Lok Sabha Question No. 2671 (UNSTARRED), answered on 2022-03-17
Subject: Tariff Hike by DISCOMs
Ministry: POWER
Asked by: Asaduddin Owaisi

## GOVERNMENT OF INDIA MINISTRY OF POWER LOK SABHA UNSTARRED QUESTION NO.2671

## ANSWERED ON 17.03.2022

## TARIFF HIKE BY DISCOMS

## 2671. SHRI ASADUDDIN OWAISI:

Will the Minister of POWER be pleased to state:

- (a) whether the Government has asked electricity distribution companies (DISCOMs) to hike tariffs timely and adequately to cover their rising costs;
- (b) if so, the details thereof;
- (c) whether  this  direction  by  the  Government  to  DISCOMs  is  likely  to  hit  hard  the consumers who are already reeling under high fuel prices;
- (d) if so, the number of States who have issued tariff orders during 2021-22;
- (e) the details of extent to which DISCOMs are facing cash crunch due to  non-payment by States who are offering subsidies on power bills, poor billing and collection inefficiency; and
- (f) the steps taken or being taken by the Union Government to ensure that consumers are not hit hard due to this direction and persuade States to pay their dues in time?

## A N S W E R

## THE MINISTER OF POWER AND NEW & RENEWABLE ENERGY

(SHRI R.K. SINGH)

- (a) to (c) : As per the Electricity Act 2003, the tariff for consumers are determined by State  Electricity  Regulatory  Commissions  and  not  by  the  Central  Government.  As  per section 65 of the Electricity Act, the State Governments may give subsidy to any category of  consumers  by  paying  the  subsidy  amount  in  advance  to  distribution  companies. Sections  61,  62  and  64  of  the  Electricity  Act,  2003  provide  for  Tariff  Regulations, Determination  of  Tariff  and  Procedure  for  tariff  order  respectively.  The  Electricity  Act provides that the tariff for the retail sale of electricity should reflect the cost of supply. However,  some  of  the  States  have  wide  gap  between  Average  Cost  of  Supply  and  the Average Revenue Realized.  A few State Commissions have been laggard in issue of timely tariff  orders, issue of timely true-up orders, and multi-year tariff orders. Such a situation has  led  to  the  tariff  not  being  cost  reflective  affecting  the  viability  of  distribution companies and also adversely affecting other companies in the value chain as generation and transmission companies.

Central  Government  has  requested  the  State  Commissions  (i)  to  determine cost-reflective tariffs, and (ii) to issue tariff orders and true-up orders on a timely basis, in accordance with the provisions of the Electricity Act, 2003. If the State Government wants to keep the tariff low they may give whatever subsidy they deem fit.

- (d) & (e) :  Only 16 States/UTs have timely issued Retail Tariff order for FY 2021-22 i.e by 31.03.2021. Till date 29 States/UTs have issued Retail Tariff Orders for FY 2021-22. The details of ACS-ARR gap, subsidies, billing and collection efficiency are given at   AnnexureI.
- (f) : The following measures have been taken by Government of India to ensure financial viability of the Power Discoms:
1. As on 31.12.2021, the Government of India under Liquidity Infusion Scheme, Rural Electrification  Corporation  (REC)  &  Power  Finance  Corporation  (PFC)  have  sanctioned Rs.1.35 lakh crore and disbursed Rs.1.03 lakh crore.
2. In  order  to  alleviate  the  financial  stress  on  the  Discoms,  Ministry  of  Power  on 20.08.2020 advised the generating companies and transmission companies to levy Late Payment Surcharge at a rate not exceeding 1% per month for all payments made under the Liquidity Infusion Scheme of PFC and REC under Atmanirbhar Bharat.
3.      The Government of India has allowed Distribution Companies to exit Power Purchase Agreements (PPAs) in cases of power plants which have completed 25 years from the date of commissioning (CoD) to reduce the Discoms burden of fixed costs. The introduction of Renewable  Energy  Bundling  Mechanism  for  replacing  thermal/hydro  power,  Green  Day Ahead Market  (GDAM)  and  Green  Term  Ahead  Market  (GTAM)  are  expected  to  help  the Discoms in reducing their dues.
4.     A Reforms-based and Results-linked, Revamped Distribution Sector Scheme having an outlay of Rs.3,03,758 crore with an estimated Gross Budgetary Support (GBS) from Central Government of Rs.97,631 crore has been launched. The scheme aims to reduce the AT&C losses at pan-India levels to 12-15% and ACS-ARR gap to zero by 2024-25.  The release of funds  under  the  scheme  has  been  linked  to  Results  and  Reforms.    The  scheme  allows States  to  adopt  customized  reform  measures  and  plan  infrastructure  works  to  meet specific needs of the State with the approval of Government of India.
5.        The  Fifteenth  Finance  Commission  (XV-FC)  has  recommended  additional borrowing space  of  0.50  per  cent  of  Gross  State  Domestic  Product  (GSDP)  to  States  for  reforms undertaken by them in Power Sector from FY 2021-22 to FY 2024-25.  States would be able to  avail  additional  borrowings  subject  to  fulfilment  of  entry  conditions  and  evaluation criteria laid down by Ministry of Finance.

The entry  level  conditions  among  others  include  timely  filing  of  tariff/  true-up  petitions, issuance & implementation of tariff/ true-up orders, advance payment of subsidy by State Government  in  line  with  section  65  of  the  Electricity  Act  2003;  preparation  of  energy accounts on quarterly basis; compliance with LC mechanism etc. The evaluation under the scheme will be based on adoption of reform measures such as improvement in percentage of metered  electricity  consumption; percentage of subsidy payment  through  DBT; Reduction in AT&C Losses, ACS-ARR gaps and Cross Subsidy; timely payment of electricity bills  by  Government  departments;  putting  Government  offices  on  prepaid  mode;  and induction of innovative technologies.

6.   The Central Government also supplements the efforts of the States through its various schemes including Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Integrated Power Development  Scheme  (IPDS)  and  Ujjwal  Discom  Assurance  Yojana  (UDAY)  and  Power System  Development  Fund  (PSDF)  to  help  them  to  achieve  the  objective  of  providing uninterrupted power supply to all households. The details are at Annexure-II.

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## ANNEXURE-I

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PARTS  (d)  &  (e)  OF  UNSTARRED

## QUESTION    NO. 2671 ANSWERED IN THE LOK SABHA ON 17.03.2022

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As per the PFC annual publication 'Report on Performance of Power Utilities' for the years 2017-18 to 2019-20, ACS-ARR Gap on Tariff Subsidy received basis (excluding Regulatory Income and UDAY Grant) along with ACS and ARR as per report are given below:

| National Level Figures                                                                              |   FY 2017-18 |   FY 2018-19 |   FY 2019-20 |
|-----------------------------------------------------------------------------------------------------|--------------|--------------|--------------|
| ACS (Rs./KWh)                                                                                       |         5.5  |         6    |         6.15 |
| ARR on Tariff Subsidy received basis (excluding Regulatory Income and UDAY Grant) (Rs/KWh)          |         4.99 |         5.31 |         5.55 |
| ACS-ARR Gap on Tariff Subsidy received basis (excluding Regulatory Income and UDAY Grant) (Rs./KWh) |         0.5  |         0.7  |         0.6  |

Details of Tariff Subsidy Billed (Rs. Cr.) and Tariff Subsidy Received (Rs. Cr.) are given below:

| National Level Figures            | FY 2017-18   | FY 2018-19   | FY 2019-20   |
|-----------------------------------|--------------|--------------|--------------|
| Tariff Subsidy Billed (Rs. Cr.)   | 92,547       | 1,10,989     | 1,19,921     |
| Tariff Subsidy Received (Rs. Cr.) | 88,189       | 99,013       | 1,13,500     |

Details of Billing Efficiency, Collection Efficiency and AT&C Loss as per report are given below:

| National Level Figures    |   FY 2017-18 |   FY 2018-19 |   FY 2019-20 |
|---------------------------|--------------|--------------|--------------|
| Billing Efficiency (%)    |        83.07 |        83.91 |        85.36 |
| Collection Efficiency (%) |        94.5  |        93.26 |        92.64 |
| AT&C Losses (%)           |        21.5  |        21.74 |        20.93 |

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ANNEXURE-II ANNEXURE REFERRED TO IN REPLY TO PART (f) OF UNSTARRED QUESTION    NO.

## 2671 ANSWERED IN THE LOK SABHA ON 17.03.2022 **************

Rs. in crore

2021-2022

|           | 2019-2020      | 2020-2021      | 2021-2022 (up to 30.06.2021)   |
|-----------|----------------|----------------|--------------------------------|
| Scheme    | Grant Released | Grant Released | Grant Released                 |
| DDUGJY    | 5767           | 4511           | 2544                           |
| IPDS      | 4600           | 3210           | 1255                           |
| Saubhagya | 696            | 448            | 431                            |
| PSDF      | 555.32         | 821.42         | 432.20                         |

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