Discom financial stress
Discom financial stress stands out clearly in MPPaKVVCL’s FY27 ARR filing, where projected costs continue to outpace realistic revenue recovery. The discom has estimated an ARR of Rs.24,383.70 crore against expected revenue of Rs.23,694.25 crore, creating a Rs.689.45 crore gap even before operational uncertainties are considered.
Power purchase and transmission charges remain the dominant cost driver at Rs.21,964.38 crore, nearly 90% of total ARR. Long-term thermal power commitments with fixed capacity charges restrict flexibility, while renewable must-run obligations add further rigidity. Small deviations in demand or scheduling directly affect cash flows.
Non-power costs are also trending upward. Employee expenses of Rs.1,325.96 crore and combined repairs, maintenance, and administrative costs of about Rs.410 crore continue to rise. Depreciation and interest reflect an expanding asset base with weak revenue productivity. Allowed return on equity remains largely notional without tariff intervention.
The filing assumes tariff action to bridge the deficit, despite political and social limits on tariff increases. Balance-sheet indicators such as negative reserves, growing receivables, and rising short-term borrowing underline persistent discom financial stress.
The filing suggests efficiency gains alone will not close the gap. EnergylineIndia.com details how discom financial stress is becoming embedded in the ARR filing cycle, and why continued reliance on regulatory forbearance may deepen discom financial stress over successive true-ups, Discom ARR, Utility Finance, Power Sector India, Tariff Stress.