The Ministry of Power continues to prioritize improvements in the power distribution sector, implementing multiple reforms aimed at strengthening the financial viability of distribution utilities. Over the past decade, several policy measures have been introduced, including the Integrated Power Development Scheme (IPDS), the Ujjwal DISCOM Assurance Yojana (UDAY), and the Revamped Distribution Sector Scheme (RDSS). These initiatives have led to improvements in billing and collection efficiency, reduction in Aggregate Technical & Commercial (AT&C) losses, and better financial health for many utilities.
The 13th Annual Integrated Rating and Ranking of Power Distribution Utilities assesses 63 power distribution companies based on financial and operational performance. This year, 32 utilities achieved AT&C losses below 15%, and overall billing efficiency slightly improved to 86.9% compared to the previous year. However, collection efficiency declined by 1.2 percentage points to 96.4%, primarily due to inefficiencies in some utilities. Among the rated utilities, 40 showed improvement in AT&C losses, with 18 achieving a reduction of over two percentage points.
The financial health of the sector has shown progress, with the gap between the average cost of supply (ACS) and average revenue realization (ARR) narrowing to ₹0.39 per unit in FY 2023-24, down from ₹0.59 per unit in the previous year. This decline in the cash gap, amounting to approximately ₹58,000 crore, signals an improvement in cost recovery. Several utilities, including IPCL, APDCL, UPCL, GESCOM, and NBPDCL, recorded notable enhancements in financial performance, while others, such as TPWODL and APEPDCL, saw deterioration.
The report also highlights concerns related to regulatory assets, with an increase in certain utilities such as TPDDL, BRPL, BYPL, AVVNL, and JVVNL. Additionally, utilities like UPCL, TPSODL, PuVVNL, and TGNPDCL faced issues due to overriding ACS-ARR conditions. No utilities reported loan defaults, but a few, including BESCOM and MESCOM, received adverse opinions from auditors due to financial reporting concerns.
Best practices identified in the report include advancements in digital payment systems, AI-powered consumer engagement, smart metering, and infrastructure modernization. Many utilities have introduced mobile apps and web portals for bill payments and service requests, while AI-driven analytics and SCADA automation have improved operational efficiency. Grid modernization efforts, such as underground cabling and substation upgrades, have enhanced reliability. Utilities are also incorporating renewable energy into their operations, promoting rooftop solar and microgrid projects.
Despite improvements, challenges remain. Days receivable saw a slight improvement to 115 days from 118 days in the previous year, yet some utilities still struggle with timely collections. Tariff subsidy realization declined to 97.4%, down from 108.6% in the prior year, indicating a reduction in state government support for some utilities. The timely issuance of tariff orders remains inconsistent, with delays observed in states such as West Bengal, Jammu & Kashmir, and Delhi.
The rankings provide a transparent evaluation of the sector, serving as a tool for stakeholders to track progress and identify areas requiring policy intervention. The report underscores the need for sustained efforts in loss reduction, financial discipline, and technological innovation to ensure reliable and affordable electricity across India.
Please view the full report here
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