The Ministry of Power (MoP) announced its ninth yearly ratings for the state distribution companies (discoms) for FY 2020. Out of 41 discoms, 16 of them registered changes in their cost coverage ratios. Out of these, six discoms recorded over 10% growth in their cost coverage ratio. The cost coverage ratio for 20 discoms continued to remain low because of non-cost reflective tariffs and higher expenses. Besides 22 discoms, which registered a decrease in cost coverage ratio, four recorded a decline of over 10% According to the report, the average cost coverage grew to 0.87x compared to 0.86x in the eighth rating exercise. Nine discoms were great performers on cost coverages, including two Haryana discoms, Hubli Electricity Supply Company Limited (HESCOM), three Gujarat discoms, and one discom of Chhattisgarh, Himachal Pradesh, and Assam each. The Average aggregate technical and commercial (AT&C) loss level of rated discoms grew to 21.16% in FY 2020, compared to 21.85% in FY 2019. Karnataka discoms witnessed the highest number of rating downgrades, including four out of five utilities, decreased to (B+). The downgrades were according to the low AT&C loss levels in FY 2020 because of the decline in collection efficiency, high dependence on subsidy reports, etc. Every discom in Rajasthan was downgraded to (C) and (C+) ratings. A couple of the utilities were downgraded the previous year from B to C. The shortage of upgrades in the state was held accountable for the low-cost coverage ratio. The report advised that the Rajasthan discoms should concentrate on decreasing AT&C losses even more. The two of Andhra Pradesh's discoms downgraded to (C) and (B) ratings for FY 2020. The Eastern Company of Andhra was downgraded to (A) to (C), and the Southern Company downgraded from a (B+) to a (B) rating. The report advised that discoms solve their serious audit qualifications and keep a low level of AT&C losses. The four Gujarat discoms maintained the same rating for FY 2020. The rating remained at A+ for Uttar Gujarat Vij Company, Dakshin Gujarat Vij Company, Madhya Gujarat Vij Company, and Paschim Gujarat Vij Company. The report recommended that discoms keep a low level of AT&C losses by improving billing, reducing the power purchase cost, and collecting performance. The rating for the Madhya Pradesh Madhya Kshetra Vidyut Vitran Company remained at (C+) for FY 2020, and the Madhya Pradesh Paschim Kshetra Vidyut Vitran Company rating was downgraded to (B+) for FY 2020. The report advised them of a considerable decrease in AT&C losses in the collection efficiency and billing. The Maharashtra State Electricity Distribution Company's rating stayed the same at (A) for FY 2020. The report recommended them to solve discoms serious review qualifications and keep a low level of AT&C losses. The report also advised the discoms for the appropriate receipt of subsidy dues from the state government. The Southern Power Distribution Company of Telangana rating was downgraded to (B) from the (B+) rating in 2019, and the rating for Northern Power Distribution Company of Telangana decreased to (C+) from (B). The report suggested decreasing AT&C losses and growth in collection efficiency, and the timely receipt of subsidies from the state government. The rating of the Tamil Nadu Generation and Distribution Corporation was downgraded to C from (B). The AT&C loss levels supported by rising billing and collection efficiency x receivable days remained low constantly and reached 47 days in FY 2020. The report advised them to remove deficiencies in audited accounts to proceed to decrease AT&C losses, concentrating on billing efficiency, long-term plan to accomplish a financial turnaround, timely filing of tariff petition, and improving the cost coverage and interest coverage ratio. The report also offered a decrease in power purchase cost and reduced the dependency of the Government of Tamil Nadu, which grows credit risk. As per the data published by the Ministry of Power, the discoms owed Rs 124.2 billion to renewable energy producers in delayed payments over 193 pending invoices at May 2021 end. Image Source Also read: Power generation from RE sources in India fell to 8.3% in FY21