There has been a marked reduction in AT&C losses of discoms during FY22 as compared to FY21, a power ministry release said.
Preliminary analysis of the performance of 56 discoms for the year FY22 indicates that aggregate technical & commercial (AT&C) losses of discoms have declined significantly to around 17 per cent in FY22 from around 22 per cent in FY21. These 56 discoms (state government owned) contributed to more than 96 per cent of input energy.
The decline in AT&C losses has resulted in a reduction in the gap between Average Cost of Supply (ACS) and Average Realizable Revenue (ARR). The ACS-ARR Gap (on subsidy received basis, excluding Regulatory Income and UDAY Grant) has declined from Rs.0.69 per kwh in FY21 to Rs.0.22 per kwh in FY22.
AT&C losses and the ACS-ARR gap are key indicators of discom performance. Reduction in AT&C losses improves the finances of the utilities, which will enable them to better maintain the system and buy power as per requirements; benefitting the consumers, the release said.
The decline of 5 percentage points in AT&C losses and Rs.0.47 in the ACS-ARR gap in one year is the result of a number of initiatives taken by the Union power ministry, the release said.
Also read: AT&C Losses Of Discoms Improve To 20.93 Pc In FY20: PFC Study
Some recent measures are discussed below:
- On September 4, 2021, the power ministry revised the prudential norms of lending agencies PFC and REC, to provide that loss making discoms will not be able to avail financing from PFC and REC until and unless they draw up an action plan for reducing the losses within a specific timeframe and get their state government’s commitment to it.
- The power ministry also decided that any future assistance under any scheme for strengthening of the distribution system by the discoms will be available to a DISCOM which is making losses only if it undertakes to bring its AT&C losses / ACS-ARR Gap down to specified levels within a specific timeframe and gets their state government’s commitment to it.
- The Revamped Distribution Sector Scheme (RDSS) lays down that funding under the scheme will be available only if the discom commits to an agreed loss reduction trajectory.
- The power ministry made a series of presentations before the 15th Finance Commission as a result of which 15th Finance Commission provided for an additional borrowing window to states contingent on their taking steps to reduce to their discom’s losses.
- On October 7, 2021, the power ministry issued regulations providing for mandatory energy accounting and energy auditing for all discoms.
- On June 3, 2022, the power ministry issued Late Payment Surcharge Rules which provide that unless the discoms promptly pay for the power drawn from the ISTS (interstate transmission system), their access to the power exchange will be cut off.
While putting all these in place; the power ministry also worked with the distribution companies to provide the necessary finances under the RDSS for undertaking the loss reduction measures.
Concerted efforts
The above improvement is a result of the concerted efforts of the Ministry of Power, the State Governments as well as Distribution companies to implement the reforms and adoption of best practices. As a result – the viability of the power system has improved. This was necessary because the demand for power has been growing and further investments will be necessary for the power sector to expand to meet the growing demand; and the investments will only come if the power sector remains viable.
