Lok Sabha Question No. 4470 (UNSTARRED), answered on 2025-03-27
Subject: Financial Viability of DISCOMs
Ministry: POWER
Asked by: Shri Rao Rajendra Singh, Shri Bhartruhari Mahtab, Shri Bidyut Baran Mahato, Shri Dilip Saikia, Shri Yogender Chandolia, Shri Lumbaram Choudhary, Shri Naba Charan Majhi, Dr. Rajesh Mishra, Shri Arun Govil, Shri Dineshbhai Makwana

## GOVERNMENT OF INDIA MINISTRY OF POWER

## LOK SABHA UNSTARRED QUESTION NO.4470 ANSWERED ON 27.03.2025

## FINANCIAL VIABILITY OF DISCOMS

4470.  SHRI DINESHBHAI MAKWANA:

DR. RAJESH MISHRA:

SHRI BIDYUT BARAN MAHATO:

SHRI ARUN GOVIL:

SHRI LUMBA RAM CHAUDHARY:

SHRI BHARTRUHARI MAHTAB:

SHRI NABA CHARAN MAJHI:

SHRI YOGENDER CHANDOLIA:

SHRI DILIP SAIKIA:

SHRI RAO RAJENDRA SINGH:

Will the Minister of POWER be pleased to state:

- (a) the manner in which the Government is working towards improving the financial viability of electricity distribution utilities across India;
- (b) the  role  of  renewable  energy  in  reducing  power  costs  and  enhancing  the sustainability of DISCOMs;
- (c) the manner in which the Government plans to strengthen regulatory frameworks for improving cost-reflective power tariffs; and
- (d) the efforts being made for solar energy in Sidhi Parliamentary Constituency?

## A N S W E R

THE MINISTER OF STATE IN THE MINISTRY OF POWER

(SHRI SHRIPAD NAIK)

- (a) : Government of India (GoI) has been supporting the Power Distribution Utilities to improve their performance through various initiatives. Some of the key initiatives taken are as under:
- i. Revamped  Distribution  Sector  Scheme  (RDSS)  has  been  launched  with  the objective  of  improving  the  quality  and  reliability  of  power  through  a  financially sustainable and operationally efficient Distribution Sector. The release of funds under  the  scheme  is  linked  to  States/  Distribution  Utilities  taking  necessary measures for improving their performance against specified parameters including the Gap between average cost of supply and average revenue realized i.e. ACSARR Gap and the Aggregate Technical & Commercial (AT&C) losses.
- ii. Allowing  additional  borrowing  space  of  0.5%  of  GSDP  to  the  State  if  the distribution utility implements loss reduction measures.
- iii. Additional Prudential Norms have been specified for sanctioning of loans to State owned Power Utilities which is contingent on performance of Power Distribution Utilities against prescribed parameters.
- iv. Timely filing of tariff petitions and issuance of tariff orders.
- v. Rules  have  been  notified  for  implementation  of  Fuel  and  Power  Purchase  Cost Adjustment  (FPPCA)  and  cost  reflective  tariff  to  ensure  all  prudent  costs  for supply of electricity are passed through and are timely realised.
- vi. Rules  and  Standard  Operating  Procedure  have  been  issued  for  proper  Subsidy Accounting and their timely payment.

With collective efforts of the Centre and States/UTs, the AT&C loss of distribution utilities at the national level has reduced from ~22% in FY 2021 to ~16.28% in FY 2024 and the ACS-ARR Gap has reduced from Rs. 0.71/kWh to Rs. 0.19/kWh during the same period.

- (b) : Renewable energy particularly if produced near the load centers, would reduce power costs and enhance the sustainability of distribution Utilities.
- (c) The following measures have been taken by Government of India to strengthen regulatory  framework  for  improving  cost-reflective  power  tariff.  Rules  have  been notified for:
- (i) Ensuring that tariff shall be cost reflective and there shall not be any gap between estimated  and  approved  Annual  Revenue  Requirement  except  under  natural calamity  conditions,  provided  that  such  gap,  created  if  any,  shall  not  be  more than three percent of the approved Annual Revenue Requirement.
- (ii) Aligning the Aggregate Technical and Commercial loss reduction trajectory with the trajectory agreed by the respective State Governments and approved by the Central Government under any national scheme or programme.
- (iii) Pass-through  of  prudent  costs  of  power  procurement,  incurred  by  distribution licensee  for  ensuring  24x7  supply  of  electricity  to  consumers  and  for  meeting requirements as per Resource Adequacy plan.
- (iv) Providing reasonable Return on Equity (RoE) and to align the same with the RoE specified by the Central Commission for generation and transmission.
- (v) Timely issuance of tariff order and timely payment of subsidy declared by State Government.

(d) : The  following  efforts  have  been  made  to  promote  solar  energy  in  the  country including in the Sidhi Parliamentary Constituency:

i. Permitting Foreign Direct Investment up to 100 percent under the automatic route for renewable energy projects ii. Inter  State  Transmission  System  charges  have  been  waived  for  solar  and wind  power  based  renewable  energy  projects  to  be  commissioned  up  to 30 th  June 2025. For Green Hydrogen Projects, the waiver is till 31 st  December 2030 and for offshore wind projects, the waiver is till 31 st  December 2032.

iii. Setting  up  of  Ultra  Mega  Renewable  Energy  Parks,  to  provide  land  and transmission access to renewable energy developers.

iv. Standard Bidding Guidelines have been issued for procurement of Power from Grid Connected Solar, Wind-Solar Hybrid and Firm & Dispatchable RE (FDRE) projects through a tariff based competitive bidding process.

v. Schemes  such  as  Pradhan  Mantri  Kisan  Urja  Suraksha  evam  Utthaan Mahabhiyan (PM-KUSUM), PM Surya Ghar: Muft Bijli Yojana, National Programme on High Efficiency Solar PV Modules, New Solar Power Scheme (for  Tribal  and  PVTG  Habitations/Villages)  under  Pradhan  Mantri  Janjati Adivasi Nyaya Maha Abhiyan (PM JANMAN) and Dharti Aabha Janjatiya Gram Utkarsh Abhiyan (DA JGUA), etc. have been launched.

vi. Evacuation  of  renewable  power  under  the  Green  Energy  Corridor  Scheme through  laying  of  new  transmission  lines  and  creation  of  new  sub-station capacity.

vii. Green Term Ahead Market has been launched to facilitate sale of renewable power through exchanges.

viii. Transmission  Plan  for  integration  of  500  GW  renewable  energy  capacity  by 2030.

ix. Promotion  of  renewable  energy  through  Green  Energy  Open  Access  Rules 2022.

***********