In a move to improve the collection efficiency of distribution companies (DISCOMs), the Ministry of Power has changed the methodology to calculate Aggregate Technical and Commercial (AT&C) losses.

The existing methodology was reviewed after weighing the feedback from DISCOMs, who said that it restricted the collection efficiency to 100%, and the efforts of the DISCOMs in realizing the past dues and liquidation of outstanding subsidies were not reflected in the calculation of AT&C losses.

Collection efficiency is an indicator of the amount collected from consumers with respect to the amount billed to them. Collection efficiency can be computed using the formula given below:

Collection Efficiency = Revenue Collected (In Rupees)/Billed Amount

The revenue collected excludes the arrears.

According to the recent modifications, the net input energy and energy sold calculations will exclude open access or wheeling units when determining billing efficiency. Previously, DISCOMs were obligated to report gross energy purchased, encompassing the total power purchased, including transmission losses.

For the revenue from the sale of energy no adjustment will be made in revenue from the sale of energy on account of unbilled revenue.

Furthermore, when computing the adjusted revenue from the sale of energy based on the subsidy received, the total amount of tariff subsidy received throughout the year, including any outstanding payments, will be incorporated into the calculation.

Earlier, the details of the subsidy booked during the year and the subsidy received against the current year and against previous years formed a part of the annual accounts as notes.

Further, to calculate the collection efficiency, the actual collection efficiency of the subsidy received and the realization from the sale of power together in the current financial year will be taken into account.

As per the existing methodology, debtors for the trading of power were not adjusted for the calculation of collection efficiency since the information was generally not available in notes to accounts.

The AT&C losses of DISCOMs declined significantly to ~17% in the financial year 2021-22 from 22.32% in 2020-21.

In April this year, the Ministry of Power proposed draft provisions in the Electricity (Amendment) Rules, 2023, for subsidy accounting and payment and a framework to ensure the financial sustainability of DISCOMs.

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