Power Ministry Mandates all Discoms to Comply With Energy Conservation Act

The Ministry of Power has issued a notification, stating that all the Discoms will now be covered under the preview of the Energy Conservation Act.

The Ministry of Power has issued a notification, stating that all the electricity distribution companies (Discoms) in the country will now be covered under the preview of the Energy Conservation (EC) Act, 2001. As per the notification, which was formulated in consultation with the Bureau of Energy Efficiency (BEE) “All entities having issued distribution license by State/Joint Electricity Regulatory Commission under the Electricity Act, 2003 (36 of 2003)” are notified as Designated Consumers (DCs).

After this notification, all the Discoms will be governed under the various provisions of EC Act, such as Appointment of Energy Manager, Energy Accounting & Auditing, identification of Energy Losses Category wise, Implementation of energy conservation & efficiency measures, etc. for each Discom. Earlier, the Discoms whose annual energy losses were equal to or above 1000 MU were only covered as DCs. Now with this notification, the number of Discoms covered under the EC Act will increase from 44 to 102.

“This decision will facilitate Energy Accounting & Auditing as a mandatory activity for all the Discoms, leading to the actions towards reducing losses and increase the profitability of Discoms,” the ministry stated.

Further adding that the amendment is expected to help Discoms to monitor their performance parameters and bring in transparency in the distribution sector through professional inputs. The ministry also expects the new change to assist in developing projects for reducing the electricity losses by Discoms and implementing effective solutions.

The amendment is expected to improve the financial state of the Discoms. The quarterly data of these Discoms will be collected and monitored by the government to suggest measures for increasing efficiency and reduce energy loss. Which is expected to gradually become more effective if extended upto the level of end consumers.

Recently, we had reported that the dues owed by Discoms to power generators (Gencos) increased to Rs 1,38,479 crore (Rs 1.38 lakh crore) in September 2020, witnessing a 28 percent rise year on year over the same month last year. Discoms owed a total of Rs 1,07,930 crore to Gencos in September 2019, according to portal PRAAPTI.

In September 2020, the total overdue amount, which was not cleared even after 45 days of grace period offered by generators, stood at Rs 1,26,661 crore, as against Rs 85,790 crore in the year-ago period. The overdue amount in September 2020 has increased from Rs 1,22,090 crore in August 2020. According to the latest data on the portal, total outstanding dues in September increased on a month-on-month basis as well. In August 2020, total outstanding dues of discoms stood at Rs 1,34,928 crore.