Govt regulator designs model for discoms' power sale and purchase

New Delhi: The Central Electricity Authority (CEA), the apex technical body in the ministry of power, is designing a model for an optimum mix and purchase of all kinds of energy and efficient plan of electricity supply.

The model, which is in the works, is for state-owned power distribution companies, most of them loss-making owing to a cost-revenue mismatch.

The CEA has joined hands with the Department for International Development (DFID), UK, to develop models that can help discoms reduce their cost and improve operations and supply.

“The model will encompass cost optimisation, demand forecast, integration of renewable energy, and peak and non-peak power supply functions,” said a senior CEA official.

The official also said a pilot was being run in Telangana and the CEA planned to give it for free to states. The move is in line with the Centre’s plan to have a second part of the discoms reforms scheme UDAY.

UDAY-II will focus on loss reduction in discoms.

“As far as losses are concerned, in the past one year, the focus was on increasing access. Now we will focus on loss reduction. What UDAY did was reducing the debt burden. More steps need to be taken, for which we are working on a scheme. This is UDAY-II, taking forward the work done under UDAY. It will be a scheme focused on loss reduction. Both the Centre and states would finance it,” R K Singh, minister of state for power, told this paper in an interview in December last year.

Launched in 2015, the programme was aimed at turning around state-owned discoms financially and operationally. While the financial part was concluded with states taking over the losses of discoms and issuing bonds, several agencies are debating the targets under operational reforms. One of the targets under UDAY was to reduce the gap between the Average Cost of Supply (ACS) and Average Revenue Requirement (ARR) of the discoms to zero or below.

The current ACS-ARR gap stands at ~ 0.25 per unit, according to the UDAY portal. The ministry of power, however, has clarified on the portal that the data reflects the status in only five states.

CEA officials said the model would indicate the demand of customers for a particular discom, seasonal and daily peak demand and how the discoms should plan its supply for it.

“As the share of renewables is increasing, the model would also plan an optimum energy mix of thermal, hydro, solar, wind and also long term and short term purchase,” said the official.
The CEA will set up a unit in its headquarters in Delhi for developing this model and showcasing it to states.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.