CAG widens purview of power sector audit, starting with DISCOMs; consumer satisfaction in focus

CAG Expands Power Sector Audit Scope

The Comptroller and Auditor General of India has widened its audit of the power sector, starting with distribution companies, or discoms. According to officials, the exercise will later extend to transmission, generation, renewable energy and the Revamped Distribution Sector Scheme. Each segment will be assessed on its operational and financial performance over the preceding five years.

The first phase covers discom performance between FY21 and FY26. It will examine 39 discoms and five departmental undertakings. Privately owned discoms fall outside the audit's scope. The exercise began in July this year, and the report is expected to be finalised around the middle of the next financial year. Transmission audit is slated to begin with FY27.

Why It Matters for Businesses

The audit signals a shift beyond conventional financial and operational checks. Auditors have been asked to engage directly with electricity consumers, local experts and influential groups rather than limiting the exercise to stakeholder consultation. Around 10,000 consumers across industrial, agricultural and domestic categories will be covered, with emphasis on supply reliability and quality. For commercial and industrial users, the findings could shape expectations around service standards and tariff scrutiny.

Power trading and procurement costs form another key area. Officials noted that short-term power procurement has grown from roughly 7–8 per cent of states' purchase baskets five years ago to nearly 14 per cent now, with power exchanges handling over 56 per cent of such transactions. Since procurement costs feed into end-consumer tariffs and the finances of the entities involved, this scrutiny has direct implications for cost structures.

The audit will also review aggregate technical and commercial losses, billing and collection efficiency, and the long-term financial viability of discoms. Discoms were chosen first because they interface directly with…