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To reduce AT&C losses, the Union government launched the Revamped Distribution Sector Scheme (RDSS) with an outlay of ₹3,03,758 crore and an estimated grant of ₹97,631 crore from the Centre for a duration of five years, from FY 2021-22 to FY 2025-26.
By November 29, 2024, India had installed 72.97 lakh smart meters under the scheme and sanctioned 19.79 crore smart meters for installation. The government aims to install 25 lakh smart meters by March 2025 under the RDSS, which is designed to reduce aggregate technical and commercial (AT&C) losses to pan-India levels of 12-15% and bring the average cost of supply (ACS)-average revenue realised (ARR) gap to zero by the end of FY 2024-25.
As of 22 January, the National Smart Grid Mission’s dashboard indicated the installation of 1.98 crore of the 22.23 crore sanctioned smart consumer meters and 3.56 lakh of 52.99 lakh smart DT meters.
The RDSS has two major components:
- Part A – Financial support for prepaid smart metering and system metering, and upgradation of distribution infrastructure.
- Part B – Training and capacity building, and other enabling and supporting activities.
Financial assistance to discoms is provided for the upgradation of distribution infrastructure and for prepaid smart consumer metering and system metering, based on meeting pre-qualifying criteria and achieving a basic minimum benchmark in reforms.
Besides increasing the use of renewable energy to meet India’s growing power demand, the government is looking to lower distribution losses to ensure profitability for discoms and businesses.
Aggregate technical and commercial (AT&C) losses, or in other words, power lost during the transmission and distribution of electricity, dropped from 27% in FY 2013-14 to 15.4% in FY 2022-23 but rose again to 17.6% in FY 2023-24. Following this, states were asked to calculate technical and commercial losses separately to improve efficiency.
The primary reasons behind AT&C losses are power theft and technical issues, with reforms in the former often triggering law and order concerns across states. In the past, efforts by authorities to reduce distribution losses have faced resistance due to tacit support from several elected representatives involved in power pilferage, as well as fiscal imprudence by states in the form of electoral freebies such as free or subsidised power.
While the government has maintained that there is ample power transmission capacity available, except in some isolated areas, it has acknowledged that the capacity has not been fully utilised. The ministries of power and new and renewable energy are working together to increase transmission capacity wherever new renewable energy (RE) projects are being installed.
Bidding documents for RE projects now reflect the list of available connectivity and capacities, while states have been directed to begin managing and planning for additional capacities.
Efforts are underway to explore whether the same transmission capacity can be used in the evenings for a different energy source, enabling additional renewable projects to be developed at the same substation. The broader plan involves allowing multiple uses of the electricity grid to optimise power transmission.
Features of RDSS
The RDSS allows discoms to access funds under the scheme for prepaid smart metering, system metering, and distribution infrastructure works aimed at loss reduction and modernisation. Financial assistance for distribution infrastructure works is subject to pre-qualifying criteria and minimum benchmarks set for discoms, evaluated based on action plans designed to incentivise fiscally prudent behaviour.
The scheme provides for an annual appraisal of discom performance against predefined and agreed-upon performance trajectories, including AT&C losses, ACS-ARR gaps, infrastructure upgrades, consumer services, hours of supply, and corporate governance. Discoms must score at least 60% and meet minimum thresholds for key parameters to remain eligible for funding under the scheme in any given year.
The implementation of the scheme aims to empower consumers through prepaid smart metering, which will be executed in a public-private partnership (PPP) mode, leveraging artificial intelligence to analyse data generated through IT/OT devices.
The plan includes system meters and prepaid smart meters to generate system-based energy accounting reports each month, enabling discoms to make informed decisions on loss reduction, demand forecasting, time-of-day (ToD) tariffs, RE integration, and other predictive analyses.
Another key focus area of the RDSS is improving electricity supply for farmers by separating agricultural feeders and ensuring daytime electricity supply through convergence with the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM-KUSUM) scheme for the solarisation of agricultural feeders.n