Context:-

The Kerala government is facing trouble over the Centre’s Revamped Distribution Sector Scheme (RDSS), which envisages pre-paid smart electricity meters in households and revamping the power distribution network in the country.

About

• Budget and Objective: The scheme, with a budget exceeding Rs 3.03 trillion over five years until FY26, aims to empower discoms in upgrading their distribution infrastructure, enhancing power supply quality and reliability for end consumers.
• Reduction Targets: The scheme also targets reducing AT&C (aggregate technical and commercial) losses to the national range of 12-15% and closing the ACS-ARR (average cost of supply-average revenue realized) gap by 2024-25. REC and PFC are designated as the lead agencies for the scheme.
• Smart Meter Mandate: RDSS (Restructured Distribution System Strengthening) necessitates the widespread deployment of smart meters throughout the country, with an ambitious goal of installing 250 million smart meters by 2025.
• Integration of Previous Schemes: As a consequence of the new scheme’s implementation, previous initiatives such as the Integrated Power Development Scheme, Deendayal Upadhyaya Gram Jyoti Yojana, and Ujjwal Discom Assurance Yojana (UDAY) will be consolidated and rendered obsolete.

Revamped Distribution Sector Scheme (RDSS)

• Aim: 
  • To help DISCOMs improve their operational efficiencies and financial sustainability.
  • It is done by providing result-linked financial assistance to DISCOMs to strengthen supply infrastructure based on:
    • Meeting pre-qualifying criteria
    • Achieving basic minimum benchmarks. 
• Budget: 
  • The scheme has an outlay of Rs 3,03,758 Crore over 5 years i.e. FY 2021-22 to FY 2025-26. 
  • The outlay includes an estimated Government Budgetary Support (GBS) of Rs 97,631 Crore.
• Goal: 
  • Reduction of AT&C losses to pan-India levels of 12-15% by 2024-25.
  • Reduction of ACS-ARR gap to zero by 2024-25.
  • Improvement in the quality, reliability and affordability of power supply to consumers through a financially sustainable and operationally efficient distribution sector.
• Components: 
  • Part A – Financial support for Prepaid Smart Metering & System Metering and up-gradation of the Distribution Infrastructure.
  • Part B – Training & Capacity Building and other Enabling & Supporting Activities.
• Nodal Agencies: 
  • REC and Power Finance Corporation (PFC) have been nominated as nodal agencies for facilitating the implementation of the scheme.

Significance 

• The world’s largest electrical energy smart metering programme aims to switch 250 million typical meters with smart ones that won’t solely assist scale back energy theft but additionally guarantee dependable electrical energy provide. 
• The reforms are additionally aimed toward bettering the reliability and high quality of energy provided.
• It allows close to real-time gathering and switching of power utilisation data.
• It will allow reductions in the AT&C losses, improve financial health,incentivise energy conservation & ensure better billing cycle.

Issues

• Insufficient Monitoring mechanism: Due to inadequate metering and data collection system in place, utilities have not been able to conduct energy audit, which is crucial for any energy business.
• Accountability and Technology Issues: The Schemes could not reduce the high Aggregate Technical & Commercial (AT&C) losses due to high Transmission and Distribution (T&D) losses coupled with low collection efficiency. Low level of collection is attributable to lack of employees’ accountability, inadequate collection facilities, limited usage of advanced technology, billing errors etc.
• Lack of Consumer Records: Schemes have not put in mechanism for maintaining consumer database and asset database, which can be addressed through IT and communication solutions. Most utilities maintain manual records of consumers. This leads to mismanagement and losses.
• Revenue & Expenditure gaps: The gap between discoms’ costs (average cost of supply) and revenues (average revenue realised), which was supposed to have been eliminated by now, stands at Rs 0.49 per unit in the absence of regular and commensurate tariff hikes.
• Electrification and Support structure mismatch: The schemes have not been able to address the gap between increasing electrification and related supporting structural mechanism.

Way Ahead

• A smart meter structure minimises human intervention in billing and assortment, and reduces theft by figuring out loss pockets. 
• The RDSS seems to be paving the way for this change in the power sector. 
• There is a need to adopt a systemic deployment strategy for smart metering infrastructure.
• Concerted efforts are required to steer the power sector into a new era of financial sustainability and operational efficiency.

Conclusion:

To leverage various opportunities, states must emphasise the need for flexibility in prioritising investments in their action plans. This should be accompanied by state-level commitments towards accelerated but deliberate implementation. Central government agencies should also be flexible in the monitoring, tracking and fund disbursal mechanisms. Without these efforts, despite its potential, RDSS will likely be important but limited in its impact, like its predecessors.

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