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					</table>The <a href="https://powermin.gov.in/" target="_blank" rel="noopener">Ministry of Power</a> has issued the Electricity Distribution (Accounts and Additional Disclosure) Rules, 2024, to enhance transparency in financial disclosures and bolster regulatory compliance for power distribution companies (DISCOMs).
The rules aim to enable DISCOMs to clearly demarcate revenue, receivables, and subsidies for better financial clarity. This will also allow investors, regulators, and the public to assess distribution entities&#8217; fiscal health better.
The rules ensure that entities are financially safeguarded against long-term defaults by mandating provisions for receivables and enforcing the reporting of trade receivable days.
The Average Power Supply (ACS), average Revenue Realized (ARR) gap, and Aggregate Technical and Commercial (AT&amp;C) loss metrics will play critical roles in policy formulation and monitoring, as these data points directly impact tariffs and financial sustainability.
The 2024 rules mandate that all DISCOMs—excluding government departments, boards, and corporations that are deemed licensees under section 14 of the Electricity Act—adopt a new reporting structure.
The rules emphasize accountability through comprehensive financial statements and additional disclosure requirements, aligning with Sections 129 and 176 of the Companies Act, 2013.
The rules outline that entities must recognize only the revenue approved within tariff orders. This means anticipated earnings outside these orders are no longer recognized in financial statements, ensuring speculative income does not distort fiscal transparency. Subsidies from state governments under the tariff subsidies program must be recorded and reported separately per guidelines.
Aimed at strengthening transparency, the new standards introduce several disclosure requirements:
<ul>
<li>Supplementary financial disclosures: Details on power sales, rebates, consumer tariffs, and government subsidies must be distinctly outlined.</li>
<li>Energy accounting: Power purchase data, including long-term, medium-term, and short-term transactions, and losses incurred in transmission are mandated to be reported.</li>
<li>Cost of supply vs. revenue gap: Entities must calculate and disclose the ACS cost against the ARR, helping regulators and stakeholders gauge efficiency and financial health.</li>
<li>AT&amp;C losses: Reporting on technical and commercial losses offers a granular view into inefficiencies, enabling corrective measures where necessary.</li>
</ul>
The minimum provisioning requirement for DISCOMs on their trade receivables from all categories of consumers in the financial statements is as follows: 
<img loading="lazy" decoding="async" class="aligncenter wp-image-71984 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables.png" alt="Minimum Provisioning Requirements for Trade Receivables" width="757" height="317" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables.png 757w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables-300x126.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables-650x272.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables-624x261.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables-600x251.png 600w" sizes="(max-width: 757px) 100vw, 757px" />
The management of each DISCOM must submit a compliance statement confirming adherence to these enhanced disclosure norms, establishing accountability, and preventing discrepancies in reporting.
These regulations could pave the way for a more transparent, accountable, and efficient power distribution sector.
Last April, the Ministry <a href="https://www.mercomindia.com/ministry-of-power-subsidy-accounting-framework-discoms/" target="_blank" rel="noopener">proposed</a> 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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Power Ministry Issues New Rules to Strengthen DISCOMs’ Financial Disclosure

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					</table>The Karnataka Electricity Regulatory Commission (<a href="https://kerc.karnataka.gov.in/en" target="_blank" rel="noopener">KERC</a>) has increased the average retail electricity tariff for all low-tension (LT) and high-tension (HT) categories by ₹0.70 (~$0.008)/kWh for the financial year (FY) 2023-24.
It was increased by 8.31% to ₹9.12 (~$0.011)/kWh compared to ₹8.42 (~$0.10)/kWh in FY23.
The revised tariff will be applicable from April 1, 2023.
Of the increase, ₹0.57 (~$0.007)/kWh will be recovered through fixed charges, and the remaining ₹0.13 (~$0.002)/kWh will be recovered as energy charges.
The electricity supply companies (ESCOMs), in their submission, had recommended an average increase of ₹1.39 (~$0.017)/kWh in tariff.
As a relief measure and to encourage the adoption of electric vehicles in the state, the Commission reduced the tariff for EV charging stations to ₹4.50 (~$0.054)/kWh as against the existing rate of ₹5 (~$0.061)/kWh.
The green tariff of ₹0.50 (~$0.006)/kWh for renewable electricity on top of the applicable tariff for HT industrial and HT commercial customers will continue.
Also, the rebate of ₹0.50 (~$0.006)/kWh for micro and small industries will continue for another year.
Under the Discounted Energy Rate program, KERC has reduced the energy charges to ₹5 (~$0.061)/kWh as against the existing rate of ₹6 (~$0.073)/kWh. Earlier, the program applied to HT consumers, which has now been extended to LT Industries and commercial installations with a sanctioned load of 50 kW and above.
To simplify the tariff structure, the number of consumer categories has been reduced to 21 from 31.
The Commission has directed the distribution companies (DISCOMs) to set up a portal to maintain the details of PPAs executed and approved by the competent authorities to monitor the terms and conditions of the PPAs and also to regulate the payment of power purchase bills online.
The portal should be made operational within three months.
The Commission has set a revised transmission tariff for the Karnataka Power Transmission Corporation (<a href="https://kptcl.karnataka.gov.in/english">KPTCL</a>) as ₹163,031 (~$1,971)/MW per month for FY 2024 against the transmission tariff of ₹172,897 (~$2,090)/MW per month approved earlier.
Annual Revenue Requirement 
The Commission approved a total Annual Revenue Requirement (ARR) of ₹581.09 billion (~$7.03 billion) as against ₹621.33 billion (~$7.51 billion) sought by the ESCOMs in their tariff applications.
Also, the Commission approved a net revenue deficit of ₹44.571 billion (~$539.02 million) for FY 2024, which included a revenue deficit of ₹17.201 billion (~$208.02 million) as per the annual performance review for FY 2022.
The proposed and approved ARR for ESCOMs
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/KERC-State-wise-Approved-ARR-for-FY-2024.png"><img loading="lazy" decoding="async" class="alignnone wp-image-54761 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/KERC-State-wise-Approved-ARR-for-FY-2024.png" alt="KERC-State-wise Approved ARR for FY 2024" width="374" height="197" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/KERC-State-wise-Approved-ARR-for-FY-2024.png 374w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/KERC-State-wise-Approved-ARR-for-FY-2024-300x158.png 300w" sizes="(max-width: 374px) 100vw, 374px" /></a>
The Commission has approved a total ARR of ₹288.73 billion (₹3.49 billion) for the Bangalore Electricity Supply Company (<a href="https://bescom.karnataka.gov.in/english" target="_blank" rel="noopener">BESCOM</a>), whereas for the Mangalore Electricity Supply Company (<a href="https://mescom.karnataka.gov.in/english" target="_blank" rel="noopener">MESCOM</a>), the approved amount is ₹47.71 billion (~$577.2 million).
For the Chamundeshwari Electricity Supply Company (<a href="https://cescmysore.karnataka.gov.in/english" target="_blank" rel="noopener">CESC</a>), the approved ARR amount is ₹61.48 billion (~$743.7 million), whereas for the Hubli Electricity Supply Company (<a href="https://hescom.karnataka.gov.in/english" target="_blank" rel="noopener">HESCOM</a>) and the Gulbarga Electricity Supply Company (<a href="https://gescom.karnataka.gov.in/english" target="_blank" rel="noopener">GESCOM</a>), the approved ARR amount is ₹108.89 billion (~$1.32 billion) and ₹74.28 billion (~$898.5 million), respectively.
Hukkeri Rural Electric Cooperative Society
KERC has approved an ARR of ₹2.56 billion (~$30.96 million) for FY 2024 compared to ₹3.1 billion (~$37.49 million) approved by the Hukkeri Rural Electric Cooperative Society. The approved net revenue deficit for FY 2024 has been calculated as ₹22.8 million (~$275.73 million). The subsidy approved for free power has been set as ₹1.11 billion (~$13.42 million) for FY 2024.
ARR for Special Economic Zones 
KERC has approved the revised ARR of ₹701.4 million (~$8.48 million) for FY 2024 against ₹573.4 million (~$6.93 million) proposed by the Mangalore Special Economic Zone. The approved net revenue deficit for FY 2024 has been set as ₹17.88 million (~$216,234).
The Commission has also approved the revised ARR of ₹259.76 million (~$3.14 million) for FY 2024 against ₹248.3 million (~$3.01 million) proposed by AEQUS Special Economic Zone. The approved net revenue deficit for FY 2024 has been calculated as ₹1.06 million (~$12,819).
In January this year, DISCOMs of Karnataka <a href="https://www.mercomindia.com/karnataka-tariff-hike-proposal-to-deter-availing-open-access" target="_blank" rel="noopener">proposed</a> revised tariffs for LT and HT consumers, which included grid support charges for captive open access power consumers.
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Karnataka Increases Average Retail Electricity Tariff by ₹0.70/kWh for FY24

The Union Minister R.K. Singh said in Rajya Sabha that the gap between the Average Cost of Supply (ACS) and the Average Revenue Realized (ARR) at the national level reduced from ₹0.47 (~$0.006)/kWh in FY 2015-16 to ₹0.28 (~$0.004)/kWh in FY 2019-20.
The gap between the revenue and cost per unit/kWh is one of the critical performance parameters for power distribution companies. A wider gap reflects that the distribution companies are under loss as their revenues are far lower than their expenditure.
Earlier in June this year, the Union Finance Minister Nirmala Sitharaman had <a href="https://mercomindia.com/finance-minister-announces-%e2%82%b93-03-trillion-upgrading-discoms/" target="_blank" rel="noopener">announced</a> the ‘Economic Relief from Pandemic’ package and declared several sops for power distribution companies (DISCOMs), including ₹3.03 trillion (~$40.82 billion) outlay for reform-based result-linked power distribution program.
The program aims to improve the quality and the reliability of power supply to consumers through a financially sustainable and operationally efficient distribution sector. The plan is to reduce the aggregate technical and commercial (AT&amp;C) losses across India to 12-15% and eliminate the gap between the average cost of supply and the aggregate revenue requirement by 2024-25.
The minister added that all state-owned distribution companies and state and union territory DISCOMs, excluding private sector DISCOMs, will be <a href="https://mercomindia.com/ministry-power-plan-revamp-discoms/" target="_blank" rel="noopener">eligible</a> for financial assistance under the revamped distribution sector program.
According to the data released by the Ministry of Power, the ACS-ARR gap narrowed in 18 states/union territories between financial year (FY) 2016 to FY 2020. On the national level, the gap narrowed from ₹0.47 (~$0.006)/kWh to ₹0.28 (~$0.004)/kWh from FY 2016 to FY 2020.
In reply to the question, the minister shared the state-wise data regarding the narrowing of the ACS-ARR gap and the current status of the states. The data is based on the subsidies booked by the states to the central government.
<img loading="lazy" decoding="async" class="aligncenter size-full wp-image-28197" src="https://mercomindia.com/wp-content/uploads/2021/08/Gap-in-Average-cost-of-supply-ACS-and-Average-Revenue-Realised-ARR-on-Tariff-Subsidy-Booked-Basis-in-India.png" alt="" width="456" height="941" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/Gap-in-Average-cost-of-supply-ACS-and-Average-Revenue-Realised-ARR-on-Tariff-Subsidy-Booked-Basis-in-India.png 456w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/Gap-in-Average-cost-of-supply-ACS-and-Average-Revenue-Realised-ARR-on-Tariff-Subsidy-Booked-Basis-in-India-145x300.png 145w" sizes="(max-width: 456px) 100vw, 456px" />
The ARR-ACS has considerably widened in Arunachal Pradesh, Meghalaya, Nagaland, Puducherry, and Tamil Nadu, which is concerning.
On the positive side, the ARR-ACS gap has narrowed significantly in Andhra Pradesh, Jammu &amp; Kashmir, Madhya Pradesh, Mizoram, and Sikkim.
Only six states have registered revenues more than the cost of power supply. These include Assam, Gujarat, Haryana, Himachal Pradesh, Rajasthan, and West Bengal.
In April last year, the Ministry of Power had <a href="https://mercomindia.com/electricity-act-amendment-draft/" target="_blank" rel="noopener">proposed</a> amendments to the Electricity Act 2003 to improve the health of DISCOMs, including direct benefit transfer and cost-reflective tariffs, among others.

Gap Between DISCOMs’ Energy Cost and Revenue Narrowed to ₹0.28/kWh in FY 2020

The Appellate Tribunal for Electricity (APTEL) has directed the state and joint electricity regulatory commissions to explain the delay in the revision of the tariff, lack of payments to the distribution companies (DISCOMs) and gaps in revenue over the last three fiscal years.
The matter dates back to a letter from the secretary to the Ministry of Power, written in January 2011. The letter laid out various challenges faced by distribution utilities which resulted in a serious impact on the financial status of the electricity sector. The matter was discussed, and the tribunal directed state electricity regulatory commissions that an annual performance review, true-up of past expenses, annual revenue requirement (ARR), and tariff determination must be conducted yearly on a timely basis.
However, state commissions of Andhra Pradesh, Manipur, Mizoram, Jharkhand, Punjab, Meghalaya, Tamil Nadu, and West Bengal have not been complying with those directions of the tribunal passed in November 2011. Following are the latest directions of the tribunal:
“We direct all the state and joint regulatory commissions to furnish the necessary information to the secretary of Forum of Regulators, who shall in turn file compilation of compliance reports before this tribunal. This exercise is to be completed on or before 31.10.2019.”
According to APTEL, the delay in tariff revisions was one of the main reasons for the financial stress that the state DISCOMs were witnessing. Currently, state DISCOMs owe power generators more than ₹525 billion ($7.4 billion).
<a href="https://mercomindia.com/payment-dues-discoms-renewable-escalate/" target="_blank" rel="noopener noreferrer">Recently</a>, the Central Electricity Authority’s (CEA) report stated that the total payment due for 513 renewable projects now amounts to ₹97.36 billion (~$1.36 billion) as of July 31, 2019, thus  showing an increase of nearly ~₹15 billion (~$0.21 billion) compared to the previous figure of ₹82.3 billion (~$1.14 billion) for the same period.
In <a href="https://mercomindia.com/payment-delays-hit-solar-and-wind-developers/" target="_blank" rel="noopener noreferrer">May 2019</a>, Mercom reported that payment delays were becoming a problem again for solar and wind project developers in India, especially in Andhra Pradesh, Tamil Nadu, and Telangana.

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