Adani Electricity Mumbai tops Centre's discom ranking ; Torrent Power takes 2nd, 3rd spot

The report stated that the average power purchase cost increased by 71 paise/kWh during FY23, driven by 8 percent growth in power demand, more expensive coal imports and higher exchange prices especially during summers.

Adani Electricity Mumbai has topped the list of India's 55 power distribution companies (discoms) for the second consecutive year, according to the 12th Edition of Integrated Rating of Discoms released by the Ministry of Power on March 11.

The top three positions went to private discoms for the financial year 2022-23 that was evaluated. Torrent Power Surat of Gujarat was ranked at the second position and Torrent Power Ahmedabad of Gujarat at the third position. Gujarat’s state power utilities Dakshin Gujarat Vij Company Limited (DGVCL) and Uttar Gujarat Vij Company Limited (UGVCL) won the fourth and fifth positions, respectively.

Since 2012, the Integrated Rating exercise has been carried out on an annual basis as per the methodology approved by the Ministry of Power to evaluate the performance of power distribution utilities. The rating is based on parameters such as overall governance, financial sustainability, performance excellence, and external environment. It is prepared by McKinsey and Company with Power Finance Corporation (PFC) being the nodal agency.

“The public need to know how the discoms are performing and what their efficiencies are. The rating exercise is an important step towards transparency in governance. Besides this, the ratings also aim at encouraging discoms and energy departments which have low efficiencies to improve, as has happened in the past. The ratings are a mirror to the system. A number of utilities have improved their ratings," said RK Singh, Union minister for power and new and renewable energy during the launch.

The aggregate technical and commercial (AT&C) losses of power utilities during the year fell from 16.2 percent to 15.4 percent, driven by a one percentage point increase in billing efficiency, which improved to 87 percent.

"Our motive behind implementing smart prepaid meters is to increase billing efficiencies to 100 percent, which will also ensure that the AT&C losses of discoms come down to single-digit. We are persuading discoms to enter into long-term power purchase agreements (PPAs). This will bring down power purchase costs and moderate electricity rates," Singh said.

The report stated that the Late Payment Surcharge Rules reduced payables to generation and transmission companies. The days payable were reduced to 126 days and the days receivable were also reduced to 119 days. State governments disbursed 108 percent of the amounts booked for tariff subsidy during FY23. Further, a few states supported financial losses of discoms through subsidy grants, totalling Rs. 44,000 crore during the year.

It also stated that the average power purchase cost increased by 71 paise/kWh during FY23, driven by an 8 percent growth in power demand, more expensive coal imports and higher exchange prices, especially during summers. The ACS-ARR gap, which is the cash-adjusted gap per unit of energy, increased to 55 paise/kWh in FY23 due to purchase costs not being passed on fully to consumers.

Historically, power demand grew at 4.3 percent CAGR between FY14 and FY20, in contrast to 8.9 percent CAGR between FY21 and FY23.

Among the 42 state power utilities which have been rated, 9 utilities belonging to Gujarat, Haryana, Karnataka, Madhya Pradesh and Andhra Pradesh have earned a rating of either A+ or A. All 11 private discoms have received a performance rating of either A+, A, B or B-. In all, out of the 55 utilities which have been rated, 14 have received a performance rating of A+, 4 have received A, 7 have received B, 13 have received B-, 11 have received C and 6 have received the rating of C-. No utility has received the lowest rating of D, the Ministry said in a statement.

The Union minister said some states which were not performing have now started performing well. “However, one of the surprising things we have noticed is that some states which are regarded as developed or fast-developing have shown lower ratings for their discoms. This is critical. Unless and until our power sector is viable, we cannot grow, since then, we will not be able to buy power to distribute to our people, which would, in turn, result in loadshedding and de-industrialisation," Singh said.