Discoms to submit report on electricity subsidy to Centre every quarter

The draft rules suggest penalties to be levied on discoms for faulty subsidy accounting, raising erroneous subsidy bills

The Union Ministry of Power has proposed to streamline electricity subsidy and its accounting, and would direct power distribution companies (discoms) to report details of electricity subsidy disbursal and its monitoring.

Through an amendment to the Draft Electricity Rules, 2005, the power ministry has proposed a quarterly report should be submitted by state electricity regulatory commissions (SERCs) for the discoms in their jurisdiction providing a report on the electricity subsidy.

It said the report should contain details on whether or not the demand for subsidy was raised by the distribution licencee based on accurate accounts of the energy consumed by the subsidised category and consumer category wise per unit subsidy declared by the state government.

The report should also contain details of actual payment of subsidy in accordance with Section 65 of the Act and the gap in subsidy due and paid as other relevant details.

The draft rules suggest penalties that the State Electricity Regulatory Commissions (SERCs) can levy on the discoms in case their subsidy accounting, the raising of bills for subsidy and the payment are not in accordance with the Act or Rules.

The draft has been shared with all stakeholders in the electricity supply chain including all state governments and respective discoms. They have been asked to submit their comments on the same.

These rules would further enhance the role of the SERCs while putting discoms on a tight leash. Most of the discoms in the country are state-owned and financially and operationally beleaguered. The Centre last year floated several reforms through the Electricity Bill, 2022 but it is yet to get legislative approval. The Bill had provided several provisions for improving fiscal health of the discoms. Additionally, the Bill has empowered SERCs by giving them the status of a civil court and power to issue suo moto tariff orders.

The Draft Electricity Rules have also proposed that the loss reduction trajectory of the discoms should be in accordance with the trajectory agreed upon by the respective state government and approved by the Centre under any national scheme or programme.

The rule is in line with the new discom reforms scheme of the Centre–RDSS. Under RDSS, all power sector schemes have been subsumed and the fund disbursal to discoms is linked to their financial and operational loss reduction targets and achievements, as submitted to the power ministry.