Power Struggle: Tighter regulations, policies to dent discoms’ finances


Power Struggle: Tighter regulations, policies to dent discoms’ finances

The UDAY scheme has helped the state-owned electricity distribution companies (discoms) to halve their losses to Rs 17,352 crore in FY18 but an imminent regulatory crackdown may cause many of them to relapse. FE has estimated that the cumulative impact of stepped up regulations and policy-induced obligations on the discoms would be around Rs 18,000 crore per year.

The power ministry has made it clear that aggregate technical and commercial (AT&C) losses above 15% won’t be compensated in tariffs (the new regime is likely from FY20). This would hit most discoms as AT&C losses of 26 major states under UDAY were 19% at the end of FY18 — these losses are very high in Bihar (33.2%), MP (29.7%), UP (27.7%); a sudden 4 percentage points reduction will be a tall order for most of the discoms. urrently, regulators compensate the discoms for bulk of their actual AT&C losses.

Since the monetary value of 1 percentage point change in AT&C losses is about Rs 4,000 crore, UDAY discoms across the country would have to take a hit of 16,000 crore, if tariffs don’t allow such losses above 15%. Read More