State regulator scorecard highlights gaps in power sector governance

The Power Foundation of India (PFI), a not-for-profit society under the Ministry of Power, has released a Report on Rating Regulatory Performance of States and Union Territories, prepared in collaboration with REC Ltd. The report covers 36 states and union territories and scores them on a 100-point scale across five broad parameters: resource adequacy, financial viability of distribution companies, ease of living and doing business, energy transition, and regulatory governance.

The report has been long overdue. The Appellate Tribunal for Electricity (APTEL) had flagged as early as 2011 that most state distribution utilities had failed to file annual tariff revision petitions in time, and that State Electricity Regulatory Commissions (SERCs) had failed to make periodic tariff revisions, directly causing the poor financial health that has plagued the sector for over a decade. That warning went largely unheeded. This report is, in part, an institutional response.

The scorecard

Punjab leads the table with 97 out of 100 (Grade A), followed closely by Karnataka (96) and Maharashtra (94). Assam (93) and Arunachal Pradesh (91) complete the top five. Eleven states in total received Grade A (85 marks and above). Ten received Grade B (65–85 marks), including Sikkim, Odisha, and Gujarat. Nine states landed in Grade C (50–65 marks), a group that includes large electricity markets like Tamil Nadu, West Bengal, and Telangana.

The lower half of the table is more concerning. Four states, Jammu & Kashmir (49), Uttar Pradesh (48), Delhi (40.5), and Rajasthan (39), received Grade D (35–50 marks). Tripura, with just 21.5 out of 100, is the sole Grade E state and the only one to score below 35.

The fact that Delhi scored 40.5 deserves attention. As the national capital, with a relatively well-organised power sector and significant urban infrastructure, its poor showing, ranked 34th out of 36, signals regulatory failures that are not simply a function of state size or poverty.

What the scoring measures

The 100-point framework is weighted across five pillars. Resource adequacy carries the highest weight at 32%, measuring whether states have framed resource adequacy regulations (as mandated by the Electricity Amendment Rules, 2022), defined planning reserve margins, set timelines in line with Central Electricity Authority guidelines, and approved multi-year Capex plans for state transmission utilities and DISCOMs.

Financial viability carries 25% of the weight and covers four sub-parameters: timely issuance of tariff and true-up orders, cost-reflective tariff, non-creation of regulatory assets, and the fuel and power purchase cost adjustment surcharge (FPPAS) mechanism. These parameters speak directly to the structural financial crisis in the distribution sector.

Ease of living and doing business (23%) evaluates compliance with service delivery timelines under the Electricity (Rights of Consumers) Rules, connection release, meter testing and replacement, net metering, connection charges, open access, and quality of power supply. Energy transition (15%) assesses Green Energy Open Access rules and Renewable Purchase Obligation (RPO) trajectories. Regulatory governance (5%) examines whether SERCs have prescribed regulations for appointment of officers and bifurcated sanctioned posts by grade.

The financial crisis that drives this report

The report is candid about why it was commissioned. India’s DISCOMs are, as a sector, financially insolvent. Their accumulated losses have grown from Rs. 5.93 lakh crore in FY 2020-21 to approximately Rs. 6.47 lakh crore by FY 2024-25. Their collective net worth has fallen from Rs. (−)1,03,056 crore to Rs. (−)1,73,365 crore in FY 2023-24.

The proximate cause is a persistent gap between the average cost of supply (ACS) and the average billing rate (ABR), in plain terms, DISCOMs are collecting less than they spend. The cash-adjusted ACS-ABR gap was Rs. 0.39 per unit in FY 2023-24, better than Rs. 0.59 per unit the previous year but still a significant structural gap. When regulators set tariffs below cost, often for political reasons, the shortfall is either absorbed as a regulatory asset (deferred revenue that may or may not ever be recovered) or financed through short-term borrowings that add carrying costs and worsen the spiral.

APTEL’s 2011 judgment in OP No. 1 made several binding directions to SERCs, including that tariffs must be decided before April 1 of the tariff year, that true-up should be conducted annually, and that regulatory assets should not be created as a matter of course. More than a decade later, several states still do not comply.

Resource adequacy: the structural gap

The resource adequacy parameter reveals a systemic weakness in India’s electricity planning. Despite the Electricity (Amendment) Rules, 2022 having mandated that SERCs frame resource adequacy regulations, with Central Electricity Authority guidelines published in June 2023, only 11 states met the March 31, 2025 deadline. A handful more filed after the deadline but before the June 30, 2025 extended cut-off, receiving prorated credit.

Resource adequacy planning is not a bureaucratic formality. It requires DISCOMs to submit demand projections to state transmission utilities, for those utilities to file long-term demand and resource adequacy plans with CEA and the SERC, and for SERCs to approve those plans and specify non-compliance charges. Without this framework, states are essentially flying blind, procuring power on an ad hoc basis rather than through a structured planning process. The consequences include both power shortages and expensive last-minute procurement.

States that scored zero on this parameter, because they had not even framed the regulations, lost up to 32 marks from their total, which in several cases is the difference between a C and a D, or a D and an E.

Renewable obligations: mixed compliance

On the energy transition front, the picture is mixed. The Ministry of Power notified a long-term RPO trajectory in October 2023, requiring DISCOMs to source 29.91% of their power from renewables in FY 2024-25, rising to 43.33% by FY 2029-30. The trajectory includes specific obligations for wind, hydro, distributed renewable energy (DRE), and other renewables.

Several states have framed RPO regulations and specified trajectories, but fewer have aligned those trajectories precisely with the MoP notification, particularly on distributed renewable energy targets. The DRE component, which covers solar installations below 10 MW across various configurations (net metering, group net metering, behind-the-meter, and others), is a relatively new sub-category and compliance is lagging.

The Green Energy Open Access rules, which lower the access threshold to 100 kW, waive cross-subsidy surcharges for green hydrogen and green ammonia projects, and extend access to waste-to-energy plants, have also seen uneven adoption across states. Some states have framed the required regulations; others have not, effectively blocking industrial consumers from accessing green power directly.

What this report can and cannot do

It is worth being clear about the report’s limitations, which PFI acknowledges in its disclaimer. The grades are based on a specific set of parameters, and different parameters would yield different rankings. The assessment relies exclusively on orders and regulations published on official SERC websites, which means states that have taken action but not yet published may be underrated. Future editions will add parameters on energy storage, tariff category rationalisation, and recovery of fixed costs.

The report also does not, and cannot, directly compel state regulators to change their behaviour. SERCs are quasi-judicial bodies with constitutional backing under the Electricity Act. The Ministry of Power can issue rules and guidelines, APTEL can issue directions, but enforcement at the state level remains difficult.

What the report does, however, is create public accountability. A citizen, investor, or policymaker can look at a single document and see that Delhi scored below Bihar, that Rajasthan’s DISCOMs are operating on a tariff order that expired in 2023, or that Tripura, the only Grade E state, is functioning in a regulatory vacuum on almost every parameter.

The road ahead

PFI has confirmed that the second edition will cover the true-up of FY 2024-25 and the Aggregate Revenue Requirement for FY 2026-27, with additional parameters added. Regulators have been given notice: the consultative process for this report included regional meetings with all SERCs, where draft scores were presented and suggestions invited.

The question is whether the states at the bottom of the table treat this as a serious accountability exercise or simply wait for next year’s revised methodology. Given that UP, Delhi, and Rajasthan together supply power to over 350 million people, the stakes of continued regulatory inertia are not trivial. Regulatory failure in the distribution sector does not stay contained, it flows upstream to generation companies awaiting payment, to transmission operators managing a grid without long-term demand data, and ultimately to consumers who pay either through unreliable supply or through eventual tariff shocks when accumulated regulatory assets can no longer be deferred.

The report’s most important contribution may be precisely this: it makes the cost of regulatory neglect visible, state by state, number by number.

The featured photograph is for representation only.