DISCOMs and the road ahead, Pg10

Key Highlights:

• India's DISCOMs (power distribution utilities) showed signs of improvement in FY 2024-25, recording a combined profit of ₹2,701 crore, a turnaround from a loss of ₹67,962 crore in 2013-14.
• AT&C losses (Aggregate Technical and Commercial losses) for DISCOMs decreased from 22.62% to 15.04% during the same period.
• The gap between Average Cost of Supply (ACS) and Average Revenue Realised (ARR) narrowed significantly to 0.06 paise per unit in FY 2024-25.
• The Revamped Distribution Sector Scheme (RDSS) and Late Payment Surcharge Rules are credited with aiding the financial turnaround of DISCOMs.
• DISCOMs cleared ₹1,31,942 crore in legacy dues out of ₹1,39,947 crore since June 2022 through EMIs and prepayments, improving financial discipline.

Detailed Insights:

• Historically, DISCOMs in India have struggled with losses, dating back to their earlier structure as State Electricity Boards (SEBs) under the Electricity (Supply) Act, 1948.
• The RDSS aims to enhance the quality and reliability of power distribution by linking funding to the implementation of necessary operational and financial improvements.
• The Late Payment Surcharge Rules allowed DISCOMs to manage legacy dues through installments, which helped generators receive timely payments for fuel and railway transportation.
• Some DISCOMs' improved financial performance is largely due to tariff subsidies and loss takeovers by their respective state governments, indicating a need for sustainable solutions.
• Feeder segregation, separating agricultural and non-agricultural power supply, should be expanded to states like Tamil Nadu to accurately measure power consumption in the agricultural sector.
• Niti Aayog suggests DISCOMs should promote solar pumps in agriculture to reduce power procurement costs, and governments should avoid offering free electricity universally.

Key Concepts Involved:

• DISCOMs: Entities responsible for distributing electricity to consumers within a specific region.
• AT&C Losses: The total loss of electricity due to technical faults, theft, and billing inefficiencies.
• Revamped Distribution Sector Scheme (RDSS): A government program to improve the operational efficiency and financial sustainability of DISCOMs.