Electricity, supply of: India
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Power: Transmission and distribution losses
Costly leak: Power cos lose Rs 30,000cr every year
Plan Panel Puts Blame On Theft, Faulty Metering & Poor Billing Mahendra Kumar Singh
New Delhi: The average cost of electricity in India may be the highest in the world but distribution utilities are losing around Rs 30,000 crore annually because they cannot recover the cost due to theft and poor billing practices, an industry euphemism for ‘transmission and distribution losses’.
Indicating that outdated networks are adding to the losses of distribution companies, the Planning Commission sees the average cost of taking power to the consumer’s doorstep increasing from Rs 3.60 per unit in 2005-06 to Rs 4.16 per unit in 2009-10, or an increase of 15.5%.
Against this level of rise in the costs, average tariff has increased from Rs 2.87 per unit to Rs 3.37 in the same period, marking a 17.4% increase. ‘‘The gap has increased to around 89 paise per unit in 2009-10,’’ the panel says in its mid-term review of the 11th Plan. Another reason for the utilities losing money in their distribution operation, the panel notes, is their failure to recover the cost owing to unsustainable level of technical and commercial losses due to pilferages and inefficiencies in metering and billing.
According to the mid-term review (MTR), the financial performance of 20 major states barring Delhi and Orissa discloses that total expenditure in distribution was Rs 2,03,097 crore in 2008-09, which is likely to be Rs 2,25,282 crore this fiscal, while commercial losses without subsidy worked out to Rs 40,910 crore in 2008-09 and are likely to be Rs 38,420 crore this fiscal. The average tariff was Rs 328.57 crore (at Rs 14.22 paise/Kwh) in 2008-09, which is likely to go up to Rs 338.32 crore (at Rs 17.47 paise/Kwh). “The gap between average cost of supply and average tariff has been found to be around 104 paise in 2008-09 and is expected to be around 89 paise in 2009-10,” the document suggests.
Criticising the distribution utilities for their poor power procurement planning, the MTR suggested that the distribution sector required substantial improvements in business planning and forecasting to manage its finances and operations better.
“Much of the present cost problems are on account of poor power procurement planning and contract management,” the panel argued. It called for for improvement in customer service and management methods which would lead to greater customer satisfaction and overall reduction in service costs and also facilitate in implementing cost reflective tariffs and timely payments from consumers.
CAG cannot audit private discoms: HC
The Times of India, Oct 31 2015
Abhinav Garg Blow to Kejri: CAG can't audit discoms
In a blow to the Kejriwal government, Delhi high court on Friday struck down its decision to get power discoms audited by CAG. It pointed out that there was a regulator, Delhi Electricity Regulatory Commission, for auditing the accounts of private discoms for tariff determination and CAG could not usurp that role. A bench of Chief Justice G Rohini and Justice Rajiv Sahai Endlaw observed that the purpose of the CAG audit -to examine if power tariffs were properly determined -was the exclusive domain of DERC. Thus, the purpose of the audit wasis not if privatisation has ser ved any purpose or whether the terms of the transfer scheme were in the interest of the Delhi government. The sole purposepurport of the audit is tariff determination,“ the bench observed, faulting the process.
The pre-poll promise that resulted in a formal request to CAG to carry out an audit of discoms in January 2014 was described as a “populist measure“ by the court which questioned the public interest behind the exercise. Since the state government and Delhi assembly have no power to take action on the findings, the court said it “ultimately may serve no purpose“.
“Such populist measures...not only end up being contrary to public interest but also put an unnecessary burden on the courts,“ the bench noted, quashing Delhi government's January 7, 2014 direction for the CAG audit.
Even as it recognized the constitutional powers of CAG, the bench faulted the Delhi government for rushing through the audit request instead of inviting objections from the discoms to a CAG au dit. “What emerges is that the discoms were given an oppor unity to represent (their point of view) before consul ations had taken place be ween the administrator and CAG and before the terms and conditions of such audit had been agreed upon between CAG and the concerned government,“ the court noted, cancelling the audit on this preliminary ground.
In its 139-page verdict, the court also criticised the government for not empowering DERC and instead embarking on “a misguided exercise by directing the CAG audit when ts report would not have any sanctity in law for achieving the desired result.“
“The direction for audit of discoms by CAG, when the report of CAG cannot impact the tariff, would not also serve any public interest,“ the court noted, lamenting that four years were wasted when “what was sought to be achieved could have been achieved by invoking the powers of DERC.“
The judges said “we are unable to decipher anything which DERC cannot but CAG can unearth“, pointing out that “once by law a regulatory body has been constituted with powers to have the ac counts of the discoms audited, there can be no other audit at the instance of the state government.“
It disagreed with the stand of the government and of an NGO that filed the PIL United RWAs Joint Action (URJA) that the audit was ordered in public interest for determining the tariff.
The court said that “determination of tariff is in sole domain of DERC which is well-empowered to itself conduct the same, and the report of the CAG audit has no place in the regulatory regime brought about by the Electricity Act and the Reforms Act.“
