Expressing concern on the financial viability of the distribution companies (Discoms), Power Minister Manohar Lal emphasised that states need to work on exploring avenues to reduce the debt burden.

Addressing the conference of Power Ministers from states and union territories on Tuesday, the Minister noted that the Average Cost of Supply (ACS)-Average Realizable Revenue (ARR) gap has improved to ₹0.21 per kilowatt-hour (kWh) in FY24.

The Minister impressed upon the gathering that India’s peak power demand hit 250 gigawatts (GW) in May 2024, which was met through collective efforts. However, in view of the growing electricity demand, efforts are required to increase the capacity.

Discom health

Lal pointed out that the financial viability of Discoms is “another concern”. Discoms are vital for the overall growth of the power sector in the country.

He mentioned that ACS-ARR gap has improved to ₹0.21 per kWh in FY24 as per provisional accounts from ₹0.45 per kWh in FY23.

The Minister emphasized that states need to ensure timely payment of government dues and subsidies. For government dues, states may establish a centralised mechanism for payment of dues and all offices should be brought on prepaid smart meter by March 2025. States were asked to work on ways to reduce the Discom debts. 

Lal mentioned that to promote smart meters, a 5 per cent rebate may be provided by states to prepaid consumers and must do effective consumer engagement.

He also mentioned that Discoms need to make efforts for expeditious implementation of works sanctioned under the Revamped Distribution Sector Scheme (RDSS).

This would help in bringing innovative solutions based on AI, for problems currently being faced by the Dsicms. Through a competitive process, 40 potential technology solutions will be incubated with a total financial support of up to Rs 37 crore under Powerthon-II and assistance of up to ₹6 crore shall also be provided to Discoms for scaling up the solutions already identified in Phase 1.

It was mentioned that a combined ranking methodology has been developed for ranking of Discoms to create healthy competition. The first ranking is to be published by January 2025.

Lal stressed that Dsicoms should effectively implement Rights of Consumers under the Electricity Rules and should provide compensation to the consumers for deficiencies in services. Besides, Dsicoms should promote the rooftop installation under the PM Surya Ghar Yojana.

He mentioned that with the growing power demand, there is a growing need for investment in the sector and also a need to improve the operational efficiencies of the utilities in the sector for which States may identify and take up utilities for listing.

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