LawDaily.org | Electricity Laws Update
The Haryana Electricity Regulatory Commission (HERC) has approved significant amendments aimed at providing relief to electricity consumers, particularly industrial consumers, by introducing flexibility in load management and revising the penalty mechanism for exceeding sanctioned contract demand. The amendments have been approved through Order No. 01 of 2026 dated 22 July 2026 passed in HERC Petition No. 01 of 2026.
The petition was filed by Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) seeking amendments and clarifications under the HERC (Duty to Supply Electricity on Request, Power to Recover Expenditure Incurred in Providing Supply and Power to Require Security) Regulations, 2016 and the HERC (Electricity Supply Code) Regulations, 2014. The petition was filed under Sections 50 and 181 of the Electricity Act, 2003.
The Commission considered the need to balance consumer interest with the technical and financial requirements of the distribution system. The amendments were proposed after industrial consumers raised concerns regarding increased fixed charges and financial pressure on industries following tariff revisions.
Background of the Petition
UHBVNL and DHBVNL approached the Commission highlighting representations received from industrial consumers regarding the impact of increased electricity costs. Industrial associations had expressed concerns that enhanced fixed charges were increasing the overall cost of operations and affecting industrial competitiveness in the State of Haryana.
Following these representations, a meeting was held on 18 September 2025 under the chairmanship of the Chief Minister of Haryana, where industrial stakeholders and officials of distribution companies discussed the concerns relating to increased financial burden on consumers. Based on these discussions, the distribution companies proposed regulatory changes for providing relief to consumers.
The first major amendment approved by HERC relates to the introduction of a Flexible Load Revision Scheme, allowing industrial consumers who reduce their sanctioned load or Contract Demand to restore the original sanctioned level within a specified period without payment of fresh Service Connection Charges.
Flexible Load Revision Scheme Introduced
Under the newly approved mechanism, consumers opting for reduction of load or Contract Demand will be permitted to restore their load up to the originally sanctioned level within a settlement period of three years from the date of reduction. Such restoration will not attract Service Connection Charges.
The Commission recognised that industries may temporarily reduce operations due to market conditions, seasonal variations, or economic challenges. The new framework provides flexibility to industries by allowing them to reduce their fixed cost burden while retaining the ability to restore capacity when business conditions improve.
However, the facility has been made subject to certain safeguards. Only one reduction and one subsequent restoration of load will be permitted during the three-year settlement period. Further, a minimum lock-in period of six months will apply after every reduction or restoration event.
The restoration of load will also depend upon technical feasibility and certification of system capacity by the concerned distribution licensee. Consumers having outstanding dues or those involved in proceedings relating to theft of electricity, unauthorised use of electricity, or similar matters will not be eligible for this benefit.
Relief in Service Connection Charges for Reduced Load
Prior to this amendment, the existing regulations provided detailed provisions regarding Service Connection Charges for new connections and extension of load but did not specifically address cases involving reduction of load or Contract Demand. This regulatory gap resulted in uncertainty regarding the applicability of charges in reduction cases.
The amendment now provides clarity regarding charges payable when consumers reduce their load. In cases where there is no change in the voltage level of supply, only processing charges up to the reduced load will be payable. In cases involving change from HT to LT supply, consumers will have options regarding metering arrangements and applicable charges.
Major Change in Maximum Demand Indicator (MDI) Penalty
The second important amendment relates to the penalty imposed on consumers for exceeding their sanctioned Contract Demand. Earlier, HT consumers exceeding their sanctioned demand by more than 5% were liable to pay a surcharge of 25% on the charges towards total sale of power during that month.
The Commission observed that the earlier provision did not differentiate between minor temporary exceedances and substantial overdrawal of electricity. As a result, even marginal increases in demand could attract the same penalty applicable for significant violations.
To address this issue, HERC approved a graded penalty mechanism under which different surcharge rates will apply depending upon the extent of demand exceeding the sanctioned Contract Demand.
Under the amended framework, no surcharge will be levied where maximum demand exceeds sanctioned Contract Demand by up to 10%, meaning demand between 100% and 110% of the sanctioned Contract Demand. Where demand exceeds 110% but remains within 115%, a surcharge of 20% will apply. Demand exceeding 115% will continue to attract a surcharge of 25%.
Public Consultation and Final Approval
Before finalising the amendments, HERC invited comments and objections from stakeholders and the general public. The Commission issued a public notice seeking suggestions regarding the proposed Flexible Load Revision Scheme and amendments to the MDI penalty structure.
During the public hearing held on 08 July 2026, the Commission considered the comments and suggestions received from stakeholders. The objections and suggestions were examined before finalising the amendments.
The Commission noted that no stakeholder raised objections specifically against the proposed amendments and accordingly finalised the HERC (Duty to Supply Electricity on Request, Power to Recover Expenditure Incurred in Providing Supply and Power to Require Security) Regulations, 2016 (4th Amendment) Regulations, 2026 and the HERC (Electricity Supply Code) Regulations, 2014 (7th Amendment) Regulations, 2026.
Impact of the Amendments
The amendments are expected to provide greater operational flexibility to industrial consumers in Haryana. Industries facing temporary reduction in production or market fluctuations will now have an option to reduce their contracted capacity without losing the ability to restore the original capacity in future.
The graded MDI penalty structure is also expected to reduce the financial burden arising from minor demand fluctuations. The amendment recognises practical operational issues faced by industries, including machine cycling, process variations, and temporary increases in demand.
At the same time, the Commission has maintained safeguards to protect the distribution network by ensuring that restoration of load remains subject to technical feasibility and system capacity assessment.
Conclusion
The latest regulatory changes introduced by HERC represent a significant step towards creating a more balanced electricity supply framework in Haryana. By providing flexibility in load management and rationalising penalties for demand variations, the Commission has attempted to protect consumer interests while maintaining the reliability and financial stability of the distribution system.
The approved amendments will come into effect after publication in the Haryana Government Gazette and will apply throughout the State of Haryana.