Amidt rising losses, the union power ministry has formulated a model state electricity distribution management responsibility bill, 2013 on the lines of Fiscal Responsibility and Budget Management (FRBM) Act, The bill aims to provide for responsibilities of the state government to ensure financial and operational turn around and long term sustainability of the state owned distribution licensee. This is to enable adequate electricity supply to consumers through financial restructuring.
The model bill envisages state government to lay electricity distribution management statement on the measures taken in relation to distribution in each financial year during the budget session to the legislature. A slew of measures will be in the areas of long term planning, consumer protection, regulatory compliance, corporate governance, financial restructuring.
Further, the state government will lay down key performance indicators (KPI) with regard to payment of dues by government departments and institutions, distribution loss cut trajectory, provisioning of subsidy, energy accounting and auditing, improvement in collection efficiency, recovery of past receivables. It is expected that distribution licensee to reduce aggregate technical and commercial losses (AT&C) at 3% annually for losses above 30% and at 1.5% per year for losses below 30%.
Moreover, 100% metering and consumer indexing to be achieved within three years, establishment of special courts for settling theft cases within a year if not set up. Distribution licensee will have to increase collection efficiency at 1.5% per year if it is between 95% to 99%, at 3% if between 90% and 95% and at 5% if between 80% and 90%.
Former union power secretary RV Shani was skeptical as he observed that the state governments in general do not seem to be serious about distribution reforms. ''In last five years the situation has in fact worsened. Commitments made by states in their agreement with the union power ministry have not been implemented. Unless the distribution is privatized or at least franchised the objective of the model bill will not materialize,'' Shahi said.
According to the model bill, the state government will make financial restructuring plan (FRP) or such other scheme a part of the state budget statements for effective monitoring of its impact on the state finances. Besides, the state government will ensure that the distribution licensee does not resort to short term loans for funding operational losses except as provided in the FRP.
Ajoy Mehta, managing director, Maharashtra State Electricity Distribution Company opined that the model bill is a laudable initiative by the union power ministry. '' Power touches everything including agriculture, industry, investment competitiveness. It is imperative for all to act responsibly towards this sector,'' he said.
Jayant Deo, founder member, Maharashtra Electricity Regulatory Commission described the model bill as a primer for running state owned distribution companies. ''There is no teeth to the proposed bill as penalties to the state are limited to denial of unallocated quota power,'' he said.
DISTRIBUTION REFORM
*State government to lay electricity distribution management statement annually before the legislature
*Distribution licensee to submit half yearly progress to regulator on energy accounting, auditing, metering
*State government to make financial restructuring plan a part of budget statements
*State to set up empowered committee to ensure provisioning and write offs of receivables and bad and doubtful debts of distribution licensee
*State to ensure regular and timely filing of true up petitions, aggregate revenue requirement and tariff petitions by distribution licensee for regulatory approval
The model bill envisages state government to lay electricity distribution management statement on the measures taken in relation to distribution in each financial year during the budget session to the legislature. A slew of measures will be in the areas of long term planning, consumer protection, regulatory compliance, corporate governance, financial restructuring.
Further, the state government will lay down key performance indicators (KPI) with regard to payment of dues by government departments and institutions, distribution loss cut trajectory, provisioning of subsidy, energy accounting and auditing, improvement in collection efficiency, recovery of past receivables. It is expected that distribution licensee to reduce aggregate technical and commercial losses (AT&C) at 3% annually for losses above 30% and at 1.5% per year for losses below 30%.
Moreover, 100% metering and consumer indexing to be achieved within three years, establishment of special courts for settling theft cases within a year if not set up. Distribution licensee will have to increase collection efficiency at 1.5% per year if it is between 95% to 99%, at 3% if between 90% and 95% and at 5% if between 80% and 90%.
Former union power secretary RV Shani was skeptical as he observed that the state governments in general do not seem to be serious about distribution reforms. ''In last five years the situation has in fact worsened. Commitments made by states in their agreement with the union power ministry have not been implemented. Unless the distribution is privatized or at least franchised the objective of the model bill will not materialize,'' Shahi said.
According to the model bill, the state government will make financial restructuring plan (FRP) or such other scheme a part of the state budget statements for effective monitoring of its impact on the state finances. Besides, the state government will ensure that the distribution licensee does not resort to short term loans for funding operational losses except as provided in the FRP.
Ajoy Mehta, managing director, Maharashtra State Electricity Distribution Company opined that the model bill is a laudable initiative by the union power ministry. '' Power touches everything including agriculture, industry, investment competitiveness. It is imperative for all to act responsibly towards this sector,'' he said.
Jayant Deo, founder member, Maharashtra Electricity Regulatory Commission described the model bill as a primer for running state owned distribution companies. ''There is no teeth to the proposed bill as penalties to the state are limited to denial of unallocated quota power,'' he said.
DISTRIBUTION REFORM
*State government to lay electricity distribution management statement annually before the legislature
*Distribution licensee to submit half yearly progress to regulator on energy accounting, auditing, metering
*State government to make financial restructuring plan a part of budget statements
*State to set up empowered committee to ensure provisioning and write offs of receivables and bad and doubtful debts of distribution licensee
*State to ensure regular and timely filing of true up petitions, aggregate revenue requirement and tariff petitions by distribution licensee for regulatory approval
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