Distribution companies (DISCOMs) owed power generators ₹655.95 billion (~$7.87 billion) in total dues for the monthly billing cycle in December 2023.

The current outstanding dues, excluding the latest monthly dues, are ₹321.31 billion (~$3.85 billion).

The overdue before the trigger date is ₹320.82 billion (~$3.84 billion), after which the amount will increase by ₹494.6 million (~$5.93 million) as the late payment surcharge (LPS) would become applicable.

Maharashtra had the highest debt at ₹137.87 billion (~$1.65 billion), followed by Uttar Pradesh with total due amounting to ₹79.27 billion (~$951.79 million), and Tamil Nadu ₹72.08 billion (~$865.46 million).

The trigger date is one month after the due date of payment or two and a half months after the presentation of the bill by the generating company, whichever is later.

The DISCOMs are allowed to pay the outstanding amount in up to 48 installments.

The Ministry of Power proposed regulating short-term and general network access for DISCOMs who fail to clear their dues even after two and a half months. The ministry has proposed amendments to the Electricity (Late Payment Surcharge and Related Matters) Rules 2023 and encouraged stakeholders to submit their comments by January 12, 2024.

In June last year, the ministry implemented the LPS and Related Matters Rules, 2022, which substantially increased financial penalties for DISCOMs delaying payments to suppliers. These rules stipulated that LPS would be applied to the outstanding sum after the due date, calculated at the base rate applicable for the initial month of default.

According to these rules, the LPS rate would progressively rise by 0.5% for each subsequent month of delay, with a maximum cap of 3% higher than the base rate at any given time.

Over the years, poor financial management by DISCOMs has hindered the growth of India’s energy sector. Despite numerous bailouts and reform initiatives spanning at least two decades, state-owned utilities remain a burden on the upstream segments of the electricity supply chain, including generation and transmission.