CAG widens purview of power sector audit, starting with DISCOMs; consumer satisfaction in focus

The Comptroller and Auditor General of India (CAG) is undertaking a comprehensive audit of the power sector, beginning with distribution companies (discoms), where consumer satisfaction, power trading and financial sustainability emerging as key focus areas.

The exercise will subsequently cover transmission, generation, renewable energy and the Revamped Distribution Sector Scheme (RDSS), with each segment’s operational and financial performance being assessed over the preceding five years, according to officials familiar with the development.

Discoms will be the first to be audited, with the ongoing phase covering their performance between FY21 and FY26. As many as 39 discoms across the country, along with five departmental undertakings, will be assessed. Privately owned discoms, however, will remain outside the scope of the exercise.

The audit commenced in July this year, with the report expected to be finalised around the middle of the next financial year. The audit of the transmission segment is scheduled to begin with FY27.

Consumer satisfaction takes centre stage

Moving beyond conventional financial and operational assessments, the CAG has directed auditors to engage directly with electricity consumers, local experts and influential groups..

“We told our auditors that it (the audit) must not be limited to a stakeholder consultation exercise, we must engage with consumers of electricity,” an official said.

The exercise will capture the experiences of around 10,000 consumers across industrial, agricultural and domestic categories, with particular emphasis on the reliability and quality of power supply.

Power trading and procurement costs will constitute another major area of scrutiny. Officials pointed out that the share of short-term power procurement in states’ overall power purchase basket has risen from around 7-8% five years ago to nearly 14% currently, with power exchanges accounting for more than 56% of such transactions.

“Ultimately, the cost at which the power is purchased would impact the end consumer of the electricity, and it also impacts financials of the entities concerned,” officials said.

The audit will also examine key operational indicators, including aggregate technical and commercial (AT&C) losses, billing and collection efficiency, alongside the financial health and long-term viability of discoms.

Integrated assessment

Discoms have been selected for the first phase given their direct interface with consumers and the cascading impact of their financial and operational performance on other segments of the power sector and the wider economy.

The CAG will also rope in the coal department to facilitate an integrated assessment of the sector.

Findings would be presented to respective state legislatures through State Audit Reports. Common policy concerns and systemic deficiencies emerging from these reports would subsequently be consolidated and submitted to the Union Ministry of Power for “consideration and appropriate policy interventions.”