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Home News Power Sector News OERC asks Discoms to bring down AT&C loss to 22% from present 40.5%

OERC asks Discoms to bring down AT&C loss to 22% from present 40.5%

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OrissaThe Orissa Electricity Regulatory Commission (OERC) has asked four power distribution companies (Discoms) to invest Rs 2550 crore of the total of Rs 5000 crore estimated for long awaited improvement & upgradation of the distribution system so that they can bring down the targeted Aggregate Technical & Commercial (AT&C) loss to the level of 21.99% in 2012-13. Even after unbundling, Orissa private discoms are unable to make any headway in improving Aggregate Technical & Commercial (AT&C) loss.

It called upon the government to spend the remaining Rs 2450 crore to strengthen the weakest link in power restructuring i.e, distribution system. One per cent reduction in AT&C loss saves at least Rs 50 crore which can go along way to provide better service to consumers.

The Commission observed that since the state government holds 49% of the shares and the distribution companies 51% of the Discoms, “it is absolutely necessary for it and the distribution companies to have a thorough discussion as to how they would jointly address the serious issue of existing high level of AT&C and the urgent need to ensure quality power supply to the consumers at an affordable price by suitable investment of capital for upgradation, renovation and expansion of the existing impoverished distribution network as well by effectively addressing the issue of rampant theft of electricity in the State”.

Approving the five year Business Plan of the four Discoms for the period 2008-09 to 2012-13 in accordance with Regulation 31 of the OERC (Conduct of Business) of Regulation 2004 and General Conditions of Distribution License on 20th March 2010, the Commission observed that though AT&C loss was coming down in a phased manner, it was still much higher than the benchmark set by them.

The performance of the Discoms depends largely on the reduction of AT&C loss. While AT & C loss stood at 60% in 1998-99, by 2009-10 it had come down to 40.5%. “As a result the Discoms are unable to provide quality service to their consumers,” the regulatory body observed.

The OERC also directed that both GRIDCO and Discoms should mutually identify the assets created after March 31, 2001 is to be hypothecated against the loan to be availed from the financial institutions such as Rural Electrification Corporation (REC) & Power Finance Corporation (PFC).

“The assets created during 2008-09 and that may be created thereafter can also be hypothecated. The state government may allow Discoms to pledge the assets created out of World Bank loan, to the financial institution such as REC and PFC to avail loan for capital works,” it suggested.

While the OERC directed the Discoms to take exemplary steps to bring down AT&C loss, it also sought the cooperation of the state government and the consumers to achieve this. While the total AT&C loss for 2010-11 is set at 23.77%, the Commission has approved AT&C loss of 22.48% for 2011-12 & 21.99% for 2012-13, respectively.

The loss targets approved for the four Discoms in 1012-13 are as follows: CESU – 23.77%, NESCO – 19-17%, WESCO – 24% & Southco – 26.25 respectively.

The OERC has set the tariff for 2010-11 considering the AT&C loss targets approved for the year. In principle, the Commission has decided to fix tariff for 2011-12 and 2012-13 on the basis of the AT&C loss targets approved by them in the Business Plan.

If the Discoms succeed in lowering AT&C loss below approved figures, it will be an efficiency gain whereas higher AT&C loss than approved targets would be considered as efficiency loss for the former. However, any loss and gain arising out of deviation from the approved benchmark shall be to the account of the licensee and as such shall not be considered for truing up exercise.

Source- Business standard

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