Higher days appear to be in retailer for the nation’s energy sector, particularly the facility distribution utilities, together with the facility sector, popularly referred to as DISCOMs.
For a very long time, DISCOMs, which presently quantity 72 (44 state-owned, 16 non-public and 12 within the energy sector) throughout the nation, introduced a difficult image of unreduced line losses, also referred to as whole technical and industrial (AT&C) losses, and the resultant widening hole between common price of provide (ACS) and common realized return (ARR). From 2020-21 to 2024-25, cumulative losses elevated from Rs 5.5 billion to Rs 6.47 billion and excellent debt rose to Rs 7.26 billion. Tariffs that don’t replicate prices and delays within the cost of state subsidies had been among the many elements that prompted this case.
legacy of loss
So far as India is anxious, DISCOM and losses have turn out to be synonymous, forcing consultants to make use of the prefix ‘minus’ at any time when a utility’s ARR exceeds its ACS. Some may argue that deficits are an issue of the previous, as these energy firms (of their earlier ‘incarnation’, the State Electrical energy Boards (SEBs) established underneath the Electrical energy (Provide) Act 1948) had been largely within the pink. Nevertheless, what was ignored then and now’s that Part 59 of the Act initially required SEBs to earn a revenue of a minimum of 3% as specified by the state authorities.
indicators of enchancment
Whilst many DISCOMs wrestle to handle power points, a number of others have began to visibly enhance their efficiency within the wake of steps taken by numerous stakeholders, together with the Union authorities. The survey revealed that DISCOMs recorded a constructive revenue after tax (PAT) of Rs 2,701 crore in monetary 12 months 2024-25, marking a “decisive turnaround” from a lack of Rs 67,962 crore in 2013-14. This enchancment decreased AT&C losses from 22.62% to fifteen.04% for the 12 months. Moreover, the ACS-ARR hole (on an accrual foundation) has been decreased from 78 paise per kilowatt hour to 0.06 paise per unit, indicating a major enchancment in price restoration.
In mid-January, the Union authorities additionally launched efficiency particulars of DISCOMs for the monetary 12 months ending March 31, 2025. The federal government claimed credit score for fiscal consolidation and attributed it to a number of measures, together with implementing a revamped Distribution Sector System (RDSS), amending electrical energy laws, and introducing late cost surcharge guidelines.
The target of the RDSS is to enhance the standard and reliability of electrical energy by way of a financially sustainable and operationally environment friendly energy distribution sector, and the discharge of funds is linked to the implementation of the required measures. Efficient implementation of this regulation has enabled DISCOMs to settle their dues by way of as much as 48 equal month-to-month installments (EMIs), thereby serving to utilities to cease the escalation of premiums on conventional dues.
Self-discipline and debt discount
Earlier than the principles got here into drive, late or non-payment of funds by DISCOMs made it tough for energy producers to pay the gasoline invoice, which must be paid prematurely to proceed producing electrical energy, aside from prepaying rake fees to the railways. When the principles got here into drive on June 3, 2022, the excellent legacy dues totaled Rs 1,39,947 crore. Since then, energy utilities in 13 states and union territories have disbursed Rs 1,31,942 crore by way of 39 EMIs, advances and changes until December 2025. In January 2026, dues additional decreased to Rs 4,927 crore, with DISCOMs primarily paying their present dues on time, reflecting a marked enchancment in sectoral monetary self-discipline.
However not all the pieces is rosy. Many, if not most, DISCOMs have been capable of obtain a turnaround primarily as a result of fare subsidies they acquired from their respective governments and the shouldering of their losses by their respective governments. For instance, within the case of Tamil Nadu, in 2024-25, the Tamil Nadu Energy Distribution Company Restricted (TNPDCL), the successor firm of the Tamil Nadu Technology and Distribution Company (TANGEDCO), acquired Rs 15,772 crore as tariff subsidy and Rs 16,107 crore as loss assumption. In reality, the facility utility has recorded a revenue (after tax) of Rs 2,073 crore for the primary time after receiving vital help from the state authorities. Nevertheless, as per the outcomes of the 14th Built-in Ranking Train carried out by Energy Finance Company Restricted (PFC) underneath the framework accepted by the Union Ministry of Energy, TNPDCL had posted a lack of Rs 14,034 crore on loss assumption. The survey outcomes had been introduced in late January 2026.
Take the instance of Jodhpur Vidyut Vitran Nigam Restricted (JDVVNL) in Rajasthan. Based on PFC’s evaluation, the corporate has improved its efficiency in 2024-2025 in comparison with the previous. The ability utility posted a revenue of Rs 92 million, after receiving Rs 11,625 billion as tariff subsidy and Rs 2,54 billion as loss assumption.
Furthermore, even the present place of DISCOMs having fun with worthwhile income seems to be short-term. It is because if electrical energy firms should revise their workers’ salaries in just a few years, there’s a very excessive chance that they are going to be again within the pink.
Future path
Nonetheless, the emphasis on authorities help, whereas nothing new, shouldn’t be seen as taking away the credit score from DISCOMs for enhancing their efficiency. Nevertheless, there’s nonetheless room for additional enchancment. The feeder separation train, which separates agricultural feeders from non-agricultural feeders, presently being launched in states with massive rural or agricultural shopper bases similar to Rajasthan, Andhra Pradesh, Gujarat, Karnataka and Maharashtra, needs to be prolonged to different states similar to Tamil Nadu, the place unmetered energy provide to the agricultural sector is the norm. Solely then will we have now extra correct information on the quantity of electrical energy delivered to farmers.
As Niti Aayog identified in its August 2021 survey on the facility distribution sector, DISCOMs ought to actively work in direction of selling the usage of photo voltaic pumps in agriculture, which might result in a major discount in energy procurement prices. The political administration should resist the temptation to broadly present free electrical energy to home customers and different classes. It is because the economically stronger sections of society all the time profit disproportionately from such measures. A mixture of political will and public-spirited paperwork can simply rework the face of DISCOMs into viable and consumer-friendly organizations.
issued – February 5, 2026 11:19pm IST
