The Power Ministry has developed a performance-based integrated rating methodology for the state distribution companies (discoms) to assess their ability to sustain commercially viable operations in the long run.

Primarily aimed at rewarding the efforts of distribution utilities, the rating methodology focuses on stimulating and improving their operational and financial performance. Marks would be assigned for current levels of performance and relative improvement over the baseline parameters. The utilities would be ranked on the basis of their performance. The annual ranking and rating of all state power discoms would be carried out by a consultant to be appointed by the Power Ministry.

Under this system, parameters such as AT&C (aggregate technical and commercial) losses, financial planning, cost coverage ratio, subsidy received and other related issues will carry maximum weight of about 60 per cent as they directly affect the commercial viability. Compliance to regulatory practices has been assigned a weightage of 15 per cent. Other parameters such as timely submission of audited accounts, metering, IT and computerisation, timely payments without default to banks or financial institutions, renewable energy purchase obligation et al would account for the remaining 25 per cent.

A system of negative marks has also been sought to be introduced in the rating methodology.