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Minister of State for Power and New & Renewable Energy Shripad Naik is slated to chair a Group of Ministers (GoM) on improving the financial viability of discoms. Government sources have indicated that the GoM will review the Finance Commission's report and discuss the possibility of states taking on certain liabilities.
India's power distribution utilities—discoms and power departments—have collectively reported a positive Profit After Tax (PAT) after years of losses, posting ₹2,701 crore in FY 2024-25. The Power Ministry described this as a significant turning point for the sector. Distribution utilities had been recording PAT losses for several years following the unbundling and corporatization of State Electricity Boards.
The ₹2,701 crore profit in FY 2024-25 marks a sharp turnaround from a loss of ₹25,553 crore in FY 2023-24 and ₹67,962 crore in FY 2013-14. Power Minister Manohar Lal Khattar termed the development a “new chapter” for the distribution sector, noting that the government has taken multiple steps to address longstanding concerns.
Inaugurating the Centre of Excellence (CoE) for Regulatory Affairs in the Power Sector at IIT Delhi, the Minister highlighted that some of the 50-odd discoms are still loss-making. He pointed out that consumer behavior has contributed to persistent losses and emphasized that power distribution is a financial, not a social, sector—states cannot sustain long-term losses. Khattar also lauded improvements through the Revamped Distribution Sector Scheme (RDSS) and smart metering, which have helped reduce line losses.
Aggregate Technical & Commercial (AT&C) losses have declined significantly, from 22.62% in FY 2013-14 to 15.04% in FY 2024-25, signaling sector transformation. Cost recovery has also improved, with the Average Cost of Supply–Average Revenue Realized (ACS–ARR) gap narrowing from ₹0.78/kWh in FY 2013-14 to ₹0.06/kWh in FY 2024-25.
The Power Ministry noted that reforms such as the Electricity (Late Payment Surcharge) Rules have reduced outstanding dues to generating companies by 96%, from ₹1,39,947 crore in 2022 to ₹4,927 crore by January 2026. Payment cycles for distribution utilities have also fallen from 178 days in FY 2020-21 to 113 days in FY 2024-25.
Key initiatives aimed at improving efficiency in the distribution sector include:
India's power distribution utilities—discoms and power departments—have collectively reported a positive Profit After Tax (PAT) after years of losses, posting ₹2,701 crore in FY 2024-25. The Power Ministry described this as a significant turning point for the sector. Distribution utilities had been recording PAT losses for several years following the unbundling and corporatization of State Electricity Boards.
The ₹2,701 crore profit in FY 2024-25 marks a sharp turnaround from a loss of ₹25,553 crore in FY 2023-24 and ₹67,962 crore in FY 2013-14. Power Minister Manohar Lal Khattar termed the development a “new chapter” for the distribution sector, noting that the government has taken multiple steps to address longstanding concerns.
Inaugurating the Centre of Excellence (CoE) for Regulatory Affairs in the Power Sector at IIT Delhi, the Minister highlighted that some of the 50-odd discoms are still loss-making. He pointed out that consumer behavior has contributed to persistent losses and emphasized that power distribution is a financial, not a social, sector—states cannot sustain long-term losses. Khattar also lauded improvements through the Revamped Distribution Sector Scheme (RDSS) and smart metering, which have helped reduce line losses.
Aggregate Technical & Commercial (AT&C) losses have declined significantly, from 22.62% in FY 2013-14 to 15.04% in FY 2024-25, signaling sector transformation. Cost recovery has also improved, with the Average Cost of Supply–Average Revenue Realized (ACS–ARR) gap narrowing from ₹0.78/kWh in FY 2013-14 to ₹0.06/kWh in FY 2024-25.
The Power Ministry noted that reforms such as the Electricity (Late Payment Surcharge) Rules have reduced outstanding dues to generating companies by 96%, from ₹1,39,947 crore in 2022 to ₹4,927 crore by January 2026. Payment cycles for distribution utilities have also fallen from 178 days in FY 2020-21 to 113 days in FY 2024-25.
Key initiatives aimed at improving efficiency in the distribution sector include:
- Revamped Distribution Sector Scheme (RDSS): Modernizing infrastructure and accelerating smart metering to ensure financial viability.
- Additional Prudential Norms: Linking access to finance for utilities to performance benchmarks to promote fiscal and operational discipline.
- Amendments to Electricity Rules: Enforcing timely cost adjustments, prudent tariff structures, and transparent subsidy accounting for full cost recovery.
- Electricity Distribution (Accounts and Additional Disclosure) Rules, 2025: Standardizing accounting and enhancing transparency across distribution utilities for improved financial governance.
- Late Payment Surcharge Rules: Ensuring timely payments to support investments in new renewable energy projects.
- Incentivizing State Reforms: Tying borrowing limits to performance metrics under the Additional Borrowing Scheme to encourage adoption of critical power sector reforms.
