The average aggregate technical and commercial (AT&C) losses for distribution companies (DISCOMs) at the national level increased from 20.73% in the financial year (FY) 2019-20 to 22.32% in FY 2020-21.

The widening losses are despite the distribution reform programs run by the government in the past. While Ujwal DISCOM Assurance Yojana (UDAY) had set a target for AT&C losses reduction to 15% by 2019, a recently launched revamped distribution sector reform plan aims to cut AT&C losses to 12-15% by 2024-25.

AT&C losses reflect DISCOMs’ efficiency in recovering the cost of supplying electricity. A higher loss means lower revenue realized per unit of supply.

The numbers were revealed in Power Finance Corporation’s (PFC) report on DISCOM performance. The report analyzed all state-owned DISCOMs and major private ones.

Billing efficiency decreased from 85.41% to 84.07%, while collection efficiency reduced nominally from 92.80% to 92.40% over the same period.

Kerala recorded the lowest AT&C losses at 7.76%, while Nagaland had the highest at 60.39%. Daman & Diu had the lowest AT&C losses among Union Territories (UTs) at 4.48%.

The national average amongst all DISCOMs was 22.32%.

(Source: PFC (Numbers are in percentages))

The other states that had low AT&C losses were Gujarat at 11.35%, Goa (12.94%), Telangana (13.33%), Tamil Nadu (13.81%), and Himachal Pradesh (14.02%).

The states with high AT&C losses were the erstwhile state of Jammu and Kashmir at 59.28%, Arunachal Pradesh (44.87%), Madhya Pradesh (41.47%), Jharkhand (41.36%), and Tripura (37.36%).

The top five states which displayed a considerable reduction in AT&C losses included Telangana, which reported a reduction from 21.92% in FY20 to 13.33% in FY21. Other states like Kerala reduced it from 13.12% to 7.76%, Uttarakhand from 20.35% to 15.39%, Assam from 23.39% to 18.73%, and Bihar from 39.95 to 35.33%.

Among UTs, Lakshadweep decreased its AT&C losses from 13.69% in FY20 to 11.63% in FY21.

The five least performing states included Andhra Pradesh, which saw a considerable increase in its AT&C losses from 10.77% in FY20 to 27.25% in FY21 compared to other states. States like Mizoram saw an increase from 20.66% to 36.53%, Madhya Pradesh from 30.38% to 41.47%, Maharashtra from 18.56% to 25.54%, and Arunachal Pradesh from 40.4% from 44.87%.

Among UTs, Andaman & Nicobar Islands increased its AT&C losses from 23.34% in FY20 to 51.94 in FY21. Dadra & Nagar Haveli reduced from 3.56% to 5.17%, Puducherry from 18.45% from 19.92%, Delhi from 8.26% from 8.87%, and Daman & Diu 4.07% from 4.48%.

One of the major contributors to the reduction in AT&C losses has been the smart meters installed by the DISCOMs. While traditional meters require meter readings to be inspected physically for power generation, smart meters do not. The readings can be monitored by the consumer and the DISCOM remotely through the internet.

Remote meter reading would be a huge boon for the sector as a significant chunk of DISCOM revenue is lost due to billing inefficiencies. Smart metering will also curb electricity theft, which significantly contributes to AT&C losses in many states.

Mercom had earlier reported on the importance and the need for installing smart meters to reduce AT&C losses.

High AT&C loss also affects the performance of DISCOMs and their financial status, which is already a huge concern for developers. The Ministry of Power has downgraded 25 DISCOMs due to a huge difference between the revenue and cost realized per kWh, high operational and maintenance costs, poor performance on power purchases, and interest costs.