Reforms agenda to be included in power distribution guidelines

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Published: July 17, 2019 12:41 AM

The minister wants the new perspective plan to also include power sector ‘Reforms 2.0’, which sources say, are managerial suggestions — such as franchisee business model.

Reforms agenda, power distribution guideline, power distribution, CEA, Central Electricity Authority, economy news, industry newsFinancial losses of these firms have increased 44% annually to Rs 21,658 crore at the end of FY19.

Keeping in mind the current financial distress of the country’s electricity distribution companies (discoms), power minister RK Singh has asked the Central Electricity Authority (CEA) to integrate the upcoming tariff policy’s proposed procedural reforms in its final ‘distribution perspective plan’. The initial version of the perspective plan, floated by CEA in June 2018, was a set of guidelines to help discoms choose appropriate technologies for infrastructure development.

The minister wants the new perspective plan to also include power sector ‘Reforms 2.0’, which sources say, are managerial suggestions — such as franchisee business model. This would allow discoms to improve their accounts.  Financial losses of these firms have increased 44% annually to Rs 21,658 crore at the end of FY19.

According to sources aware of the development, in the power sector, ‘Reforms 2.0’ refers to key amendments to the Electricity Tariff Policy, 2016, such as penalty for gratuitous load-shedding, restriction of AT&C losses to 15% (losses above this would not be compensated via tariffs), payment of subsidy through direct benefit transfer, capping cross subsidies at 20% of the power supply cost and reducing cost of electricity units while increasing fixed monthly rentals.

The power ministry said on Tuesday the perspective plan laid emphasis on 100% metering and envisages conversion of all meters into smart-prepaid mode by the end of FY22. Removal of manual intervention in metering is expected to reduce the losses of discoms by improving billing and collection. Keeping in mind the rising share of intermittent, renewable power generation sources, the 2016 tariff policy had mandated installation of smart meters for every connection by the end of 2019 — a target that has not been met mainly due to discoms’ financial woes.

The perspective plan also anticipates a 38% rise in substation capacity and 32% rise in transformer capacity in 2022. With transmission capacity creation happening at a slow pace, the CEA has already suggested power utilities to consider installing high-performance conductors in their existing and new power lines. However, adequate capital is seen to be an impediment on this front as well.

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