Promonique
Promonique
EPR Subscription Banner
EPR Subscription Banner
Promonique Banner
Promonique Banner
Home » News » Government streamlines regulations to stabilise DISCOMs finances

Government streamlines regulations to stabilise DISCOMs finances

August 1, 2023 6:08 pm

Government streamlines regulations to stabilise DISCOMs finances
.

The Central Government prescribes rules for subsidy accounting, actual energy consumption, and financial sustainability in the power sector.

The government has introduced a series of measures aimed at bolstering the financial well-being of Discoms (Distribution Companies) by streamlining crucial aspects of their operations. This move comes in response to the pressing need for a comprehensive framework to ensure the sustainability of the power sector. Among the key issues addressed are improper and non-transparent accounting practices, as well as delays in the payment of subsidies announced by the States-factors that have contributed to the financial distress faced by Discoms.

The Ministry of Power recently announced new rules, effective July 26, 2023, that mandate the submission of quarterly reports by distribution licensees within thirty days from the end of each respective quarter. State Commissions will then examine these reports and issue their assessments within another thirty days. The reports will cover various aspects, including the raising demands for subsidies based on energy consumption by the subsidised categories and the actual payment of subsidies under Section 65 of the Act, as announced by the State Government.

The new rules emphasise strict compliance and accountability. Should any discrepancies be found regarding subsidy accounting and billings, the State Commission is empowered to take appropriate action against those responsible for non-compliance in line with the provisions of the Act.

Addressing the pressing issue of Aggregate Technical and Commercial (AT&C) losses, the framework for sustainability outlines a clear path for their reduction. State Commissions will be tasked with approving AT&C loss reduction trajectories for tariff determination, aligning them with the trajectories agreed upon by the respective State Governments and approved by the Central Government under national schemes or programmes.

To ensure the full recovery of costs incurred by the Distribution licensee, the rules state that all prudent costs of power procurement will be taken into account during tariff approval. Similarly, prudent costs associated with the development and maintenance of the distribution system will also be considered, subject to fulfilling prescribed conditions.

Moreover, the rules outline a fair sharing mechanism for gains or losses arising from deviations from the approved AT&C loss reduction trajectory. Both distribution licensees and consumers will share the outcomes, ensuring an equitable distribution of benefits.

For streamlined operation and maintenance of the distribution system, the Central Electricity Authority has been entrusted with issuing guidelines aimed at establishing norms and best practices.

In order to encourage investments in the sector, a reasonable Return on Equity (RoE) is critical. To this end, the State Commission will align its RoE with that specified by the Central Electricity Regulatory Commission (CERC) in its Tariff Regulations for the relevant period, with necessary modifications to account for the risks inherent in distribution business.

These measures are poised to usher in a new era of financial stability for Discoms, ultimately benefiting consumers and contributing to the overall growth of the power sector.

Cookie Consent

We use cookies to personalize your experience. By continuing to visit this website you agree to our Terms & Conditions, Privacy Policy and Cookie Policy.

Android App
Android App
EPR eMagazine May 2024
EPR eMagazine April 2024
EPR eMagazine April 2024

Events

EL Asia
EL Asia
Global Energy Digitalisation Conclave
Global Energy Digitalisation Conclave
India Energy Storage Week
India Energy Storage Week
World battery and energy storage industry expo
World battery and energy storage industry expo
Green Hydrogen Summit
Green Hydrogen Summit
Powergen
Powergen
Windergy
Windergy

Our Sponsors

Rayzon Solar Pvt Ltd
Rayzon Solar Pvt Ltd
CSE Power
CSE Power
Calter
Calter
Lawson Fuses
Lawson Fuses
Kusam Meco
Kusam Meco
Apar Industries
Apar Industries
Easun MR Tap Changers
Easun MR Tap Changers
Maco Corporation India Pvt Ltd
Maco Corporation India Pvt Ltd
Bask Energies
Bask Energies
HPL Electric Power
HPL Electric Power
Mecc-Alte India
Mecc-Alte India
flir system
flir system
Triveni Turbine ltd
Triveni Turbine ltd
Innovatek
Innovatek
Aeron Composite Pvt Ltd
Aeron Composite Pvt Ltd
Powerica LTD
Powerica LTD
Electrotherm
Electrotherm
MENNEKES Electric India
MENNEKES Electric India
Om Technical Solutions
Om Technical Solutions
PRAMA HIKVISION INDIA
PRAMA HIKVISION INDIA