The Bihar Electricity Regulatory Commission (BERC) has notified the BERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2025, following a suo motu proceeding initiated by it to align intra-state deviation settlement provisions with the national electricity policy, tariff policy, and the latest Central Electricity Regulatory Commission (CERC) regulations.

The Commission approved several amendments and new provisions, and rejected others after detailed stakeholder consultation.

After examining all submissions, BERC undertook a clause-by-clause review of the draft regulations issued in August last year. The suggestions accepted relate to the applicability to entities connected to intra-state transmission systems, provisions related to Qualified Coordinating Agencies (QCA), the accounting responsibilities of the state load despatch center (SLDC), implementation timelines, and the treatment of surplus funds in the State Deviation Pool Account.

BERC emphasized that deviation settlement must remain a commercial discipline mechanism rather than a revenue or incentive tool.

Major Changes

Scope and Applicability

In the draft clause, DSM was framed to apply to grid-connected state entities connected to the intra-state transmission system. North Bihar Power Distribution Company (NBPDCL) and the South Bihar Power Distribution Company (SBPDCL) sought that any renewable energy generating capacity connected below 33 kV be excluded, with DSM instead applying only to renewable energy connected at 132/33 kV and having an operable capacity of 5 MW or more.

The Commission rejected this approach and clarified that DSM applies to grid-connected state entities and to renewable energy generating stations connected to an intra-state transmission system with an operable capacity of 1 MW or more.

DISCOMs as a Single Entity

The draft clause treated entities separately for DSM accounting. Stakeholders proposed treating both DISCOMs as a single entity, arguing that procurement and scheduling occur at the state level and that financial liabilities are settled through a single tariff, so treating them separately could create artificial deviations.

Disagreeing, the Commission held that NBPDCL and SBPDCL are distinct entities with their own operational requirements, and each must design and manage its schedule independently.

Contract Details

The draft provision required the state entities to provide SLDC details of contracts entered into for the exchange of energy. Stakeholders asked that all contract details be provided, since SLDC is responsible for optimizing scheduling, and implied that this should support economic operations.

The Commission’s final view retained the draft requirement that contract details be provided, but explicitly clarified that furnishing the information does not shift responsibility for the ‘optimal cost of power’ to SLDC. It means that the final provision remains operational/accounting-focused rather than making SLDC responsible for commercial optimization.

AMR Requirement

The draft clause required the state transmission utility to arrange installation of suitable meters using automated meter reading (AMR) at points of injection and withdrawal. Stakeholders proposed a clarification limiting AMR coverage to the State Transmission System (STS) and seeking the exclusion of the distribution network.

The Commission rejected this limitation and kept AMR applicability broader, confirming that the draft requirement covers all points of injection and withdrawal, irrespective of voltage level.

Dispatch and Deviation Restriction

The draft clause empowered SLDC to take decisions on the dispatch of the state entities while considering security and constraints of the transmission network. Stakeholders proposed modifying the methodology by prescribing how restrictions should be imposed and argued that SLDC intervention should focus mainly on deviations linked to commercial penalties.

The Commission did not accept the attempt to narrow SLDC’s discretion; the final position reaffirms SLDC’s authority to control and dispatch electricity within the state grid in accordance with grid standards and the State Grid Code.

Frequency-linked Charge Proposals

The draft regulations contained frequency-linked provisions for charges during low-frequency conditions. Stakeholders proposed changing the trigger for volume-linked charges.

The Commission rejected these proposed modifications and retained the final provisions in line with CERC DSM Regulations, 2024, stating that since CERC’s DSM is amended periodically, Bihar’s DSM should remain aligned.

Deviation Volume Limit

The draft clause defined deviation limits for buyers as the lesser of a percentage of the schedule or an absolute volume. Stakeholders proposed replacing this with a ‘whichever is less’ concept, using cumulative DSM volume instead of a volume limit, arguing that buyers could otherwise breach thresholds and face punitive charges.

The Commission rejected this and kept the final approach aligned with CERC DSM, meaning the draft-style volume limit framework continues rather than shifting to cumulative volume as proposed.

Partial Open Access Consumers

In the draft, deviation limits for large buyers (more than 400 MW) were specified. Stakeholders proposed that partial open access consumers should be treated as distribution licensees because their deviations directly affect DISCOM DSM charges.

The Commission rejected this proposed reclassification and retained the final provision consistent with CERC DSM Regulations, 2024 — meaning partial open access consumers are not converted into distribution licensees for DSM purposes.

Infirm Power from Thermal Stations

The draft clause provided that any infirm power injected before successful synchronization would be charged under the specified deviation charge mechanism. Stakeholders proposed charging infirm power at the PPA’s ceiling energy charge of ₹2.86 (~$0.032)/MWh, arguing that this would incentivize earlier generation and support grid stability.

The Commission did not accept this change and kept the final treatment consistent with CERC DSM Regulations, 2024.

Additional DSM Charges

The draft provisions dealt with how surplus funds in the State Deviation Pool Account could be used and how additional charges could be recovered. Stakeholders proposed that no additional charge should be levied on DISCOMs beyond their ‘natural DSM charge,’ arguing that imposing additional charges would burden DISCOMs and create extra financial strain.

The Commission amended the draft around surplus handling. It clarified how surplus is to be addressed at the end of settlement/financial periods and explicitly provided that surplus is recovered by levy/additional charge. BERC introduced a structured utilization approach — 50% reimbursement to entities in proportion to contribution and 50% utilisation for system/market operation improvements through SLDC programs, with the Commission’s approval.

Settlement Cycle

The draft clause required weekly settlement with payment due within ten days of the weekly statement. Stakeholders proposed shifting the settlement cycle to monthly, with payments due within 20 days of the monthly settlement.

The Commission partially accepted this: the final provisions move toward monthly preparation/issuance of deviation charge statements, reflecting a shift away from the draft’s purely weekly structure.

Letter of Credit

The draft clause mandated a Letter of Credit for any entity delaying payment in the previous year, while stakeholders proposed exempting DISCOMs from mandatory Letter of Credit for deviation settlement, arguing DISCOMs already provide an LC for power procurement, and an additional Letter of Credit would be burdensome.

The Commission rejected the exemption request and retained the Letter of Credit discipline in the final text, specifying that an entity failing to make timely payment must open a Letter of Credit equal to 110% of its average payable.

Force Majeure and Grid Events

The draft regulations had no specific clause for waiving DSM charges due to force majeure or major grid events. Stakeholders proposed adding a provision allowing a waiver of penalties when a deviation is caused by unforeseen events such as major grid outages, natural disasters, or technical failures.

The Commission accepted this but modified it in the final regulations by inserting a clause empowering it to waive deviation charges for state entities in cases of major grid disturbances, and specifying that it would be applied on a case-by-case basis.

Last month, BERC released a draft tariff order proposing generic levelised tariffs for electricity generated from select renewable energy sources for the financial year 2025-26.

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