POSOCO Forbids 15 DISCOMS in Seven States from Trading in Power Exchanges

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Power System Operation Corporation (POSOCO) has debarred 15 distribution companies (DISCOMs) in six states and a Union Territory from buying or selling electricity at power exchanges as a penalty for not clearing their dues to generators under the Late Payment Surcharge Rules.

POSOCO invoked the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022 to penalize DISCOMs by barring them from buying electricity from alternative short-term sources at the power exchanges.

These DISCOMs owe ₹14.76 billion (~$184.96 million) to power-generating companies. The DISCOM in Jammu & Kashmir had the highest due amount of ₹4.34 billion (~$54.33 billion). Three Karnataka DISCOMS owed ₹2.34 billion (~$29.29 million), four DISCOMS in Rajasthan owed ₹3 billion (~$37.55 million), and one DISCOM in Madhya Pradesh owed ₹2.32 billion (~$29.04 million). Two DISCOMS in Tamil Nadu owed ₹2.01 billion (~$25.16 million), three DISCOMS in Telangana owed ₹529 million (~$6.62 million), and one DISCOM in Mizoram owed ₹182 million (~$2.27million).

The DISCOMS penalized include Bangalore Electricity Supply Company, Gulbarga Electricity Supply Company, Hubli Electricity Supply Company, Madhya Pradesh Power Management Company, Ajmer Vidyut Vitran Nigam, Jodhpur Vidyut Vitran Nigam, Jaipur Vidyut Vitran Nigam, Rajasthan Rajya Vidyut Prasaran Nigam, Jammu and Kashmir Power Distribution Department, Mizoram Mizoram Power Department, Telangana State Northern Power Distribution Company, Telangana State Power Commission Company, Telangana State Southern Power Distribution Company, Tamil Nadu Generation & Distribution Corporation, and Tamil Nadu Electricity Board.

According to Clause 7 of the Late Payment Surcharge Rules,  if a DISCOM fails to clear its dues even after two and half months from the presentation of the bill by the generating company, short-term access for the sale and purchase of electricity included in the power exchange will be regulated entirely. If the dues are not cleared even after three and a half months, long-term supply too can be regulated.

The rules stipulate that a late payment surcharge will be payable on the outstanding amount after the due date at the base rate of the late payment surcharge applicable for the first month of default. The rate of late payment surcharge for the successive months of default will increase by 0.5% for every month of delay, provided that the late payment surcharge will not be more than 3% higher than the base rate at any time.

The first due date for payment of the equated monthly installment will be the fifth day of the immediate month after 45 days from the notification of the rules, and the due date for all subsequent installments will be the fifth day of the subsequent months.

Most DISCOMs in the debarred list were downgraded in the tenth annual integrated ratings released by the Ministry of Power. Compared to the previous ratings, 25 DISCOMs were downgraded, while only two improved their rankings.

DISCOMs owed generators ₹237.06 billion (~$3 billion) in overdue payments (excluding disputed amounts) at the end of July. The figure marked an increase of nearly 18% compared to ₹200.37 billion (~$2.53 billion) at the end of June.

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