As the Centre plans to overhaul the power transmission sector, the aggregate technical and commercial (AT&C) losses in several states tend to be higher. The average all-India loss levels in FY13 were in the range of 27 per cent, according to a recent report by ICRA, an investment information and credit rating agency.

While there is improvement in distribution loss levels for power distribution companies in 12 states during the FY07-13 period, distribution losses remain relatively high in a majority of the states, with discoms in 10 states showing upwards of 20 per cent loss in FY13, the report said.

“Discoms that have seen a deterioration or limited progress in reducing loss are in Uttar Pradesh, Jammu & Kashmir, Bihar, Chhattisgarh and Odisha, where the loss levels in FY13 remained significantly higher as compared with the national average,” the report noted.

In the Union Budget, the National Democratic Alliance government introduced two new schemes to strengthen power transmission in the country.

The schemes are Integrated Power Distribution Scheme for rural and semi-urban areas and Deen Dayal Upadhyaya Gram Jyoti Yojana for feeder separation for agricultural populace. There is already a Restructured Accelerated Development and Reforms Programme scheme, which aims at improving the efficiency of the power transmission sector.

Utilities in eight states, which have agricultural consumption of 25-30 per cent have already implemented feeder separation schemes. However, in states where loss levels have been reduced, the discoms continue to face financial crunch due to high cost of power and increased agricultural consumption, which is subsidised in many states.

To revamp the sector, ICRA has suggested tariff revision to improve the financial position of discoms, due to increasing dependence on costlier thermal fuel sources.

The capital expenditure approved by state electricity regulatory commissions for strengthening the distribution infrastructure, aggregate capital expenditure as estimated by ICRA is Rs 44,000 crore in FY15, which represents an increase of eight per cent over the previous year.

According to ICRA, for every one per cent reduction in the all India AT&C losses for the sector, there could be a five per cent decrease in cash losses (Rs 3,900 crore). Also, for a distribution entity with loss level of, say, 25 per cent, a one per cent loss reduction leads to cost saving of 11-13 paise a unit. This results in a relief of 2.2 per cent on the retail tariff, assuming the cost of power supply remains the same.