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					</table>The Karnataka Electricity Regulatory Commission (<a href="https://kerc.karnataka.gov.in/en" target="_blank" rel="noopener">KERC</a>) has proposed the Draft Electricity Supply Regulations, 2026, consolidating the state&#8217;s rules governing electricity connections, metering, billing, security deposits, power supply to buildings, consumer installations, and unauthorized use of electricity.
The draft notification seeks comments, suggestions, and objections from stakeholders within 30 days of its publication in the Gazette.
Once finalized, the regulations will apply across the state to all distribution licensees (DISCOMs), consumers, and applicants for electricity supply.
Classification of Supply
KERC proposes to classify supply according to load and voltage. Systems with single phase at 230 V can supply power to installations up to 5 kW excluding motive power, while supply from three-phase 400 V low tension (LT) systems would cover installations up to and including 150 kW/176 kVA/201 HP.
Installations exceeding this threshold and up to 2,000 kVA would ordinarily receive 11 kV supply. Higher loads would be supplied at 33 kV, 66 kV, 110 kV, or 220 kV, subject to the prescribed thresholds and technical feasibility.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/08/KERC-Draft-ESR-2026.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-103230 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/08/KERC-Draft-ESR-2026.png" alt="KERC Draft ESR 2026" width="518" height="400" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/08/KERC-Draft-ESR-2026.png 518w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/08/KERC-Draft-ESR-2026-300x232.png 300w" sizes="auto, (max-width: 518px) 100vw, 518px" /></a>
Timeline for Licensee to Provide Supply
Where neither any extension of distribution mains nor construction of a new substation is required, power supply must be provided within three working days in metro cities, seven working days in other municipal areas, and 15 working days in rural areas.  In case a service line extension is required, the timeline for power supply is 90 days, while substation construction could take up to 24 months.
The draft also permits multiple LT connections within the same premises. Buildings may receive 11 kV and LT supply, or a combination, through separate service mains from a common source up to and including 7,500 kVA, subject to safety conditions.
Supervision Charges
Applicants may execute permitted service line and infrastructure works themselves through licensed electrical contractors. For self-execution, the draft proposes supervision charges of 5% of the estimated cost, capped at ₹1.5 million (~$15,692).
The draft lays down specific requirements for different consumer categories, including LT installations, irrigation pump sets, industrial and commercial consumers, HT/EHT consumers, multi-storeyed buildings, residential and commercial complexes, and electric vehicle (EV) charging.
For irrigation pump sets, supply is governed by Karnataka government policy. Applications must include evidence of water rights and other prescribed documents. Supply cannot be provided to wells located within 250 meters of drinking water borewells of a local authority.
Industrial Consumers
LT industrial consumers may opt for a demand-based tariff, where permitted by the Commission’s orders. Fixed charges would be based on sanctioned load or maximum demand recorded by the meter, whichever is higher.
Industrial consumers would be permitted to share electricity with tenants through approved sub-meters on a no-profit-no-loss basis. Similar provisions are proposed for HT and EHT industrial consumers, and certain residential, commercial, and EV charging loads inside HT/EHT premises can be separately sub-metered and billed at the applicable tariff without additional fixed charges on those sub-metered loads.
Commercial and Residential Consumers
For commercial, residential, multi-storeyed, and mixed-use buildings, the provisions generally apply where the requisitioned load is 35 kW or more, or the built-up area exceeds 800 square meters. Buildings with loads between 25 kW and 35 kW, or built-up areas between 500 square meters and 800 square meters, must provide space for distribution transformers and associated equipment, subject to prescribed conditions.
In metropolitan areas, Urban Development Authority areas, and City Corporation areas, buildings with a requisitioned load of 250 kW or more, or a built-up area exceeding 5,000 square meters, must provide at least four EV charging stations with adequate parking for simultaneously charging four-wheelers.
Buildings exceeding 500 square meters of built-up area are exempt from providing transformer space where a behind-the-meter rooftop solar plant is installed, and the requisitioned load does not exceed 10 kW. For mixed-use buildings, common area services would be billed under the domestic tariff where commercial load does not exceed 25% of the total load. Where commercial load exceeds 25%, the common area services would generally attract the commercial tariff.
Responsibility of Developers 
In residential layouts, developers would deposit the cost of 80% of the required distribution transformers and allied equipment with the distribution licensee, which would install them in phases as demand develops.
Temporary electricity connections would generally have to be serviced within 48 hours, or within seven days where distribution system augmentation is required.
Power Factor Applicable to HT/EHT and LT Installations
KERC proposes safety and power factor requirements for consumer installations. These include regulations like wiring must comply with applicable Central Electricity Authority safety regulations.
The regulations also prescribe power factor requirements for LT, HT, and EHT installations. Where monthly consumption falls below 10 units per kVA of contracted demand or 10 units per kW of sanctioned load, the power factor penalty would be capped at 30% of the energy charges.
Metering
It also proposes that no new connection be released unless the meter conforms to the CEA metering regulations.
LT consumers would be provided smart meters or prepaid smart meters depending on their choices, while HT/EHT consumers would use three-phase tri-vector meters or smart meters.
Security Deposit
Every applicant must pay an Initial Security Deposit equivalent to the estimated electricity charges for two months&#8217; consumption in cases of monthly billing.
The distribution licensee could demand an additional security deposit (ASD) based on consumption. Consumers would have an opportunity to object to the demand, while licensees would have to make detailed ASD calculations available for download through the consumer&#8217;s online account.
A meter security deposit would generally be collected for new installations unless the consumer purchases the meter. Failure to pay the required security deposit within the stipulated period could result in disconnection.
Transfer of Installation
Transfer of an electricity connection would require prescribed proof of ownership or occupation and Aadhaar e-KYC authentication.
Restrictions for Power Use 
The transferee should undertake to pay any dues that may arise due to any short claims detected later even in respect of periods prior to the date of transfer.
The licensee may also impose restrictions on electricity use because of system constraints or shortages. Consumption above restricted levels may attract deterrent charges and could lead to disconnection without notice.
For applicable non-domestic installations, where connected or rated load exceeds sanctioned load or contracted demand, assessment would be made at twice the applicable tariff for the period of unauthorized use.
Misuse of Electricity
Where electricity is used for a purpose attracting a higher tariff, charges would similarly be assessed at twice the applicable tariff. Unauthorized extension of supply beyond the consumer&#8217;s premises could lead to immediate disconnection, with reconnection permitted only after the unauthorized extension is removed.
The draft also states that no theft case should be booked merely because the meter window glass or seal is broken, where the previous 12 months&#8217; consumption pattern is reasonably uniform or is not less than 50% of the prescribed estimated consumption, unless prima facie evidence of theft exists.
Earlier in June, KERC <a href="https://www.mercomindia.com/karnataka-propose-lower-levelized-tariff-for-solar-projects" target="_blank" rel="noopener">proposed</a> reducing levelized generic tariffs for distributed and ground-mounted solar projects serving domestic and non-domestic consumers.
Subscribe to Mercom’s real-time <a href="https://www.mercomindia.com/product/mercoms-renewable-energy-regulatory-updates" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

Karnataka Regulator Proposes New Electricity Supply Rules

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					</table>The Ministry of Power (<a href="https://powermin.gov.in/" target="_blank" rel="noopener">MoP</a>) has issued the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Amendment Rules, 2023, under which it has added provisions for the banking settlement cycle, introduced new charges, and exempted offshore wind projects from paying additional surcharge.
Additionally, it also allowed consumers to purchase green energy based on their consumption.
Most of the changes are intended to align the existing rules with newly approved regulations and provide flexibility to the consumer to promote renewable energy open access.
The amendments were notified on January 27, 2023, and came into effect on the same day.
The ministry had <a href="https://mercomindia.com/no-load-limit-energy-open-access-captive-consumers/" target="_blank" rel="noopener">notified</a> the Green Energy Open Access Rules 2022 in June last year.
The amended rules have changed the term related to banking from ‘month’ to ‘cycle,’ which further provides flexibility to states with different banking settlement periods and would be crucial to renewable energy generators.
However, the states would have to wait until the ministry comes out with a definition for the term ‘cycle’ notified in the new amended rules.
The notification clarified that the credit for banked energy will not be allowed to be carried forward to subsequent banking cycles and must be adjusted during the same cycle.
Any surplus banked energy will be considered lapsed at the end of each banking cycle. The renewable energy generator will be entitled to Renewable Energy Certificates for the lapsed banked energy.
The amendments also revise the charges levied on Green Energy Open Access, adding banking and standby charges wherever applicable. It also includes Load Despatch Centre fees, scheduling charges, and deviation settlement charges per the Commission&#8217;s relevant regulations.
The new rules exempt non-fossil fuel-based ‘Waste-to-Energy’ projects which supply to open access consumers from additional surcharge along with cross subsidy surcharge, which was previously notified.
Offshore wind projects commissioned up to December 2025 and supplying to open access consumers will be exempted from paying the additional surcharge.
The new provision substitutes older rules which exempted green energy utilized to produce green hydrogen and green ammonia.
The green open access consumers will have to pay standby charges wherever applicable and specified by the state regulators. The standby charges should not exceed 25% of the energy charges applicable to the consumer tariff category.
The consumers who provide a notice at least a day before delivery of power for standby arrangement to the distribution licensee before the Day Ahead Market closure time will be exempted from such charges.
The new rules state that any consumer can purchase green energy up to a certain percentage of the consumption or its total consumption. They can place a requisition for this with their distribution licensee, who will procure the requested green energy capacity and supply it to them. The consumers will also have the flexibility to give separate requests for solar and non-solar.
In a recent ruling, the MERC <a href="https://mercomindia.com/maharashtra-regulator-rejects-petition-seeking-changes-to-open-access-policy/" target="_blank" rel="noopener">turned</a> down an individual consumer petition requesting certain crucial amendments to rooftop solar and green energy open access regulations.
According to the <a href="https://mercomindia.com/product/india-solar-open-access-market-report-q3-2022/" target="_blank" rel="noopener">Mercom India Solar Open Access Market Report Q3 2022</a>, India installed around 1.9 GW of open access solar capacity in the first nine months (9M) of the calendar year (CY) 2022, an increase of 96% year-over-year (YoY).

Government Amends Green Energy Open Access Rules to Align with Regulations

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					</table>The prospect of heavy penalties on delayed payments has prompted the state-owned power distribution companies (DISCOMs) to clear outstanding dues worth ₹246.8 billion (~$3.04 billion) in just four installments, the Ministry of Power (<a href="https://powermin.gov.in/" target="_blank" rel="noopener">MoP</a>) said in a statement.
The outstanding dues of suppliers, including Generating Companies (GENCO), Transmission Companies, and Traders, stood at ₹1.13 trillion (~$13.9 billion) in November 2022, a drop of 17% compared with June.
The ministry said that five Indian states availed a loan of ₹168.12 billion (~$2.07 billion) from the Power Finance Corporation (<a href="https://www.pfcindia.com/Home" target="_blank" rel="noopener">PFC</a>) and <a href="https://recindia.nic.in/" target="_blank" rel="noopener">REC Limited</a>, while eight other states made their own arrangements to clear outstanding dues and avoid the regulations under Electricity (Late Payment Surcharge -LPS- and related matters) Rules, 2022.
The Ministry added that the DISCOMs also cleared nearly ₹1.68 trillion (~$20.68 billion) of their current dues in the past five months.
In June this year, the MoP <a href="https://mercomindia.com/discoms-allowed-clear-dues-generators-48-installments/" target="_blank" rel="noopener">notified</a> the LPS and Related Matters Rules, 2022, which substantially raised the DISCOMs&#8217; cost for delaying payment to suppliers.
The new rules provided for a LPS payable on the outstanding sum after the due date expires will be levied at the base rate of LPS applicable for the first month of default.
The rules said that the rate of LPS for the successive months of default would increase by 0.5% for each month of delay, given that it will not be more than 3% higher than the base rate at any time.
“Based on the results achieved so far, it is expected that strict implementation of the LPS Rules will bring back the financial viability of the power sector in the country and would attract investment to ensure reliable 24&#215;7 electricity to the consumers,” the ministry said.
It added that the rule has not only ensured that the outstanding dues are liquidated but also that the current dues are paid on time.
In August this year, REC Limited <a href="https://mercomindia.com/rec-%e2%82%b9220-billion-discoms-clear-dues-generators/" target="_blank" rel="noopener">approved</a> ₹220 billion (~$2.71 billion) for the power utilities of Jharkhand, Rajasthan, Chattisgarh, and Jammu &amp; Kashmir to clear their outstanding dues to power generators.
Earlier this month, ReNew Power attributed its quarterly profit to receiving late payment surcharges from DISCOMS on outstanding payments.
In a <a href="https://mercomindia.com/renew-powers-q2-fy23-revenue-inches-by-5-yoy/" target="_blank" rel="noopener">statement</a> to the Securities and Exchange Commission (SEC), the company said, “Andhra Pradesh &amp; Telangana DISCOMs have agreed to clear the overdue receivables in 12 installments, and Madhya Pradesh, Tamil Nadu &amp; Karnataka DISCOMs have agreed to clear their past due receivables between 40-48 months. A few DISCOMs have also agreed to release/pay overdue interest as per Late Payment Surcharge rules.”

Heavy Penalty Prompts DISCOMs to Clear Dues Worth ₹246.8 billion Since June

The Ministry of Power (<a href="https://powermin.nic.in/" target="_blank" rel="noopener noreferrer">MoP</a>) has drafted new electricity rules to make the compensation process easier for renewable project developers. The proposed regulations, if implemented precisely, will bring a huge relief to the solar project developers.
The draft addresses several important aspects like the change in law and the must-run status of renewables, among other important concerns for renewable energy projects.
The Ministry noted that the deadline for stakeholders to submit their comments is October 22, 2020.
The rules are proposed to be issued under the Electricity Act. They deal with the “pass-through” option in the event of a change in law and compensation to renewable energy generators for losses due to power not being scheduled by procurers.
Notably, the Ministry has proposed a pass-through mechanism that will allow power project developers to modify tariffs to compensate for any change in law events within 30 days without the need to file petitions with regulatory bodies. Here is a brief overview of the proposed rules:
Adjustment in Tariff Due to Change in Law:
As per the proposed rules, parties affected by a change in law event must be restored to the same economic position as before the event by way of adjustments to the monthly tariff. The pass-through is set to take place within 30 days of the event. The formula to calculate the pass-through is to be specified in the bidding document. The final pass through based on the formula is to come into effect after 30 days of the change in law event and is to be set on a per-unit-of-electricity-basis.
Accordingly, the generator, procurer, or intermediary procurer will need to submit the relevant documents and calculation sheets to the respective Commission for truing up the rate of pass-through per unit. Subsequently, the regulator will verify the calculation and true it up within 60 days of the pass-through coming into effect.
Earlier, if a change in law event occurred after the bidding was concluded and resulted in an additional cost for the developer, it was allowed as pass-through. The pass-through meant they would be reimbursed for the additional cost due to the change in law. But, to claim reimbursement, developers had to file a petition with the regulatory commission. This caused a considerable delay and distress to developers, and many of them are yet to be <a href="https://mercomindia.com/solar-project-developers-still-waiting-safeguard-duty-reimbursement/" target="_blank" rel="noopener noreferrer">compensated</a>.
This new proposal of adjusting the tariffs within 30 days of the change in law event could solve stranded investments and lengthy regulatory processes.
Commenting on the development, Aditya Singh from HSA Advocates said, “This proposed rule, if implemented, will be beneficial for the industry. It could give relief to those PPAs in which carrying cost clauses have not been incorporated. After the Supreme Court judgment in the case of Gujarat Urja Vikas Nigam Ltd, commissions have taken a view not to provide carrying cost to those developers where the PPA does not have a restitution principle clause. This proposed rule clearly states that the tariff will be adjusted with the principle that the affected party is compensated to restore it to the same economic position as if such the change in law has not occurred.”
Singh also points out that the ministry has considered the interest on the loan component to be monthly. He suggests that the developers demand a monthly rate of interest on both equity and debt component while calculating interest rate (70% rate of the interest on loan and 30% post-tax return on equity).
Must-Run Status:
Any wind, solar, wind-solar hybrid, hydropower project, or any other renewable energy-based power project will be considered a must-run power project as per the proposed rules. These must-run projects should not be subjected to power curtailment or regulations on account of merit order dispatch or other commercial considerations.
The only exceptions for curtailment of these projects must be in the event of any technical constraints or grid security reasons. In these cases, the power procurer is expected to compensate the generator for any losses as per the rates prescribed in the PPA.
The rules added that if a notice of curtailment is provided 24 hours before the scheduled supply, the generator is required to sell the unscheduled power to the power exchange. The amount from such sales must be adjusted against any compensation payable as per the PPA every month. Any excess amount is to be carried forward and adjusted in the next month.
The Ministry also stated that when the rate of compensation is not specified in the PPA or the power sale agreement (PSA), the rate will be set at 75% of the PPA rate per unit.
“Recent PPAs include such compensation. However, old PPAs do not provide such a provision, and many regulators have refused to provide any such compensation in the absence of a specific clause. The proposed rule, post-implementation, will bring statutory force to the argument that the power generator should be compensated in cases of curtailment’, added Aditya.
Power curtailment has been <a href="https://mercomindia.com/solar-curtailment-issue-power-developers/" target="_blank" rel="noopener noreferrer">plagued</a> the solar and wind sector alike even with the must-run status in place. But the new compensation proposed is expected to make the DISCOMs cautious of taking such steps in the future.
Trading Licensee to Procure Power for Distribution Licensees:
According to the Ministry’s draft rules, intermediary procurers are allowed to bid for purchasing power competitively. If bids are made on the bucket filling method, and multiple suppliers are selected at different rates to meet requirements, the weighted average of all the bids received will be the final rate at which an intermediary procurer can sell power.
The rules also made provisions for trading licensees and distribution licensees who have already signed agreements to sell renewable power before the date of effect of these new rules. They said that the tariff would be set based on the weighted average of all tariffs quoted by other selected suppliers. The appropriate Commission is also expected to adopt the weighted average tariff after hearing the concerned parties and true up the tariff annually. Trading licensees are also likely to set a trading margin as specified in the agreements or regulations or as determined by the appropriate commission, the draft added.
These new rules come in light of recent issues developers have been facing while claiming compensation due to change in law events like the <a href="https://mercomindia.com/seci-reimburse-additional-charges/" target="_blank" rel="noopener noreferrer">Goods and Services Tax (GST)</a>, <a href="https://mercomindia.com/avaada-clean-energy-compensated/" target="_blank" rel="noopener noreferrer">Safeguard Duty (SGD)</a>, and the <a href="https://mercomindia.com/cerc-demonetization-seci-refund-wind-developer/" target="_blank" rel="noopener noreferrer">demonetization</a> in 2017. Mercom has covered these cases <a href="https://mercomindia.com/solar-developers-karnataka-safeguard-reimbursements/" target="_blank" rel="noopener noreferrer">extensively</a>.
Meanwhile, several states like <a href="https://mercomindia.com/andhra-pradesh-objects-amendments/" target="_blank" rel="noopener noreferrer">Andhra Pradesh</a>, <a href="https://mercomindia.com/maharashtra-discom-highlights-issues/" target="_blank" rel="noopener noreferrer">Maharashtra</a>, and <a href="https://mercomindia.com/telangana-opposes-proposed-amendments/" target="_blank" rel="noopener noreferrer">Telangana</a>, have opposed the draft amendment to the Electricity Act.
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