India devises rating system for power firms

India's Ministry of Power has devised a new system of rating for state power utilities to incentivise/disincentivise the distribution entities in order to improve their operational and financial performance.

The structure has been so designed as to gauge the level of interest subsidy under the National Electricity Fund as well as utility performance as prescribed under R-APDRP.

The rating system envisages a method of assigning marks based on performance levels of utilities. Marks are awarded in an objective manner based on current levels of performance as well as relative improvements from year to year. In the event of deterioration of

Weights are assigned to different parameters on a relative basis. For instance, different weights are assigned to financial health, viability, regulatory practices and other parameters, as each has a different level of importance attached to it.

Similarly, a system of negative marking as described above, has also been assigned weights for failure to meet certain minimum criteria which is mandatory as per law or otherwise. This has been devised to conform adherence to a certain minimum level of performance from the utilities.