Punjab Power Corporation Clashes with Engineers Over Revised Loss Targets
The Punjab State Power Corporation Limited (PSPCL) has formally addressed objections raised by the PSEB Engineers Association (PSEBEA) regarding its revised Aggregate Revenue Requirement (ARR) for the upcoming 4th Control Period spanning from FY 2026-27 to FY 2028-29. The dispute primarily revolves around revised distribution loss targets and the accounting treatment of over Rs 3,581 crore in government funding.
Engineers Label Targets as Unrealistic and Technically Unfeasible
The PSEBEA has criticized the PSPCL's new distribution loss targets, describing them as "unrealistic" and "technically unfeasible." Initially, in November 2025, the PSPCL proposed a distribution loss trajectory starting at 12.75% for FY 2026-27. However, in a revised petition, the corporation reduced this target to 10% for the same period following a series of submissions.
The Engineers Association argued that this revision represents an "abrupt and unprecedented" reduction of 2.95% in a single year. They alleged that the change attempts to "artificially suppress" the revenue requirement by over Rs 5,200 crore in power purchase costs over three years, effectively deferring financial burdens to future consumers.
PSPCL Justifies Reduction with Infrastructure Overhaul
In its reply to the Punjab State Electricity Regulatory Commission (PSERC) on February 26 this year, the PSPCL denied allegations of "slashing" its ARR. The corporation justified the sharper reduction by pointing to a massive, time-bound rollout of infrastructure projects. Key initiatives cited include:
- Statewide implementation of smart metering under the Revamped Distribution Sector Scheme (RDSS) across Punjab.
- Introduction of a new "Unified Billing Solution" to streamline revenue collection.
- Intensive recovery drives targeting major defaulters with outstanding arrears exceeding Rs 50,000.
- Systematic HT/LT loss reduction works and strengthening of 11 kV and 66 kV systems.
The PSPCL stated that these works are targeted for completion by March 2027, with the primary impact expected during FY 2026-27, followed by marginal reductions of 0.05% in subsequent years. The utility emphasized that its roadmap relies on a time-bound infrastructure overhaul aimed at substantial completion by March 2027, including smart metering to improve energy accounting and billing efficiency.
Dispute Over Government Funding Accounting
The two sides also differ on the treatment of Rs 3,581.95 crore received from the Government of Punjab as loss funding. The Engineers Association argued that treating this grant as "non-tariff income" negates its intended purpose. In contrast, the PSPCL asserted that its accounting practices adhere to Indian Accounting Standards and the Companies Act 2013, leaving the final regulatory treatment to the "prudence check" of the Regulatory Commission.
PSPCL's Detailed Infrastructure Plans
The power discom outlined additional measures to support its revised targets:
- Daily intensive recovery drives against defaulting consumers to enhance revenue assurance.
- Execution of HT/LT loss reduction works across Punjab, including a dedicated "Outage Reduction Plan" to minimize outage duration and distribution losses.
- Ongoing tendering process for LT network revamping within urban local body (ULB) areas.
The PSPCL argued that because these systemic improvements are concentrated in the immediate term, a sharp "one-time" reduction to a 10% loss target is achievable for FY 2026-27. This marks a shift from its original proposal of 12.75% and the commission's previously approved target of 11.80%. The corporation projects that only marginal annual reductions of 0.05% will be necessary for the subsequent years of the control period.
Engineers Raise Concerns Over Regulatory Process
Ajaypal Singh Atwal, general secretary of PSEBEA, expressed concerns about the regulatory commission's decision-making process. He stated, "It appears that before taking the final decision the regulatory commission could not properly determine whether the PSPCL's efficiency gains were achievable or whether they risked the 'long-term financial uncertainty' cited by the engineering cadre." Atwal also noted that despite the short duration, power engineers managed to file objections over the PSPCL's revised submissions. He added, "It is also surprising that the commission had issued tariff orders ahead of the Punjab government budget whereas usually the tariff orders are issued by the end of March."
The ongoing dispute highlights the tension between operational efficiency targets and financial sustainability in Punjab's power sector, with both sides presenting detailed arguments to the regulatory authorities.
