The utilities should effectively use the strong penal provisions in the Electricity Act, 2003 especially after the 2007 amendment to curb theft and pilferage of electricity. FORs recommendation is crucial when the aggregate technical and commercial losses are in the range of as low as 11% to 76% in various states.
SERCs might also encourage suitable local area based incentive and disincentive schemes for the staff of the utilities linked to reduction in losses, as stipulated in para 8.2.1(ii) of the Tariff Policy. FORs recommendations are crucial when the peaking shortage is about 14% while the energy shortage is 8% in the country.
According to FOR, agricultural feeder separation is emerging to be an effective method of loss reduction. Segregation of feeder for agriculture supply should be resorted to especially in states where proportion of supply to agriculture sector is substantial. This has been effectively implemented by Gujarat while Maharashtra has launched feeder separation.
Under-achievement of the loss reduction target should be borne by the licensee, and in case of achievement over and above the targets the gain should be shared between the licensee and the consumers in the ratio to be determined by SERCs.
FOR has strongly recommended that transmission losses should not be clubbed with distribution losses in order to have a clear focus on reduction of distribution losses. To segregate the technical and non-technical loss, baseline data should be compiled for each electricity division. Third party verification of the technical and financial data submitted by the utility is crucial, before such data is taken into account for determination of tariff. The trajectory for loss reduction should be determined keeping in view the actual loss levels, the capital expenditure made in the past for improving the network and the future capital expenditure plan.