Context: Launched in July 2021, the Revamped Distribution Sector Reform Scheme (RDSS) is the latest of many central government grant-based programmes towards electricity distribution network investments. 

• Others include urban loss reduction schemes such as the Accelerated Power Development Programme and rural connections and network expansion focussed schemes such as SAUBHAGYA. 

Key Aspects of Revamped Distribution Sector Reform Scheme (RDSS)

• RDSS’s outlay of Rs 3 lakh crore for five years can enable financially-strained electricity distribution companies to get government support.
• Half of the outlay is for better feeder and transformer metering and pre-paid smart consumer metering. 
• The remaining half, 60 per cent of which will be funded by central government grants, will be spent on power loss reduction and strengthening networks.

Concerns of RDSS

• Complex processes and conditions for fund disbursal. 
• Only 60 per cent of the total Rs 2.5 lakh crore grants allocated in past schemes were disbursed. 
• Lack of public review and regulatory oversight in states
• The prescriptive approach of the scheme design impedes effective implementation. 
• For example, RDSS emphasises loss reduction investments over system strengthening. 
• However, high losses are typically connected to sustained poor quality service which, in turn, is affected by inadequate investment in system strengthening. 

Way Ahead for RDSS Scheme

• Strengthen rural networks to meet growing demand
• Rural electrification (4.9 crore poor households electrified in last decade), increased use of appliances like refrigerators and mixers and the needs of rural enterprises will need more network investment. 
• Without this, the risk of power outages is high. 
• The RDSS system’s strengthening plans can focus on this challenge.

Strengthen Agricultural Feeders

• About 25 per cent of electricity sales is to highly subsidised agricultural consumers who also receive erratic, poor quality supply. 
• Under the national KUSUM scheme, day-time, low-cost supply can be provided to a large number of farmers by installing megawatt scale solar plants, which supply eight hours of quality power directly to dedicated agricultural feeders.
• For this to work, separate feeders for agricultural consumers are needed. 
• RDSS prioritises investments and grants towards dedicated agricultural feeders to accelerate feeder solarisation. 
• States must leverage this grant support to provide reliable supply and reduce subsidy requirements.

Metering of distribution feeders. 

• Despite efforts, unmetered consumers and non-functional meters at the consumer and feeder level persist. 
• Without functioning meters, accurate energy accounting and loss monitoring is a challenge.
• Therefore, all feeders must be equipped with meters capable of communicating readings without manual intervention. 
• States should leverage RDSS’s emphasis on automatic meter reading for this.
• To realise benefits, the state regulator must stipulate a framework to evaluate cost reduction and performance improvement due to smart meters and protect consumers from undue tariff impacts due to such investments.

Charging Infrastructure

• Discoms can avail 60 per cent of grants under RDSS for network investments required to address the demand of charging infrastructure for electric vehicles. This can accelerate a shift away from petrol and diesel fuels.

Road Ahead

• Central government agencies should be flexible in the monitoring, tracking and fund disbursal mechanisms. Without these efforts, despite its potential, RDSS will likely be important but limited in its impact, like its predecessors.