The Government of India has introduced new regulations for electricity distribution companies, aiming to improve transparency and financial accountability. The Electricity Distribution (Accounts and Additional Disclosure) Rules, 2024, will come into effect immediately.
The rules clarify the recognition of revenue and income, ensuring that only tariff-approved items can be recognized as revenue. They mandate specific provisioning requirements for trade receivables from different customer categories, with higher provisions for overdue payments.
Distribution companies must prepare and disclose additional financial information, including:
- Supplementary disclosures to financial statements
- Power purchase and energy accounting details
- Average Cost of Supply-Average Revenue Realised gap
- Aggregate Technical and Commercial Loss
- Performance summary
The management of distribution companies must certify the accuracy and completeness of the additional disclosure statements.
Impact on Consumers and Industry
These new regulations are expected to enhance transparency and accountability in the electricity distribution sector by clarifying revenue recognition and provisioning requirements. They thus ensure financial stability and improve the overall efficiency of distribution companies.
For consumers, the additional disclosures will provide better visibility into the financial performance of distribution companies and the factors affecting electricity tariffs. This increased transparency can empower consumers to make informed choices and advocate for their interests.
