End losses, spare consumers: JERC

Srinagar, Jan 6: The Joint Electricity Regulatory Commission (JERC) has directed power utilities in Jammu and Kashmir to immediately curb high distribution losses, stating in clear terms that “inefficiencies cannot be passed on to the consumers.”

Approving the retail supply tariff for 2025-26, the Commission said, “Distribution loss is a controllable parameter; the Petitioners (JPDCL and KPDCL) should take immediate action to curb the high losses observed in their area of supply.”

It further ruled that “the actual losses cannot be considered and inefficiencies cannot be passed on to the consumers.”

The directions apply to the two power distribution companies – Jammu Power Distribution Corporation Limited and Kashmir Power Distribution Corporation Limited.

Explaining the basis of its tariff determination, the Commission said it was guided by Section 61 of the Electricity Act, 2003, which mandates “safeguarding of consumers’ interest and at the same time, recovery of the cost of electricity in a reasonable manner” and adherence to “the principles rewarding efficiency in performance.”

JERC also referred to the Electricity (Second Amendment) Rules, 2023, notified by the Ministry of Power on July 26, 2023, which state that “the Aggregate Technical and Commercial (AT&C) loss reduction trajectory to be approved by the State Commissions for tariff determination shall be in accordance with the trajectory agreed by the respective state governments and approved by the central government under any national scheme or programme.”

“An AT&C loss reduction trajectory of up to 15 percent by FY 2019-20 was previously fixed under the UDAY scheme,” the Commission said.

It said it “considers the distribution loss level for FY 2025-26 as approved by MoP, Government of India, under the RDSS scheme, for JPDCL and KPDCL,” adding that “the same level of loss was approved under the Business Plan order also.”

The Commission observed that the restructuring and unbundling of the erstwhile Jammu and Kashmir Power Development Department “primarily aims towards initiating reform in the power sector to enable self-reliant and cost-efficient operation of these corporations in generation, transmission, and distribution business in the future.”

“It is therefore imperative that the financial support and grant-in-aid made available to such utilities during the initial stage needs to be gradually phased out over the period, and the revenue requirement to run the business of these utilities shall be met through the tariff charged to the consumers,” the JERC said.

AT&C losses in J&K have declined from 63 percent in 2021-22 to 44 percent in 2023-24, but remain far above the national average.

“The AT&C losses of the J&K Power Department are one of the highest in the country. The present AT&C losses are of the order of 44 percent against the national average of 15.9 percent,” a senior Power Development Department (PDD) official said. “Due to these losses, the gap between power purchase cost and revenue realisation is huge.”

Officials said AT&C losses include both technical losses caused by infrastructure constraints and commercial losses due to billing inefficiencies, theft, and non-payment.

“Due to the existence of long LT lines carrying electricity to distant and scattered households over the mountaintop, a substantial quantum of electricity is lost at I²R loss, leading to the high cost of power supply in J&K,” an official said.

According to official estimates, J&K loses nearly Rs 5000 crore annually due to high distribution losses and revenue shortfalls.