POWER FINANCE CORPORATION LIMITED

 (A Navratna PSE)

Workshop on Revised Methodology

for AT&C Losses and ACS – ARR Gap

16th May, 2018

Overview
 The concept of AT&C Losses
 Revised Methodology for calculation of AT&C Losses
 Revised Methodology for calculation of ACS – ARR Gap
 Best practices adopted by utilities in data presentation
 Background on PFC’s Report on the Performance of State Power
Utilities

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Genesis of AT&C Losses
 AT&C loss is a key parameter being used to determine efficiency of distribution utilities.

 Traditionally losses in the power sector were termed as T&D Losses which represented
the difference between input energy and energy billed.

 However, in the absence of 100% metering and absence of feeder segregation between
agricultural and domestic, it is possible to manipulate billing such that substantial portion
of T&D losses including theft may be attributed to agricultural consumption.

 The concept of AT&C loss was introduced to measure the difference between input
energy and energy realised where energy realised represented the no. of units for
which revenue is realised.

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The concept of AT&C Losses
 Energy realised: Energy billed factored by collection efficiency.

 Collection Efficiency: An index of efficiency in realisation of billings–current

as also previous years–and essentially focuses on the year-to-year movement
of receivables.

 Billing Efficiency: Net Energy Billed/ Net Input Energy

AT&C Loss % = (1 – Billing efficiency X Collection Efficiency)*100

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 Graphical representation of AT&C Losses

Gross Energy Purchase

by DISCOM including Net Input Net Energy Energy
net own generation Energy Sold Realised

Energy Transmission Distribution End

Purchase System Network Consumer

Transmission Losses • Distribution Losses • Unpaid Bills

• Un-metered Units • Unpaid
• Energy Traded Subsidy
• Theft / pilferage
• Inter-state sales
• Open Access
• Wheeling
• UI Export

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 Graphical representation of AT&C Losses
AT&C Loss

Billing Collection
Efficiency Efficiency

Gross Energy Purchase

by DISCOM including Net Input Net Energy Energy
net own generation Energy Sold Realised

Energy Transmission Distribution End

Purchase System Network Consumer

Transmission Losses • Distribution Losses • Unpaid Bills

• Un-metered Units • Unpaid
• Energy Traded Subsidy
• Theft / pilferage
• Inter-state sales
• Open Access
Billing & Collection
• Wheeling
Inefficiencies
• UI Export

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AT&C Loss methodology 2016-17 onwards
 It was noted by MoP that there was lack of uniformity in the methodology for
calculation of AT&C Losses and ACS – ARR Gap.

 Reconciliation of the methods used and finalization of a single applicable

method was deemed necessary. MoP constituted a committee to deliberate
on the Methodology of AT&C Loss in April, 2016.

 Committee consisted of members from REC,CEA and PFC.

 Revised formula for AT&C loss was notified by CEA in June, 2017.

 Key change in formula was with respect to inclusion of subsidy booked and
received while calculating collection efficiency.

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Revised Methodology for calculation of AT&C Losses

S.No. Parameter As per formula notified in June, 2017

A Net Input Energy (MU) Gross Input energy for DISCOM adjusted for 

transmission losses and energy traded

B Net Energy Sold (MU) Gross energy sold adjusted for energy traded

C Net Revenue Billed (Rs.  Revenue from sale of energy + subsidy booked

Crores) (Revenue from energy traded excluded)

D Net Amount collected (Rs.  Revenue from sale of energy + Subsidy 

Crores) received + Opening Debtors – Closing Debtors

E Collection Efficiency (%) D/C

F Energy Realised (MU) B*E

G AT&C Loss (%) (A‐F)/A*100

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AT&C Loss methodology 2016-17 onwards
 As per revised AT&C loss formula notified by CEA, all
distribution utilities were directed to include AT&C loss
calculation and information w.r.t subsidy booked/ received as
part of their annual accounts as notes to accounts/ annexure.

 Some utilities have complied with the requirement. However,

while calculating AT&C losses, many adjustments have been
made to revenue, debtors etc. which cannot be corroborated with
information provided in relevant schedules of annual accounts.

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Revised Methodology for calculation of AT&C Losses

AT&C Loss              = 1 – Billing Efficiency * Collection Efficiency
A.    Billing Efficiency   =  Net Energy Sold
Net Input Energy
Net Input Energy  =  Gross Energy Purchase incl net own generation – Transmission Loss
– Energy  traded   

Net Energy Sold       = Gross Energy Sold – Energy  traded  
Clarification on certain parameters w.r.t Billing Efficiency

Information w.r.t transmission losses needs to

be clearly reported in annual accounts
especially in the case of utilities having
Transmission Losses combined generation and distribution function
(GEDCO) such as TANGEDCO and PSPCL since
annual accounts of GEDCOs present combined
T&D Losses.

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Revised Methodology for calculation of AT&C Losses

Clarification on certain parameters w.r.t Billing Efficiency

For open access consumers, utilities are

providing their distribution system for use by a
consumer. Open access input/ sale does not
Open Access Input and Sales/ Wheeling of 
represent purchase or sale by the utility. Hence,
Energy
open access/ wheeling units are not included in
Net Input Energy and Net Energy Sold

Bulk Sale to DF is included in Net Energy Sold as

Sale to Distribution Franchisee the energy sold is within the licensed area of
operation of Discom.

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Revised Methodology for calculation of AT&C Losses
B. Collection Efficiency =  (Revenue from sale of energy + Opening Gross Debtors –
Closing Gross Debtors + Subsidy Received)
(Revenue from sale of energy including Subsidy Booked)
Revenue from sale of energy is taken as per relevant schedule of P&L which includes:
• Revenue from sale of energy including unbilled revenue accounted for on accrual basis
• Fixed charges and other operating income such as meter rent, recovery from theft, 
connection fee etc. 
• Fuel surcharge adjustment
Revenue from sale of energy does not include:
• Other income such as Interest income, income from sale of scrap etc. since these are not 
pertaining to the business of sale of power.
• Revenue from energy traded and open access consumers since the energy sold in MU terms 
has been excluded from Net Energy Sold.
Gross debtors (Opening and Closing) taken as per relevant schedule of Balance Sheet:
• Without deducting provisions for doubtful debts
• Unbilled revenue shall not be considered as debtors
• Any amount written‐off directly during the year will be added back
• Debtors for sale of power for inter‐state sales and open access will be excluded if the 
information is made available in the relevant schedule.
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Revised Methodology for calculation of AT&C Losses

Clarification on certain parameters w.r.t  Collection efficiency
Electricity duty will not be included for calculation
Electricity Duty of collection efficiency as it is collected by the
utilities on behalf of the government.
DPSC will not be included for calculation of
collection efficiency since DPSC is more in the
nature of a finance charge and most utilities
Delayed payment surcharge (DPSC) account for DPSC under the head Other Income
and not under Revenue from sale of energy.
Moreover, some utilities account for DPSC on
receipt basis while others on accrual basis.
Utilities have requested that Total Tariff Subsidy
received during the year including arrears (if any)
also to be included while calculating collection
Subsidy received for previous year
efficiency.
Treatment of this parameter will be
communicated separately

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ACS – ARR Methodology
 Formula for ACS – ARR Gap was notified by CEA in August, 2017.
 ACS – ARR Gap is calculated on Total Input Energy Basis (no adjustment
made for transmission loss/ energy traded etc.)

ACS – ARR Gap
ACS --> Avg. Cost of Supply (in Rs/ Total Expenditure (Amount)/ Total Input Energy
kwh) (units)
Revenue from Sale of Power (on Subsidy
ARR --> Average Realisable Revenue
Received basis) + Other income/ Total Input
(Subsidy received basis) (in Rs/ kwh)
Energy (units)

Gap (Subsidy received basis) ACS – ARR (Subsidy received basis)

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Best Practices in Data Presentation

JVVNL Audited Accounts 2016-17

Details w.r.t Transmission Losses, Energy Traded and Sale to DF made available
http://energy.rajasthan.gov.in/content/dam/raj/energy/jaipurdiscom/pdf/upload/Annual_Report_
2016-17.pdf
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Best Practices in Data Presentation

JVVNL Audited
Accounts 2016-17
Details w.r.t debtors
made available

http://energy.rajasthan.
gov.in/content/dam/raj/
energy/jaipurdiscom/p
df/upload/Annual_Rep
ort_2016-17.pdf

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Best Practices in Data Presentation

UGVCL Audited Accounts 2016-17

Consumer Categorywise Sale details made
available. However, Transmission Losses
not reported separately

http://www.ugvcl.com/cprofile/Financial%20
Statements%20%20FY%202016-17.pdf

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Best Practices in Data Presentation

MSEDCL Audited Accounts 2016-17

Details for subsidy received.

https://www.mahadiscom.in/Annual%20Report%20Yearwise/MSEDCL_AN
NUAL_REPORT_ENGLISH_2016-17.pdf

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Background – Financial & Operational Data
 “Annual Report on the working of State Electricity Boards and Electricity Departments”
was earlier being published by Planning Commission. The Report was discontinued
after the Report for the year 2001-02 was published.

 On Ministry of Power’s (MoP) request, PFC prepared a Report on the Financial

Performance of State Power Utilities for the years 2000-01 to 2002-03.

 The 14th edition of the Report for the years 2013-14 to 2015-16 was published in 2017
and the 15th edition of the Report for the years 2014-15 to 2016-17 is under compilation.

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PFC’s Report on SPUs
 Source of Information:
 Audited/ Provisional annual accounts of utilities.
 Information provided by utilities not preparing annual accounts such as power
departments, newly formed entities.
 Additional information such as subsidy received, consumer category-wise
information, information for calculation of AT&C losses etc., if not appearing in
annual accounts, is obtained separately from utilities/ tariff petitions etc.
 Reliance on data available in annual accounts/ other verifiable documents is critical
to maintain authenticity and consistency of information presented.

 Coverage of the Report:

 State Power Utilities (SEBs/ unbundled utilities/ corporatised utilities/ power
departments) in all the States as well as Union Territory of Puducherry and private
distribution companies of Delhi.

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PFC’s Report on SPUs
 Key parameters covered in the Report
 Financial parameters such a profitability, ACS – ARR Gap, cost analysis, ratio
analysis etc.
 Operational parameters such as AT&C Losses, capacity, generation, power
purchase etc.

 Uses of the Report:

 Data from the Report is used for evaluating performance of utilities, providing
information for Parliament questions, evaluating policy decisions and within PFC for
business decisions.
 Used by academia and media for discourse on power sector.

 Data updation in the Report:

 Data for previous years’ is updated in the Report on receipt of audited/ revised
accounts or if utility provides revised information to PFC.
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Inconsistency in data
 UDAY Cell/ REC is monitoring all DISCOMs which have signed UDAY on a
quarterly basis. Utilities are providing information on UDAY portal. AT&C
Losses and ACS – ARR Gap are key parameters being monitored under the
UDAY scheme.

 PFC is the nodal agency appointed by MoP for Integrated Rating exercise of
Discoms carried out on an annual basis. These Ratings are used by PFC/
REC and banks for credit appraisal of Discoms. AT&C Losses and Cost
Coverage have a high weightage in the Rating exercise.

 Data submitted to PFC/ REC and Rating Agencies needs to be consistent.

 If additional information w.r.t AT&C Losses, subsidy receipt, consumer

category-wise information is made available in annual accounts, the issue of
inconsistency in data will not exist.
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THANK YOU

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