A two-year extension of the Revamped Distribution Sector Scheme (RDSS) aimed at bringing operational efficiencies and financial discipline to India’s power distribution sector is on the cards.

The Ministry of Power (MoP) has told Parliament’s Standing Committee on Energy that the ₹3.3 trillion (~$40.35 billion) program, which was to end in the financial year (FY) 2025-26, needs an extension until FY 2028.

“As per our current implementation status, a lot of work remains to be done, especially in the case of smart meters. This will approximately take two years,” MoP told the committee.

The committee observed that the accumulated losses of distribution companies (DISCOM) had gone up from ₹5.45 trillion (~₹62.64 billion) in FY 2020-21 to ₹6.92 trillion (~$79.54 billion) in FY 2023-24 (FY24).

“Further, the billing and collection efficiencies of the DISCOMs are not very impressive and the gap between Average Cost of Supply (ACS) and Average Revenue Realized (ARR) has been fluctuating and is far from zero,” the committee said.

The RDSS was devised to improve the quality and reliability of power supply to consumers through a financially sustainable and operationally efficient distribution sector. It aimed to reduce Aggregate Technical & Commercial (AT&C) losses to pan-India levels of 12-15%, and the ACS-ARR gap to zero.

The ACS-ARR gap is a key metric of a DISCOM’s financial health.

The ACS-ARR gap (₹/unit) was 0.21 at the end of FY24.

At the end of FY24, all India level AT&C losses were at 16.87%, the losses reported by government sector DISCOMs was 17.17% and 12.12% by private sector DISCOMs.

Gujarat’s DISCOMs continued to top the annual integrated ratings of the power distribution sector with all four of its DISCOMs retaining their A+ ratings for FY 2023-24.

The ministry told the committee that the budget utilization was slow due to the delay in awarding projects, including smart meters, in the initial years of the RDSS. Now, the physical progress under the program has gained pace, which would result in effective utilization.

The RDSS is a reform-based result linked program under which the release of funds (except for 10% of Gross Budgetary Support as an advance) is contingent upon DISCOMs/power departments qualifying the annual evaluations for a particular financial year and based on the actual physical progress.

The committee observed that the achievements in respect of loss reduction works, household electrification, and installation of smart meters were way behind the targets. Only 25.3% of the target for loss reduction works had been met. Out of 99,680 households identified for electrification, only 180,070 households had been electrified until February 9, 2025.

Mercom had recently reported that only 20.85 million smart meters had been installed under various programs as of February 10, 2025. By the end of March 2026, the government had envisaged installing 250 million smart meters.

The ministry said until a year ago, only about 11,000 to 12,000 smart meters were being installed daily. Installations gradually increased to around 38,000 in April last year. At present, approximately 80,000 smart meters are being installed per day. It is expected to touch the figure of 100,000 within the next one month.

The committee noted that smart metering supports DISCOMs in improving their financial viability by strengthening billing and collection efficiency, automatic energy accounting, improved load forecasting, optimized power purchase costs and renewable energy integration through net metering.

It recommended that, given installations picking up pace, faulty meter complaints should be addressed on priority by using check meters to verify the readings, and independent third-party verification of installed smart meters should be initiated to instil confidence in consumers.