Economy
Power Distribution Reforms and AT&C Losses
GS3 Infrastructure: EnergyPrelims and Mains
- Why in news
- On 6 January 2026 the Ministry of Power said provisional FY 2024-25 data show a turnaround in DISCOM health. AT&C losses fell to 16.16% and utilities posted their first-ever profit.
- What it is
- AT&C losses measure the share of energy put into the distribution system that is not billed or not paid for. They combine technical line losses with billing and collection losses. The ACS–ARR gap is the difference between a utility's average cost of supply and its average revenue realised per unit, and shows how far tariffs cover costs.
- AT&C losses
- AT&C losses fell from 22.62% in FY14 to 16.16% in FY25 (provisional).
- ACS–ARR gap
- The gap between average cost of supply and average revenue realised narrowed from ₹0.78/kWh in FY14 to ₹0.11/kWh in FY25.
- First profit
- DISCOMs and power departments recorded a positive PAT of ₹858 crore for the first time, against a loss of ₹67,962 crore in FY14.
- Late Payment Surcharge Rules
- Dues to generating companies fell 96%, from ₹1,39,947 crore in 2022 to ₹5,747 crore by December 2025.
- Legacy burden
- DISCOMs still carry ₹6.39 lakh crore in accumulated losses and ₹7.18 lakh crore in debt, with about 80% concentrated in eight major states.
Don’t confuse with AT&C loss vs technical loss: Technical loss is energy lost in lines and transformers. AT&C loss also includes billing inefficiency and unpaid revenue.
Don’t confuse with ACS–ARR gap vs AT&C loss: The ACS–ARR gap is a money gap per unit between cost and revenue. AT&C loss is a percentage of energy not paid for.
Economy terms and data: 42 Prelims questions since 2013, rising in recent years; they test what a term or instrument means. In Mains, 12 news-triggered questions.
Why it matters
- Healthy DISCOMs are needed to integrate renewables, electric mobility and a digital grid for the 500 GW non-fossil target.
- Lower dues to generators and better cost recovery ease pressure on state finances and the power chain.
Problems
- Accumulated losses of ₹6.39 lakh crore and debt of ₹7.18 lakh crore remain, concentrated in a few large states.
- The FY25 figures are provisional, and the profit is small against the legacy burden.
Way forward
- Enforce cost-reflective tariffs, timely subsidy payment and uniform accounting, and tie finance to performance.
- Speed up smart metering and network modernisation under RDSS to cut losses further.
Put in your answer
AT&C loss trend: AT&C losses fell from 22.62% in FY14 to 16.16% in FY25.
Accumulated losses: Accumulated DISCOM losses declined year-on-year for the first time, from ₹6.92 lakh crore to ₹6.39 lakh crore.
- 2014Mains GS2 · Q8Whether a Rail Tariff Authority benefits consumers, using power sector tariff regulation experience
- 2006Prelims Q65Which statements on Appellate Tribunal for Electricity and APDRP distribution upgradation are correct?
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
No practice question for this one; the card may still help an answer. Why: Lasting topic on power sector finances with data. AT&C loss, ACS-ARR gap and DISCOM profit are fresh numbers, but routine data rarely reaches Prelims or Mains.
Worth revising until Prelims 2027: most news questions come within two years of the event.