Telangana Finalizes Demand-Side Management Regulations for Distribution Licensees

The Telangana State Electricity Regulatory Commission (TSERC) has released the final regulations for the demand-side management (DSM) initiatives of distribution licensees (DISCOMS).

The DSM initiative is designed to encourage consumers to change their electricity consumption patterns with respect to the timing and level of electricity demand to help consumers use electricity more efficiently. DSM is expected to help grid operators improve the power grid’s efficiency and stability by flattening the electricity load curve. Another significant benefit of the DSM is that the DISCOMs can plan their costs and ways of recovering it through tariffs or any other method.

The TSERC had released the draft of the DSM initiative in October 2020.

According to the framework, the TSERC would establish DSM targets for each DISCOM in the state based on the percentage reductions in load growth, savings in kW, kWh, and savings as a percent of total resources to meet the load.


Each DISCOM would constitute the DSM cell within one month of notification of the regulation. DISCOMS would formulate and submit a prospective DSM plan to the TSERC covering the control period within one year of the regulation’s notification.

The DSM plan would include an overall goal for the plan, a description of the DSM programs, the implementation process and schedule of each program, a plan for monitoring and reporting, and an indicative assessment of its cost-effectiveness.

DISCOMs are expected to submit the DSM plan to TSERC for approval at least six months before starting the ‘multi-year tariff’ (MYT) control period. The DISCOMs would then implement the DSM program as approved by TSERC.

DSM’s Role

DISCOMs are expected to undertake load research to identify the target consumer segments and end-users for DSM programs to build the necessary database. The DISCOMs would also undertake market research to estimate the market potential for specific energy efficiency technologies and applications, establish key performance indicators, and determine existing baseline market conditions.

Based on the results of load and market research, the DISCOMs would develop baseline data for its area of supply. Apart from this, DISCOMs would design, develop and implement the initial few DSM programs based on available data and studies completed by the ‘Bureau of Energy Efficiency’ until the complete baseline data is available for its supply area.

The establishment of baseline data would not be a pre-requisite for designing such initial DSM programs by the DISCOMs.

The selection and prioritization of various programs in the DSM plan would be guided by the following factors- the cost-effectiveness assessment, DSM objectives, whether the proposed programs supplement national and state-level efforts adopted by the Bureau of Energy Efficiency, programs with high visibility, and awareness within consumers.

The DISCOMs would also carry out activities assigned to it either by itself or through an appropriate independent entity. While doing so, the DISCOMs would ensure that continuity and consistency are maintained, and the interest of the consumers is not compromised.

DISCOMs would identify the net incremental costs if any, associated with the planning, design, and implementation of programs and propose a methodology for recovery of net incremental costs through tariff or any other mechanism.

TSERC may direct the DISCOMS to undertake DSM programs that may not be cost-effective but are highly beneficial to society. DISCOMs would prepare a plan for the evaluation, measurement, and verification of each DSM program and submit to the TSERC along with the DSM program document.

The evaluation measurement and verification of DSM programs may be undertaken by the TSERC or third-party agency assigned by the commission. Reports on the DSM plan’s progress and expenses incurred on implementing the DSM plan would be submitted by the DISCOM every six months.

The DISCOMs would also prepare and submit a detailed ‘program completion report’ and submit the same to the TSERC within one month of completion of the program. The TSERC may also provide incentives to DISCOMs for achieving the DSM objectives.

Recently, the TSERC also drafted smart grid regulations to enhance its power generation, transmission, and distribution networks.