The Comptroller and Auditor General (CAG) is conducting an integrated audit of the operational and financial performance of 39 public-sector power-distribution companies (discoms) and five power departments across the country, with the statewise report expected to be released next year.
“There are 28 officers involved in this audit,” a senior official said, adding that the exercise would cover the data of the last five years.
The audit is envisaged to cover all major sub-segments of the power sector over the next four years, starting with discoms and subsequently followed by transmission, power generation and renewable energy.
While the CAG regularly audits power-sector utilities, schemes and entities of both Union and state levels, what makes the current exercise unique is its integrated and horizontal scale, the official said.
For the first time, the auditor is adopting a multiyear, whole-of-sector road map, using a uniform methodology across all states to distil local-audit findings into national-level policy insights. The audit will examine operational parameters, including aggregate technical and commercial (AT&C) losses, billing efficiencies, effectiveness in collection, and power-supply performance, and the overall financial health and sustainability. Assessing consumer satisfaction, covering around 10,000 consumers across the country and across categories, is also being undertaken to evaluate the quality of electricity services delivered by discoms.
Additionally, it will focus on short-term power procurement, including through power exchanges. The discoms’ data, assessed by the auditor, has indicated that their financial stress is rooted in weaknesses in procurement, demand forecasting, metering, regulatory accounting, and consumer service.
”Revenue grants have grown more than four times as compared to increase in capital grants. Government support is increasingly meeting the cost of losses, debt and interest rather than investment,” the official said.
The CAG has found that 41 discoms in 2024-25 earned aggregate profits of ₹32,661 crore while 23 incurred combined losses of ₹29,959 crore.
The discoms’ combined accumulated losses stood at more than ₹3.41 trillion, along with outstanding borrowings of above ₹7.26 trillion, with an interest burden of ₹77,653 crore, at the end of March 2025.
“Given the fact that discoms are the interface between the power sector and consumers and their stress affects the reliability and affordability of power supply and spills over into state finances through subsidies, guarantees and equity support, priority was accorded to the horizontal performance audit of their operational and financial performance,” the official said.
Since electricity distribution is primarily a state-level function, the audit is being conducted at state level, and the findings will be presented to the respective state legislatures through “State Audit Reports”. However, issues of common policy and systemic deficiencies will be consolidated and brought to the notice of the Ministry of Power for policy intervention.
An audit of the Centre’s Revamped Distribution Sector Scheme (RDSS) has also been integrated with the discoms’ audit to facilitate the use of relevant findings from the discom audit in assessing the implementation and outcomes of the RDSS. To ensure uniformity and consistency in the audit exercise, a detailed audit-design matrix has been developed after obtaining inputs from internal and external stakeholders as well as domain experts.
A common sampling methodology has also been formulated following extensive deliberations. The CAG has engaged institutions like the Indian Institute of Management Ahmedabad to help design audit strategy and address gaps in capacity building. It is conducting stakeholder consultations with field audit offices across all states, the state and Union power secretaries and power utilities, regulatory authorities and other key institutions, including the Central Electricity Authority (CEA) and Central Electricity Regulatory Commission (CERC).
The Ministry of Power, in January this year, released the 14th Annual Integrated Rating of Power Distribution Utilities, which covered 65 of the 73 public- and private-power utilities, and power departments.
Gujarat’s power utilities and Odisha’s private discoms emerged as top performers, while utilities in Telangana and Jharkhand featured among the weakest performers.
