Despite the government’s multiple interventions, state discoms remain heavily in debt. Analyse
The Distribution Companies (DISCOMs), which connect electricity providers to households, are in charge of distribution. They serve as a link between utilities and consumers. Electricity is a concurrent subject under the Indian Constitution, and the states are responsible for the distribution and supply of power to rural and urban users. As a result, state governments hold the majority of DISCOMs. Private DISCOMs operate in India as well, albeit only in a few cities like as Delhi and Mumbai. For the improvement of the distribution sector, the Government of India gives support to states through several Central Sector / Centrally Sponsored Schemes. Most electricity distribution firms in India have been losing money for many years.
The main reasons why DISCOMS fail to pay dues to their respective power generators are:
- Tariffs not reflective of costs
- Most of DISCOMs purchase power from NTPC, other GENCOS via Transmission companies (TRANCOS) and Power Grid Corporation of India Limited (PGCIL) for end consumers. At times, States may slashes duties, surcharges to offer relief to end consumers. However, as GENCOS, TRANCOS, PGCIL do not slash their rates, state govts have to bear the burden of the additional cost, often leading to debt.
- Around 25% of energy sales are too subsidised, and agricultural users are likewise subjected to inconsistent, low-quality supplies.
- Unmetered consumers and non-functional metres at the consumer and feeder level remain despite attempts.
- Poor billing and collection efficiencies
- Non-payment of electricity dues by State Government Departments
- Non-payment/short payment by the State Government against the subsidies announced by them
- Aggregate Technical and Commercial (AT&C) Losses
- The Revamped Distribution Sector Reform Scheme (RDSS) is the most recent central government grant-based initiative for energy distribution network investments, which was launched in July 2021.
- The Ujjwal DISCOM Assurance Yojana (UDAY) was launched in November 2015 with the goal of improving the financial status of state distribution corporations (DISCOMs). State governments took over 75% of their DISCOMs’ debt and issued lower-interest bonds to cover the remaining debt. In exchange, DISCOMs were set deadlines (2017-19) to accomplish efficiency goals such as lowering power losses due to transmission, theft, and improper metering. The plan did not succeed in achieving its goal.
- Previously, schemes such as the Accelerated Power Development Programme (an urban loss reduction scheme), PM SAUBHAGYA (a rural connections and network expansion focused scheme), Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), and Ujwal Discom Assurance Yojana (UDAY) were instrumental in increasing access and improving the performance of India’s power sector DISCOMs.
- Regulatory Reforms: State governments should support the State Electricity Regulatory Commission’s authority, competency, and openness (SERC).It is imperative that DISCOMs be depoliticized.
- Operational Reforms: India’s total AT&C loss rate is significant.Many utilities need to enhance their billing efficiency by implementing smarter metering.
- Strengthening Rural Networks: To satisfy rising demand, rural networks must be strengthened. More network investment will be required to meet increased supply hours, appliance consumption, and the demands of rural industries. Without this, there is a greater danger of power disruptions. This difficulty might be the focus of the RDSS system’s strengthening strategies.
- Agricultural Consumers’ Needs: Under the PM-KUSUM concept, a significant number of farmers may get low-cost daytime electricity by erecting megawatt-scale solar plants that offer eight hours of quality power straight to designated agricultural feeders. Farmers’ desire for consistent supply would be met, and the discom’s cost and subsidy requirements would be nearly halved. To speed up the solarization of agricultural feeders, RDSS emphasises investments and incentives to specialised agricultural feeders. This financial assistance can help to ensure a consistent supply and decrease the need for subsidies.
- Privatization of DISCOMs: In several cities, including Delhi, Mumbai, Kolkata, and Ahmedabad, this experiment has brought excellent outcomes. AT&C’s losses in the national capital were as high as 53% before it was privatised in 2002, and the government was subsidising discoms to the tune of Rs 12,000 crore every year. Losses decreased after privatisation, and currently Delhi has one of the lowest AT&C losses among DISCOMs in the country, at just 8%.
- Electricity Amendment Bill 2021: The bill aims to delicense power distribution in order to lower entry barriers for private players and create competition in the market, allowing consumers to choose from a variety of service providers and forcing them to clean up their acts and become more operationally efficient.
- Automatic Metering of Distribution Feeders: In order to demonstrate loss reduction, discoms frequently under-estimate losses by over-estimating unmetered use. All feeds must be fitted with metres capable of conveying readings without the need for user intervention for higher accuracy. For this, states should take advantage of the RDSS’s emphasis on automated metre reading.
- States’ role: States must identify implementation challenges, develop appropriate metering techniques, and develop frameworks for comparing benefits vs costs. States should underline the need for flexibility in their action plans, allowing discoms to make an educated decision between prepaid and postpaid metering. In addition, the state regulator must establish a framework for evaluating cost savings and improved performance as a result of smart metres, as well as safeguard customers against unjustified rate increases as a result of such expenditures.
- The monitoring, tracking, and financial disbursement procedures used by central government agencies should also be adaptable.
- Reforms to Integrate Renewable Energy: DISCOMs must plan to handle a growing quantity of renewable energy (RE) from both generators and prosumers.
- Effective managerial improvements, such as conveniently available call centres and simple bill payment facilities, can assist minimise customer unhappiness while also increasing income.
- Furthermore, performance incentives might aid in aligning discom staff with the organization’s goals.
How to structure:
- Give an intro about state DISCOMS
- Explain why the state DISCOMS are in debt even after continous interventions- mention about uday scheme as well.
- Suggest measures