CAG audits 39 state power distributors, examining service quality and short-term purchases

India's Comptroller and Auditor General has begun a combined audit of 39 state-owned electricity distribution companies, with attention to consumer satisfaction and short-term power buying as well as financial and operational performance. Five departmental undertakings, where distribution remains directly within government departments, are also covered. The exercise began in some states in July and is expected to finish by the middle of the next financial year, according to officials familiar with it.

Earlier audits often assessed individual distributors in different states and years. This exercise brings them under a common review through the State Commercial Audit division established last year. Distribution is the first stage of a planned four-year integrated examination covering generation, transmission, distribution and renewable energy, in a sector expected to attract about Rs.50 lakh crore by 2032 and Rs.200 lakh crore by 2047. Those are sector investment expectations, not the audit's budget or completed spending.

Customer experience and purchasing decisions are in scope

The audit will examine technical and commercial losses, billing, collection, supply performance and financial sustainability. A planned survey of around 10,000 domestic, industrial, commercial and agricultural consumers would assess service satisfaction, using the Statistics Ministry or another survey agency. A planned survey is not yet a finding that customers are satisfied or dissatisfied.

Officials say short-term buying has risen from roughly 7–8 percent of states' power purchases four or five years ago to about 14 percent, with exchanges contributing more than 56 percent of that short-term segment. Auditors want to examine demand forecasting and the timing of purchases, because procurement costs can affect end users. These shares refer to different denominators: the exchange share is not 56 percent of all electricity purchased.

Public distributors have reported accumulated losses of Rs.6.77 lakh crore and borrowings of Rs.7.11 lakh crore. Officials say revenue grants have grown much faster than capital grants, raising questions about support being absorbed by losses, debt and interest rather than investment. The integrated method has also been used in areas such as multimodal freight, urban mobility and ease of doing business. This audit is an examination in progress, not a concluded finding of wrongdoing by all 39 companies or a promise of lower bills.