APERC Unveils New DSM Regulations to Boost Energy Efficiency

The Andhra Pradesh Electricity Regulatory Commission (APERC) has released a new draft regulation aimed at enhancing Demand Side Management (DSM) strategies across the state. The proposed regulation shall be called the 'Andhra Pradesh State Electricity Regulatory Commission (Demand Side Management) Regulation, 2024' that will focus on optimising energy use and reducing peak demand through a series of structured programs and initiatives.

The draft outlines a comprehensive framework for the design, implementation, monitoring, and evaluation of DSM measures, highlighting APERC's commitment to promoting energy efficiency and conservation among consumers.

Under the new draft, the Distribution Licensees will be required to submit a detailed DSM Plan to APERC at least six months before the beginning of the Multi-Year Tariff (MYT) Control Period. This plan should include specific programs that supplement national and state-level efforts, align with the objectives set by the Bureau of Energy Efficiency (BEE), and have high visibility to raise consumer awareness. "The Commission shall adopt procedures for approving the DSM Plan as specified in the Conduct of Business Regulations," states the draft, emphasising the importance of a regulated approach to energy conservation.

Each DSM program will need a separate program document providing an in-depth description, including general information, technology involved, deployment schedules, budget, cost-effectiveness assessments, implementation plans, and estimated savings. The draft mandates that no DSM program can be implemented without the prior approval of APERC. To ensure alignment with the DSM objectives, APERC reserves the right to direct modifications to any proposed or ongoing program.

Implementation of approved DSM programs will be carried out by the Distribution Licensees, either directly or through independent entities, ensuring continuity and consistency are maintained, and the interests of consumers are not compromised. The draft encourages quick-gain DSM programs and underscores the importance of transparency and cost recovery.

The costs associated with planning, design, and implementation of these programs will be included in the Annual Revenue Requirement (IARR) of the Distribution Licensees. The Commission may even direct the Licensees to undertake programs that are not cost-effective but offer significant societal benefits, using available resources to fund such initiatives.

Also, monitoring and evaluation of DSM programs are critical components of the new regulation. Distribution Licensees are required to prepare a detailed plan for evaluating, measuring, and verifying the effectiveness of each DSM program. This plan must include key details like program objectives, target markets, eligibility criteria, estimated participation, and savings, as well as methodologies for data collection, quality control, and reporting. “The Commission shall approve the evaluation, measurement, and verification plan before the Distribution Licensee implements the DSM program,” the draft specifies, highlighting the emphasis on accountability and oversight.

To support the effective implementation of DSM measures, the Andhra Pradesh State Energy Conservation Mission (APSECM) and the Andhra Pradesh State Energy Efficiency Development Corporation (APSEEDCO) will play a pivotal role. They are tasked with creating awareness, providing capacity-building programs, and assisting with market research to enhance the outreach and penetration of DSM programs. Additionally, APSECM and APSEEDCO will help the Commission identify suitable third-party agencies for program evaluation and suggest successful DSM initiatives from other states that could be implemented in Andhra Pradesh.

The draft also proposes the formation of a DSM Consultative Committee (DSM-CC), which will include representatives from various stakeholders, such as Distribution Licensees, Transmission Utilities, and educational and research institutions. The DSM-CC will advise on conducting consumer surveys and load research, reviewing DSM programs, and supporting the Commission in monitoring, evaluation, and verification processes. The Committee will also assess the impact of already implemented DSM programs and provide quarterly updates to the Commission on all DSM-related activities.

APERC’s draft regulation includes strict provisions for non-compliance, stating that any expenditure incurred by a Distribution Licensee for failing to achieve DSM targets or implement programs according to the approved plan may be disallowed. Furthermore, the draft grants the Commission the power to amend, modify, or relax any provisions of the regulation if needed and to issue directions regarding its implementation.

By focusing on a structured and transparent approach to energy conservation, the APERC draft regulation aims to create a robust framework for Demand Side Management in Andhra Pradesh, ultimately promoting a more sustainable and energy-efficient future for the state.