Prepaid smart meters can play an important role in solving the problem of billing and collection in electricity distribution, the secretary tells Power Alok Kumar. In an interview at Karunjit Singhhe also said that the ministries of electricity, coal and railways were actively working to increase the supply of coal, and that the electricity generation companies, or gencos, were unlikely , face the problem of low coal stocks after the monsoon in 2022. Edited excerpts:
State government dues to discoms and discoms to gencos have been key issues in the industry. Are these contributions going down?
The dues haven’t come down if you look at the whole thing, but the dues for the CPSUs (central public services in the sector) have come down because they are very quick in regulation. IPPs (Independent Power Producers) are not as quick to regulate. They must therefore apply the security mechanism for PPA (power purchase agreement) payments. We fully support (this) and we have also told the CPSU that if some IPPs regulate for lack of payment, the CPSU will not fill this vacuum and provide additional (electricity) to this state.
In the discom part, the cash position is generally a problem for three reasons: the timely revision of tariffs, the payment of subsidies and government dues by state governments, and the collection of billing and collection by the discom. One-time payment by states is part of pre-qualification under the new regimes. Pricing is also part of prequalification. So those two things will be fixed. These are the terms for both our RDSS (Revemped Distribution Sector Scheme) as well as the additional 0.5% borrowing by the Department of Finance.
For the collection part, we recommend prepaid and smart meters. The bane of billing and collection is that those meter readers aren’t there. [Distribution companies, or discoms] outsourced it. They cut corners, invoices are not delivered on time. Sometimes incorrect invoices are delivered on time and consumers do not pay. Then you see the number of grid-connected households reaching into the millions in some states like UP, Maharashtra and all. No company or big business and never the government can collect money from these consumers and disconnect them one by one. Prepaid metering is therefore the solution because it has been proven in telecoms as well, in our DISH TV (sector) as well.
So if you have a prepaid connection, the consumer will also know how much I have to pay, how much I can consume. He will pay and he won’t be bothered if he doesn’t get a bill on time or if he gets a wrong bill and has it corrected or if he gets a bill after six months that you can’t pay all at once. So my point of view is that prepaid metering is good for discos. And I would say it’s even better for consumers for transparency, convenience, and ease.
Are you confident that thermal power plants will be able to meet coal storage targets and avoid a post-monsoon shortage?
I will say that coal supply this year has seen good growth over last year and previous years as well, but our demand is still up. So, in terms of electricity demand, this will be a task that will require continued attention from the Ministry of Energy, Ministry of Coal and Railways.
Coal production has started to increase now and we have also had detailed discussions with the railroads and they have increased the rakes (being shipped). The rakes per day that was there around Jan 10, now (like Feb 4) it’s 20 more rakes a day, but we need more rakes. The railways have therefore drawn up a plan for the introduction of new wagons as well. They also identified some critical and super-critical railway works that need to be completed at the earliest to increase track capacity. We work closely together, but it will be an important and difficult task. But I am sure that with our collective efforts, this situation (low coal stocks) will not happen after the monsoon.
The Center requested a lower cross-subsidy surcharge for overtime. How do States respond to this proposal?
You can have a very ambitious cross-subsidy percentage, (up to) 140%. But look at the growth of industrial consumption in your state. It’s lean or it goes down. The amount of cross-subsidies received is therefore much lower. Have a reasonable cross-subsidy surcharge and try to get more industrial load so that your overall cross-subsidy in terms of crore rupees is bigger. It is objective. Cross-subsidization consists of subsidizing other poor consumers.
…As we solarize agricultural consumption, the subsidy burden of agricultural supply will decrease because solar energy is cheaper. So, as you solarize agricultural consumption and reduce that amount of subsidy, you will have space available to reduce cross-subsidies.
You see the states that are wiser, they have moderated their cross-subsidy levels and increased their industrial consumption and their amount of cross-subsidies has increased. We advised them, we made a tariff policy and I think the states will learn from the success of other states.
What do you think of the energy transition budget proposals and the need for Viability Gap Financing (VGF) in areas such as energy storage and offshore wind?
The most important part of the budget is that it very boldly and prominently recognizes our goal of energy transition and the need to move it forward. So, Budget made very good announcements in several respects, like the PLI program (for the manufacture of photovoltaic solar panels), they also talk about sovereign green bonds, which will finance the green projects of the CPSEs. They have also given energy storage infrastructure status which will lead to access to lots of easy and convenient credit and also lower cost of credit.
And we hope that no matter what, we will always go to the Ministry of Finance and come up with new schemes and new interventions.
But also one thing to say is that VGF or support in terms of concessional finance should be given to the extent that it is needed for new technologies…as storage is very expensive we may need some support in terms of VGF or concessional finance, possibly for 3-4 years. Then it will settle down on its own. Thus, VGF will be needs-based, to promote requirements and the most important emerging requirements for the energy transition are energy storage of all types, (including) pumped storage projects for energy storage .
We have discussed internally (VGF for energy storage and offshore wind) within the Ministry that we will prepare a concrete proposal for VGF. We are going to talk about it with the Ministry of Finance, we are sure that they will support us because the government is committed to the energy transition.