MoP New Rule Aims To Bring Transparency In Electricity Distribution

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The Ministry of Power (MoP) recently introduced reforms to electricity and distribution regulations aimed at enhancing system transparency through the new Electricity Distribution (Accounts and Additional Disclosure) Rules, 2024. MoP through its latest provision aims to bring claims or sums recovered through tariff order as recoverable, thereby to be included as revenue in the financial statements. This would allow MoP to recover claims or sums through tariff.

The latest policy included items and sums within the tariff orders as recoverable as revenue in the Financial Statements.  The regulation also defined trade receivables as amount receivable on the account of sale of power or related services rendered in the normal course of business.  The regulation gave a detailed description of the provisioning of trade receivables, it set the minimum provisioning requirement for a ‘specified entity’ on its trade receivables from all category of consumers in the Financial Statements as follows in the form of table given below:

Ministry Of Power

The notification further elaborated that the consumers means the departments, urban local bodies, rural local bodies, public sector undertakings and the like owned or belonging to the State Government and the Central Government. Whereas, trade receivable days means trade receivables at the end of the financial year divided by average revenue per day.

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As per the additional disclosure statements, are to be included as a part of the Financial Statements prepared by the Specified Entity and are to be annexed to the Financial Statements as the last disclosure titled ‘Additional Disclosure Statements‘ under the notes to accounts of the Financial Statements.

Additionally, the additional disclosure statements is expected to comprise of statements like:
(i) supplementary disclosures to Financial Statements
(ii) power purchase and energy accounting details
(iii) statement of Average Cost of Supply-Average Revenue Realised gap
(iv) statement of Aggregate Technical and Commercial loss
(v) performance summary of Specified Entity

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