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Way forward to Uplift Discom health rather than imposing restrictions by Ministry of Power GOI

image credit: Energy news in India
Sudheer Kumar Dwivedi's picture
Sr Manager Power Management, MP Power Management Company Limited

A Certificate Energy Manager From BEE India and Certified Regulatory Professional from IIT Kanpur.

  • Member since 2022
  • 4 items added with 1,020 views
  • Aug 30, 2022

Recently due to non fulfilling of  Late Payment Surcharge (LPSC) almost 27 Distribution companies across country short term open access operation aborted. 

     Some points need to be resolved immediately to enhance performance of distribution companies.


  1. Total consumption across the country tends to 1400  BUs. Out of which 280 BUs ( 20% of 1400 BU Lost due to poor billing efficiency i.e. 80% ). Suppose cost of electricity is 5/- per unit then it leads to loss of 140,00 Crs of INR per year. As this is not raised in the bill so there is no provision to get this money back .


  1. To decrease this loss management had tried various ways either through remote metering with Fixed frequencies GPRS  or Radio frequencies  but it's really inadequate as the locations of consumers doesn't allow them to fetch readings due to various reasons.


 Uttar Pradesh has installed approximately 20 lacs of smart meter GPRS based by EESL in the last two year. But it suddenly stopped working due to a non updation of problem its NIC card ( switching required from 2 G to 3G) . 

  Similarly if all the consumers will go into RF then approximately 200 MW consumption across the country takes place. As per the current situation when the rate of electricity is 12/- per kWh during peak hours (19:00-24:00hrs) then it will cost nearly 1.20 Crs of INR for just 5 hrs per day similarly for year it will be around 438 Crs of INR for just 19:00-24:00 hrs. If it is calculated throughout the day it may increase vehemently from the pocket of consumers.


  1. Immediate need to fulfill meter reader vacancy on a regular basis to eliminate such behemoth economic loss.  Due to absence of an efficient or qualified meter reader, approximately 80% meter reading diaries are inaccurate. It leads to public grievances and abysmal performance of  distribution companies.


  1. As per the current practice of Hon' ble  SERC passing tariff i.e. it passes tariff on the basis of total energy consumption rather than actual cost of power required to meet peak demand. As it was decided in the Forum of Regulators of CERC. 


  So it's immediate need to analyse the PPA of such power stations which are having ECR more than 8/- like it has been done at various states in other parts of India.


  1. As total installed capacity of  renewable energy  is approximately 150 GW  and in future it will be ramped up  to the tune of 450-500 GW. So it needs time to review the TOD ( Time of day) scheme on monthly basis  looking to Power market price a,demand response and RE generation. As most of the RE generation used to occur in day hours ( solar Window). In this time power plants having low ECR use to back down to facilitate above generation, at the same time electricity prices in the power market are also low. While in night hours (00:00-02:00 hrs)  power plants having Higher ECR use to get scheduled  to meet demand at the same time due to TOD discoms have to pay incentives to high value consumers. So it may increase loss in revenue as well as power purchase cost.


  1. As the demand  increases gigantic i.e. base load of 170 GW to 190 GW , but  the 33/11 KV substations are operated in an unprofessional way. 


 Almost 80% of 33/11 KV substations are operated on an outsource basis . The companies who get these tenders are deploying unqualified, unskilled personnel even though they are not able to read the readings of the control panel. Ramifications of it leads to failure of Power transformer,Fatal accidents. even hundreds of Engineers punished with suspension and Chargesheet due to improper supply at 11 kV feeders.


 Further, due to non skilled operator tripping at 33/11 kV substation increases because they are not aware about the health of equipment and alarming indication of equipment.


  1. In Discom almost 47% of employees are in shortage but the load growth along with management and customers expectations to fulfill quality and reliable supply increased exponentially. It leads to abysmal performance.


Like,  It has been seen even a single lineman have to look after 50 Villages alone in rural area.So  even if he visits continuously throughout the month one day per village he will not able to reach all the villages i.e. 50 in a month's So expecting revenue growth along with satisfying consumer services can not be achieved. To meet our manpower, every line man used to employ 4-5 personnel at his own risk without informing anyone. Ramifications of it leads to unknown fatal accidents along with service deterioration.


 So it's immediate need to address adequate skill manpower.


  1. Currently the Kusum Part - C scheme was launched by the Ministry of Power . Many  power companies are supposed to do solar power PPA at 3.20/- per unit  for 25 yrs. 


  Further it is submitted that in the open market the cost of solar power is hardly 2.50/- per unit including POC ,CTU,STU and other charges. So as per calculation  almost 9.0 lakhs extra rupees per MW per year for continuously 25 years state discoms  have to pay.  As per information almost 5000 MW PPA are under process across the country so it will lead to loss of approximately 4380 Crs per year. If we calculate it for 25 years it leads to loss of 109,500 Crs of INR.


 So there shall be provision to fulfill this gap either for the State Government or Central government rather than pressuring Power Companies.


  1. As per the ARR employees cost is only 13-15% across the states most of the cost i.e. 85% comes with power purchase agreement so it's need of time to decrease Power purchase cost by better management rather than looking for state Discoms, like in past   many states have been allotted RLNG,LNG,RF,CRF and many more costlier power by MOp despite many times states have written request for its reparation which are having ECR more than 24/- per kWh  but upto today no action has been taken.


  1.  In past our Hon'ble PM had requested states to immediately clear dues of subsidy amount to Discoms. But it's further need to look at Central government arms Indian Railways, which is having outstanding of approximately 10,000  Crs of INR  of States discoms in terms of cross subsidy surcharge and additional surcharge . But upto today no action has been taken by the Central government.


  1. As it has been proven, sector experts give better output rather than fixing someone for 2-3 years from other services. So if GOI really wants discoms to run business in profit then the post of Managing Director of discoms shall be fulfilled by Discom officials only.


  1. As of today the discom business is giving ROE of 16% highest ever paid in any other business. It was decided in the past when the interest of loan from the bank was 12-13%. But in the current situation when bank interest rate are below 10% so it's immediate need to revise it from the current level of 16%.


  1.  As Chhattisgarh state government merged its discoms similarly UP government too has taken steps for merger of its generation companies to reduce various administrative and replication expenses.


      So the same action is required across the country . It will save a lot of expenditure along with an increase in efficiency of systems.


  1. As per the current practice if a power plant gets scheduled more than 85% throughout the year it attracts the incentives from the Discom (50 -65 paise per unit). Alongwith 16% on ROE.


If we connect it with other business like more you buy less you pay ( economic surplus) then this practice need to be immediately abolished.



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Thank Sudheer Kumar for the Post!
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