Union Minister Calls for Urgent Reforms in India’s Power Distribution Sector

Union Minister of State for Power and New & Renewable Energy, Shripad Yesso Naik, led the 4th meeting of a special group of ministers (GoM) focused on solving problems faced by electricity distribution companies (DISCOMs) in India. The meeting took place in Vijayawada and was attended by Energy Ministers from several states along with senior officials and experts from the power sector.

Energy Minister of Uttar Pradesh A.K. Sharma, Andhra Pradesh’s Energy Minister Gottipati Ravi Kumar,  Hiralal Nagar, Minister of State for Energy, Rajasthan, and  Meghana Sakore Bordikar, Minister of State for Energy, Maharashtra, attended as members of the GoM. Senior representatives from the All India DISCOM Association (AIDA), Central and State Governments, State Power Utilities, and the Power Finance Corporation (PFC) Ltd. also participated in the crucial deliberations.

In his inaugural address, Naik thanked the Government of Andhra Pradesh for hosting the meeting and acknowledged the ongoing collaborative efforts under the GoM. He recalled the key takeaways from the previous three meetings and underlined the urgent need for comprehensive regulatory reforms to ensure long-term sustainability of the power distribution sector.

One of the core issues raised during the meeting was the compliance of State Electricity Regulatory Commissions (SERCs) with the Tariff Policy and Rules while finalising tariff petitions. AIDA, which made a special presentation, emphasized the need to realign the existing tariff policies to reflect current operational and consumer realities.

The discussion highlighted how financial instability among DISCOMs is often exacerbated by delays in tariff adjustments, under-recovery of costs, and mounting debt. It was observed that the annual revenue growth of most utilities is disproportionate to the rise in their debt levels—posing a significant challenge to their financial health.

A presentation by the Joint Secretary (Distribution), Ministry of Power, showcased the financial performance of DISCOMs in member states. It also outlined regulatory disallowances and gaps in revenue realisation. An action plan was proposed to reduce outstanding debts and commercial losses through targeted financial restructuring.

During the meeting, several key action points were discussed to improve the financial and operational health of DISCOMs. One major recommendation was the adoption of cost-reflective tariffs. This means electricity prices should accurately reflect the cost of supply, helping ensure the economic sustainability of power distribution companies. Another important point was the need for timely disbursement of government subsidies and quick clearance of dues owed by various government departments. These delays often strain the finances of DISCOMs and affect their day-to-day operations. The ministers also stressed the importance of speeding up ongoing work under the Revamped Distribution Sector Scheme (RDSS), with a special focus on implementing smart metering projects. Smart meters can help reduce power theft, improve billing accuracy, and enable better energy management.

Lastly, the integration of Artificial Intelligence (AI) and data analytics was highlighted as a key step toward modernising the power sector. These technologies can be used to predict electricity demand more accurately and help optimise power procurement, leading to better planning and cost savings.

The meeting concluded with a unanimous recommendation that the Group of Ministers should continue beyond the submission of its final report. States proposed rotating brainstorming sessions focused on emerging issues in the power sector. A dedicated session involving all key stakeholders to discuss measures for reducing power purchase costs was also suggested.

The GoM reiterated its shared commitment to strengthening India's power distribution sector and reaffirmed its resolve to implement bold and coordinated reforms to ensure financial and operational viability.