zo)]
- Defined as a generator based on Municipal Solid Waste (MSW) or Refuse Derived Fuel (RDF).
- Brings clarity for categorizing MSW-based generating stations under DSM rules.
4️⃣ Reference Update in Regulation 5
- DSM parameters will now follow CERC DSM Regulations, 2024 (earlier 2022 reference removed).
- This ensures consistency with national regulatory guidelines.
⚖️ Regulation 7: Revised Charges for Deviations
🧑🔧 For General Sellers (excluding Run-of-River stations)
- Deviation ≤10% or 20 MW within frequency band (49.90 Hz–50.05 Hz):
- Over-injection: Receives RR
- Under-injection: Pays up to 184% of RR as frequency drops
- Deviation ≤10% or 20 MWoutside frequency band:
- No payment above 50.10 Hz
- Under-injection below 49.90 Hz: Pays 184% of RR
- Deviation >10% or 20 MW:
- Severe penalties apply, up to 220% of RR if frequency drops below 49.90 Hz
🏞️ For Run-of-River (RoR) Stations
- Deviation ≤15% or 30 MW:
- Over-injection: Paid at 80% of RR
- Under-injection: Pays up to 105% of RR
- Deviation >15%:
- Receives zero for over-injection
- Pays up to 120% of RR for under-injection
⚠️ No linkage to frequency for RoR projects due to their non-dispatchable nature.
🧾 For Buyers (Consumers)
Charges vary with the volume of deviation and grid frequency:
- VLB (1): Deviation ≤10% or 100 MW
- Under-drawal: Paid up to 100% of NR
- Over-drawal: Pays up to 150% of NR as frequency drops
- VLB (2): Deviation >10% and ≤15% or 200 MW
- Under-drawal: Paid 80% of NR
- Over-drawal: Pays up to 160% of NR
- VLB (3): Deviation >15% or above 200 MW
- No payment for under-drawal
- Over-drawal: Pays up to 200% of NR when frequency <50.00 Hz
📌 NR = Normal Rate of Charge for Deviation
📉 Frequency Band Definition
- Normal Frequency Band: 49.90 Hz – 50.05 Hz
- Deviation charges increase or decrease progressively with each 0.01 Hz variation in system frequency.
✅ Significance of the Amendments
| Aspect | Impact |
| Frequency-linked Deviation Charges | Encourages grid discipline by penalizing frequency violations |
| Updated Contract Rate Definitions | Ensures fair pricing for all types of transactions |
| Inclusion of MSW Plants | Promotes waste-to-energy generation |
| RoR-specific Rules | Provides flexibility for hydro projects with seasonal flows |
| Alignment with CERC-2024 DSM Rules | Brings Himachal in sync with national regulatory structure |
🗂 Effective Date
These regulations come into force from the date of publication in the Rajpatra (Official Gazette) of Himachal Pradesh.
📝 Conclusion
With this second amendment to its DSM Regulations, HPERC has taken a vital step in modernizing its regulatory approach. By aligning closely with CERC’s 2024 DSM regulations, Himachal Pradesh ensures a more predictable, fair, and grid-supportive environment for both power producers and consumers