A convoluted tariff regime, under-recoveries, power theft, and unpaid subsidies are threatening the sustainability of the Delhi discoms Delhi Government is looking at various options to address twin problems facing its three power distribution companies (discoms) namely BSES Rajdhani Power Limited (BRPL), discom for South & West Delhi; BSES Yamuna Power Limited (BYPL) — discom for Central & East Delhi; and Tata Power Delhi Distribution Limited or TPDDL – discom for North Delhi. These are (i) “Regulatory Assets” or RAs of Rs 27,200 crore lying in the books of these discoms; (ii) an equally staggering amount of Rs 26,500 crore they owe to power generation and transmission companies viz. Indraprastha Power Generation Co. Ltd (IPGCL), Pragati Power Corporation Limited (PPCL)...
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Category: Power
Sans political will, power theft persists
According to then Union Power Minister R K Singh, AT&C losses were previously as high as 27%. For example, if 100 units of electricity leave power dispatch centres and 27 units are stolen and not paid for. The Centre is planning to launch a new scheme to help power distribution utilities (discoms) cut technical losses through “transition-financing” of necessary capital expenditures. Discoms, mostly owned and controlled by state governments, are at the core of the power supply and distribution network in the country. They buy electricity from generating companies (gencos) and supply it to consumers. Technical losses, specifically aggregate technical and commercial (AT&C) losses, often mean power theft. According to then Union Power Minister R K Singh, AT&C losses were...
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Populism cripples revival of discoms
The twin problems of AT&C losses and under-recoveries on sale to certain households or farmers in some States have existed for close to a quarter century The Centre is planning to launch ‘another’ scheme to enable public sector power distribution utilities (discoms) to cut technical losses via “transition financing” of the required capital expenditure. The discoms stand at the core of the power supply and distribution network in the country. Mostly owned and controlled by State Governments, they buy electricity from the generating companies (call them gencos) in the public sector such as National Thermal Power Corporation (NTPC) etc and gencos in the private sector commonly referred to as independent power producers (IPPs) and supply to the consumers. Technical losses...
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With power freebies, debt comes calling
The core dilemma persists: How to prevent debt while ensuring universal electricity access? This issue entails policy intricacies and power sector reforms In an interview, Union Power Minister RK Singh revealed he has been telling States that electricity is not free. “If any State wants to give free power to any category of people, they can go ahead and do so, but you have to pay for it”. Singh’s exhortation to the States assumes significance in the backdrop of a spate of announcements by the latter to give free electricity to certain consumers which affect the viability of power distribution companies or discoms (they buy power from generating companies or gencos and supply to the consumers). He argues “like any...
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AAP pushing discoms into crisis
The AAP government’s decision to supply subsidised power in Delhi is adversely affecting the financial health of discoms Since the financial year (FY) 2019-20, the AAP government in Delhi led by Arvind Kejriwal has been subsidising the distribution of electricity to household (HHs) consumers. Whereas, HHs consuming up to 200 units per month are fully exempt from paying any charges, those with consumption between 201-400 units per month get 50 per cent of the bill amount as a subsidy subject to a cap of Rs 800. During FY 2019-20, the government spent Rs 2405 crore on subsidizing these consumers. The expenditure increased to Rs 2940 crore during FY 2020-21. It further increased to Rs 3090 crore during FY 2021-22. In...
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State doles can put discoms at risk
Discoms will be profitable only when they are unshackled from state controls and electricity distribution is deregulated Even as the Central government is making all-out efforts to remove the financial distress of power distribution companies or discoms (situated at the core of the power supply chain, they procure electricity from power generating companies or gencos and distribute it to the consumers) and restore them to robust health, actions of the state governments undermine these efforts. The financial distress of discoms arises fundamentally due to their inability to generate enough revenue to pay for the electricity they buy. For over two decades, they have been incurring losses year after year. They have funded these losses by borrowings from banks and other...
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Discoms show signs of ‘turn around’
According to PRAAPTI (Payment Ratification and Analysis in Power Procurement for Transparency in Invoicing of generators) – a portal maintained by the Ministry of Power (MoP) – , the legacy dues of power generating companies (gencos) from distribution companies or discoms in short came down from Rs 1,20,540 crore in June 2022 to Rs 61,025 crore in July 2023. If, we include dues of transmission companies (transcos) and traders also, then total dues of all those involved in electricity supply chain decreased from Rs 1,39,747 crore to Rs 69,957 crore during the same period. The MoP has attributed this drastic improvement in clearance of dues by discoms to implementation of late payment surcharge (LPS) and related matters Rules, 2022 as...
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Delhi power tariff will only go North
Delhi’s electricity bill cannot be reduced unless reforms such as de-licensing of the distributors, breaking the monopoly of a few discoms is undertaken In its order dated June 22, 2023, the Delhi Electricity Regulatory Commission (DERC) has allowed the power distribution companies (discoms) in the national Capital viz. BSES Yamuna Power Limited (BYPL), BSES Rajdhani Power Limited (BRPL) and New Delhi Municipal Council (NDMC) to charge 9.42 per cent, 6.39 per cent and 2 per cent respectively in PPAC (Power Purchase Agreement Cost) on top of the prevailing rates of 22.18 per cent, 20.69 per cent and 28 per cent. Earlier on June 7, 2023, Tata Power Delhi Distribution Limited or TPDDL (earlier NDPL) was allowed an additional PPAC of...
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Mess in Delhi’s power distribution business
The problem can be eradicated only if the State Government liberates the three discoms from its controls and gives them the much-needed freedom In 2018, the Delhi Electricity Regulatory Commission (DERC) issued an order requiring the Delhi Government to give subsidies to its preferred consumers, primarily households, ‘directly’ by crediting it to their bank account using the direct benefit transfer (DBT) mechanism instead of routing it through the three power distribution companies (discoms) namely BSES Rajdhani Power Limited (BRPL), discom for South & West Delhi; BSES Yamuna Power Limited (BYPL) — discom for Central & East Delhi; and North Delhi Power Limited (NDPL) — discom for North Delhi which is the existing practice. The order was never implemented and is...
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Regulatory assets are elephant in the room
Regulatory assets are created when state electricity regulatory commissions accept that the tariffs don’t cover discoms’ purchase cost but don’t raise rates The Power Ministry has taken two decisions which have a bearing on viability of the beleaguered power distribution companies (discoms). It has (i) warned state electricity regulatory commissions (SERCs) against creating a pile of ‘regulatory assets’; and (ii) proposed a pool of efficient thermal power units more than 25 years old to act as a balancing source for the increasing share of renewable energy in the electricity grid. Mostly owned and controlled by state governments, discoms purchase power from public sector undertakings (PSUs) such as the National Thermal Power Corporation (NTPC) and independent power producers (IPPs) under long-term...
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