The age-old dilemma over the viability of having multiple electricity distribution companies in Tamil Nadu seems to have influenced the State government in not creating regional distribution companies (discoms).
The government, through two orders issued on January 24, cleared the proposal for unbundling the Tamil Nadu Generation and Distribution Corporation (Tangedco) and permitting the formation of three entities instead - one each for thermal power generation, green energy and distribution. The proposed discom will take care of around 2.3 crore domestic consumers and nearly 23.3 lakh agriculture connections. The State has a total of 3.3 crore low-tension (LT) consumers,
Ever since the Electricity Act, 2003, came into effect, the talk of having more than one discom has been doing the rounds among policy makers. Apart from the factor of resistance to change, the question arises whether regional discoms, if created for the Cauvery delta and southern districts, would be viable, given the fact that the two regions are having a large number of agricultural connections covered under the free power scheme.
In the northern and western districts, with their industrial base and numerous commercial establishments, the proposed discoms can be financially sustainable but not in the other two. “In such a case, developmental activity will suffer in the delta and southern districts which won’t be a desirable outcome. This is why we have decided to retain the single discom concept,” explains a policy maker, clarifying that the latest move, however, marks the first step towards the scenario of multiple discoms.
The government order on the unbundling of the Tangedco stated that “most States with single-discom model” had achieved “similar operational efficiency” compared with States having multiple discoms. In single-discom States, economies of scale reduced the overhead cost. With “the ongoing IT reforms in the power sector and the inevitable digitisation” of distribution network in the next couple of years, “a single entity with a common IT backend provides a more conducive set up for integrated operation” of the network.
The State government’s decision to have one discom is different from the systems in most of the southern States (barring Kerala). In Karnataka, there are five discoms; in Andhra Pradesh, three and in Telangana, two. Though Maharashtra, in 2005, created only one discom - Maharashtra State Electricity Distribution Company Limited (MSEDCL) at the time of restructuring of the Maharashtra State Electricity Board, the State has three more discoms (Brihanmumbai Electric Supply & Transport Undertaking-BEST, Tata Power Ltd., Mumbai and Adani Electricity Mumbai Limited), all dealing with Mumbai. The MSEDCL has about 2.7 crore consumers.
To a query on the future of the Tangedco, the policy maker clarifies that it is a matter of time that the entity will cease to exist, once all the formalities with the establishment of all the new companies are over. The process of registration of the titles of the new companies - Tamil Nadu Power Generation Corporation Limited (TNPGCL), Tamil Nadu Green Energy Corporation Limited (TNGECL) and Tamil Nadu Power Distribution Corporation Limited (TNPDCL) - has been completed. Now, the process is on for incorporation. Of about 89,000 employees in the Tangedco, nearly 60,000 will be part of the discom.
