PRESS NOTE MINISTRY OF POWER

State Power Ministers Adopt Resolution to Bring Down Power Distribution Losses
The State Power Ministers’ Conference on “Distribution Sector Reforms” organized in New Delhi today has underlined the need for urgent steps to arrest and reverse the growing losses in power distribution. The Conference chaired by Union Minister of Power Shri Sushilkumar Shinde was attended by Power Ministers of the States from across the country. Highlighting that power is a concurrent subject, Mr. Shinde said that while the Centre is always ready to help the States, it is their responsibility to ensure implementation of the reforms. He said that the target of bringing down the distribution losses to 15% is achievable if the States devise utility-wise turn-around plan and closely monitor it at the highest level.

In their presentations, the states highlighted the administrative and financial measures taken by them to address the issue of electricity pilferage and power thefts. They assured of early completion of auditing of accounts of the utilities, clear all the outstanding subsidies to them and ensure advance payment of subsidy as per the Electricity Act.

In a unanimously adopted resolution, the Conference agreed upon a set of measures to bring down the distribution losses. These are as follows:

1. The state governments would ensure that the accounts of the utilities are audited upto the year 2009-10 and also ensure that the accounts of a financial year are audited by September of the next financial year, henceforth. Computerization of accounts would be undertaken on priority, if not done already.
2. The states would ensure that the distribution utilities file their Annual Tariff Revision Petition every year, by December – January of the preceding financial year to the State Regulators as stipulated by the National Tariff policy.
3. The Annual Tariff Revision Petition would be filed before the SERC, keeping in view the increase of the Power purchase cost (which accounts for nearly 70-80% of the Cost of supply) and states will ensure that the difference between ARR and ACS is not only bridged but is positive to generate internal surpluses which can be used for network expansion and maintenance.
4. The state governments would ensure automatic pass through in tariff for any increase in fuel cost by incorporating the same in the regulations, as provided in Section 62(4) of Electricity Act, 2003. (State Governments can issue directions to SERCs under Section 108 of the Electricity Act, 2003).
5. The state governments would not only clear all the outstanding subsidies to the utilities, but ensure advance payment of subsidy as per the Section 65 of the Electricity Act, 2003 in future.
6. The eligibility criteria for inclusion of towns under R-APDRP assistance with population of 30000 (10000 for special category states) should be reduced to 15000 (5000 for special category states). All district headquarter towns in special category states should also be covered under R-APDRP, irrespective of their population.
7. The state governments would ensure payment of all outstanding dues from various departments of state government and institutions to the distribution utilities or release payments from the State budget directly.
8. The state governments would consider converting loans due from the state governments to the distribution utilities as state government equity to ensure capital infusion and improvement in net worth of utility.
9. The state governments would take effective steps to reduce AT&C losses to less than 15% by administrative measures, curbing pilferage of electricity and by setting up special police stations and special courts to deal exclusively with power theft related cases, if not done already.
10. States would immediately initiate steps to appoint distribution franchises in urban areas through competitive bidding.
11. States would immediately invite bids for meeting the uncovered generation capacity gap viz- a -viz the requirement in their States by the end of 12th Plan. The process will be completed by March, 2012.
12. States would create a unit in their states for integrated planning of generation, transmission and distribution to meet the future requirement of their states.

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