What can be the opportunities and Challenges for DISCOMs in India when any disruptive regulation, policy or technology comes.

DISCOMs are an interface between utilities and the consumer.  According to Indian Constitution, power distribution and supply to rural and urban consumers rests with the States.  Government of India provides assistance to states through various Central Sector / centrally sponsored schemes for improvement in the distribution sector.  Private DISCOMs limited to a few cities are also operational in India. 

The condition of DISCOMs in India however is not healthy as they suffer losses every year and the accumulated losses coupled with other reasons make them quite fragile.  The major reason for this loss is to high level of aggregate technical and commercial (AT&C) losses – energy loss during transmission and distribution, theft and billing inefficiency;  inadequate or lesser tariffs compared to cost of power supply  and insufficient subsidy support by State Governments.  India’s loss is between 18-19% (2019) against 6-7% in US & UK.  According to the recent data DISCOM payment arrears are $14 billion – one fifth is claim of renewable producers.  Lack of metering, decrease in revenue generation during pandemic, absence of political consensus at the state level to raise tariffs, Centre’s ‘Electricity for All’ have contributed to greater inefficiency, emergence of alternative sources of energy and decline of cross subsidy tariff are a few limitations of the DISCOMS in India.

The implication of a weak DISCOM makes it further difficult to reach new climate targets – will struggle to reach non fossil fuel generation capacity (including hydro and nuclear) to 500 GW by 2030 and consequently the commitment of 50% non-fossil fuel needs by 2030.

There is huge difference in the functional and operational aspects of public and private companies and DISCOMS are not exploiting the true potential of digital indicatives.  It is therefore time for them to tune themselves with changing landscape and keep pace with objectives including customer satisfaction.  While AT&C losses have been reduced between 10-13% by private T & D utilities through digital transformation the State utilities still are at 23%.   Data analysis is another dimension that digital technology could handle successfully and transform the business towards positivity.  Grid automation, grid network optimization and aggregation, integrated customer services are additional advantages. The challenge before power and utilities sector in India therefore banks on how the policy makers, power sector stakeholders play their role effectively. While there are many advantages, it is also vulnerable to cyber-attacks. 

Change in the material conditions of market (existing or new) induces policy disruptions leading to invalidation of existing regulatory expectations, norms, ideas and frameworks.  Platform companies for example, disrupt not only the economic sector but, even the regulatory regimes governing the specific sector.

Any innovation dramatically changes the way consumers, businesses and industries operate and create a new market as well.  The other side of it is that they enter established market but, radically change the way business is handled and renders current processes obsolete.  Artificial Intelligence that includes robots, self-driving cars, home assistance, Chatbots of retail sites and digital travel agents are a few examples.  While sustaining technology evolves slowly and steadily over time disruptive technology can become sustaining once it firmly gets established. Innovative benefits, start-up opportunities, room for business growth are a few benefits against unrefined inventions, early performance problems and unproven applications as a few disadvantages.

India today is a power-surplus country and the power sector is operated under one nation - one grid – one frequency which is considered the most complex globally.  Under the Public-Private Partnership (PPP) model, Delhi government has saved around Rs. 70,000 Cr.  through curtailing the AT&C losses.   Similar story is echoed from east coast of Odisha adopting the Delhi model – it is urban-rural blend.  All the four DISCOMS of Odisha have been upgraded in the integrated Ratings by the Power Ministry.

In view of the above successes, it is time that DISCOMs transform from authoritarian to authentic leadership fostering a vision and trust thereby gaining the employees’ confidence.  This approach facilitates real-time decisions and safety net in case of errors – additionally transparency, accountability and rewarding performance.  Unfortunately, there is disconnection between employees and leadership.  It is essential to induct industry experts as the operations have become specialised in view of evolving technology and regulatory landscape.