Turning Around the Power Distribution Sector’ Report

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Turning Around the Power Distribution Sector’ Report

‘Turning Around the Power Distribution Sector’ Report

Recently, NITI Aayog and Rocky Mountain Institute have published the report ‘Turning around the Power Distribution Sector’.

  • As per this report, most of the Power Distribution Companies (DISCOMs) are facing extensive financial losses as a result of costly long term power purchase agreements, poor infrastructure, inefficient operations etc. This loss is estimated at Rs 90,000 crore for FY-21.
  • Major reforms/suggestions mentioned in the report

Reconstitution of DISCOMs (Distribution Company):

  • For state-owned companies to be successful, there must be a clear separation between the company and the state. This can be done by freeing regulatory functions from political pressure. For this measure, Regional Electricity Regulatory Commission should be constituted with the participation of the Central Government.
  • Private participation should be increased for higher efficiency. For example, the franchise model has been implemented in Odisha and Maharashtra.
  • For loss-making sectors where commercial operations are not possible without government support, the public-private partnership (PPP) model may prove to be more useful.

Operational Improvements:

  • Their billing efficiency can be improved by using prepaid or smart meters.
  • Use of solar pumps for agriculture should be encouraged.

Renewable Energy Integration Reforms:

  • There is a need to deploy energy storage on a large scale by DISCOMs by providing with battery system or pumped hydro-storage system.
  • There is a need to set up mini-grids with decentralized small-scale production from locally available RE sources for remote and sparsely populated areas.

Government Schemes to Help Discoms:

  • Ujjwal Discom Assurance Yojana (UDAY/UDAY), Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS).
  • Revamped Distribution Sector Scheme, a reform based and result linked scheme was approved by the cabinet in June 2021.

Source – The Hindu

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