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The Power Ministry has notified rules for streamlining the process of accounting, reporting, billing and payment of subsidy by states to the Discoms in a bid to improve financial health of the sector.
The Rules, which were notified on July 26, mandate that a quarterly report shall be submitted by the Discoms within 30 days from end date of the respective quarter and the State Electricity Regulatory Commission (SERC) shall examine the report and issue it within 30 days of submission of the quarterly report, the Ministry said.
The report will inter-alia cover the findings regarding raising of demands for subsidy based on accounts of the energy consumed by the subsidised categories; and the subsidy payable to these categories as announced by State government and the actual payment of subsidy in accordance with section 65 of the Electricity Act, it added.
Rationale
“The measures come in the wake of the need for a framework for sustainability of the sector and the fact that improper and non-transparent accounting as well as non-payment or delayed payment of subsidy announced by the States is one of the reasons for financial distress of Discoms,” the Ministry pointed out.
The Ministry emphasised that Reasonable Return on Equity (RoE) is one of the major factors required to ensure investment in the sector.
“The Rule provides that the RoE by the SERCs would be aligned with the RoE specified by the Central Electricity Regulatory Commission (CERC) in its tariff regulations for the relevant period, with appropriate modification taking into account the risks involved in distribution business,” it added.
New rules
Under the new rules, provision has been made that if subsidy accounting and raising of bills for subsidy is not found in accordance with the Act or Rules or Regulations issued thereunder, the SERC shall take appropriate action against those responsible for non-compliance as per provisions of the Act.
Besides, to define a “definite and reasonable goal” for reduction of Aggregate Technical and Commercial (AT&C) loss, it is prescribed that the AT&C loss reduction trajectory would be approved by the SERC for tariff determination in accordance with the trajectory agreed by the respective State governments and approved by the central government under any national scheme or programme, or otherwise, the Ministry said.
The trajectory for both collection and billing efficiency for the Discom have to be determined by the SERC, accordingly, it added.
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“In order to ensure the recovery of full costs incurred by the Discom in distributing electricity, it has been prescribed that all prudent costs of power procurement, done in a transparent manner, would be taken into account, while approving the tariff. Similarly, all the prudent costs incurred by the Discom for creating assets for development and maintenance of the distribution system would be accounted for subject to fulfillment of prescribed conditions,” it said.
It is also provided that gains or losses accrued to the Discom due to deviation from approved AT&C loss reduction trajectory would be shared between the Discom and the consumers. For establishing norms for operation and maintenance of the distribution system, the Central Electricity Authority has been mandated to issue guidelines, it added.
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