Punjab notifies new deviation settlement framework effective April 2026

The Punjab State Electricity Regulatory Commission has issued its final order approving the Punjab State Electricity Regulatory Commission (Deviation Settlement Mechanism and related matters) Regulations, 2025. The regulations were notified in the state gazette on 04 December 2025 and will come into commercial effect from 01 April 2026. They replace the 2020 DSM framework and follow a detailed consultation, stakeholder objections and public hearing.

Objective and coverage
The new framework seeks to maintain grid discipline and security through commercial signals that encourage adherence to scheduled injection and drawal of electricity. It applies to sellers and buyers using the intra-state transmission system or distribution network, subject to a 5 MW threshold for sellers. Wind and solar generators continue to be governed under separate forecasting and scheduling regulations. The Commission clarified that once these regulations come into force, deviation settlement for covered entities will take place strictly under this framework and not under open access regulations.

Deviation limits and charges
A key feature is the revised structure for computing deviation volume and charges. After reviewing stakeholder concerns, the Commission set deviation volume limits for general sellers at 10% of scheduled generation or 40 MW, whichever is lower. This strikes a middle ground between the draft proposal of 20 MW and demands for a 100 MW cap. For PSPCL, as the state’s sole distribution licensee and classified as an RE-rich entity, buyer deviation bands have been set at 170 MW, 260 MW and beyond 260 MW. Deviation charges are frequency linked, with payable or receivable amounts varying based on frequency conditions and direction of deviation.

Decisions on key objections
The Commission rejected a proposal to treat PSPCL’s generation and distribution businesses as a single entity for deviation accounting, reiterating that every state entity remains responsible for its own deviation. It also declined to exempt state-owned hydropower plants from deviation charges, though it provided liberal, frequency-agnostic deviation volume limits for run-of-river stations to reflect operational constraints. All accounting and payment timelines have been aligned with the Central Electricity Regulatory Commission’s 2024 DSM regulations to maintain consistency.

Settlement process and SLDC mandate
The State Load Despatch Centre will prepare weekly deviation charge statements, with payments required within ten days into a designated State Deviation Pool Account. A letter of credit provision has been introduced for payment security in case of default. The Commission also directed Punjab State Transmission Corporation Limited to urgently strengthen the SLDC, highlighting that it currently operates with only 34 personnel against a recommended strength of 144. It ordered immediate staffing, infrastructure upgrades and enhanced operational autonomy to enable reliable implementation of the new DSM regime and support grid stability.

The featured photograph is for representation only.