In the world of power distribution companies or discoms, Aggregate Technical & Commercial (AT&C) losses have long been one of the "four horsemen of doom and despair".

AT&C losses are caused by technical factors, such as inefficiency of distribution lines and system overload, or by commercial factors, such as low metering efficiency, theft, pilferage, and collection delays or failures.

The good news is that these losses seem to be on the mend at the national level.

Latest data from the Ministry of Power reveals a milestone: for the first time, India’s discoms have achieved a positive profit after tax at an all-India level. Central to this recovery is the drop in AT&C losses, a metric tracking energy lost to leaky wires, theft, and billing failures, which fell to 15.04% in FY25, down from 15.97% just a year prior.

While the headline figure suggests a turnaround, the devil is in the details. The recovery is patchy with sudden relapses across India’s different states.

The Efficiency Frontier

The improvement in the all-India level of AT&C looks impressive for two reasons. First, India lost nearly a quarter in value of its generated power to AT&C in 2010-11. By FY21, that figure was 21.91%, meaning the bulk of the efficiency gains were made in the last three-four years.

Second, this progress brings India within striking distance of its Revamped Distribution Sector Scheme (RDSS) mandate, which sought to compress AT&C losses to a 12-15% range by the close of FY25.

India plans to reduce these losses to 10% by 2030, which will place India closer to the global average for AT&C losses in the power sector, estimated at 6-7%.

Devil In The Detail

However, national averages mask deep regional fractures. While the national AT&C loss average was at 15.04%, technical losses remained a reality in the hilly states like Himachal Pradesh, as well as the Union Territories of Ladakh and the Andaman & Nicobar Islands. Even industrial heavyweights like Madhya Pradesh and Maharashtra are currently trailing the national average.

Historically, it has been difficult to address AT&C losses in North-eastern states and other hilly regions because of their terrain.

“Long low-voltage lines and difficult physical terrain (especially in rural areas) raise technical losses and make maintenance harder," says Rajasekhar Devaguptapu, fellow at the CSEP Research Foundation.

For example, in regions like the North-East/Ladakh, technical losses are naturally high due to long lines at lower voltages and challenging terrain.

Devaguptapu notes that the winners are those embracing “measurement discipline.” This involves deep metering, rigorous energy accounting at the substation and feeder levels, and adopting "modern utility practices that invest time and effort in carrying out periodical load-flow studies, demand projection, and optimal procurement."

The Smart Meter Cure

The state of Rajasthan serves as a cautionary tale of "commercial stress rather than a structural collapse in network efficiency," according to Saloni Sachdeva Michael, energy specialist at the Institute for Energy Economics and Financial Analysis (IEEFA).

Rajasthan’s losses spiked to 22.13% in FY24 before retreating to 15.18% in FY25. “The FY24 spike coincided with a deterioration in collection efficiency, delays in subsidy reimbursements, and billing gaps,” Sachdeva said. She said that while better billing has helped, sustained health requires "tariff rationalisation, continued smart meter rollout, feeder-level energy accounting, and disciplined collections."

In contrast, Punjab has seen its performance slip to 19.21% in FY25, largely due to "temporary dips in collection efficiency, delays in government subsidy payments, and seasonal agricultural consumption," according to Sachdeva. As of March 2025, Punjab had failed to install any of the nearly 9 million sanctioned smart meters under the RDSS.

India’s smart meter adoption varies for different states for a host of reasons, including execution issues, lack of skilled manpower for installations, and consumer resistance, particularly from non-urban, agri-focused areas.

The Bihar Turnaround

The state that has shown a surprise turnaround. The state slashed its losses to AT&C 15.51% in FY25 from 20.32% a year ago. The state has emerged as a leader in smart meter adoption.

Manoj Kumar Singh, Bihar’s energy secretary, attributed the success to “targeted interventions in billing and collection, digital systems and consumer services" that are beginning to deliver "tangible results." Bihar is now building an integrated data portal to analyse smart meter data, aiming for a 10% loss target.

The Bottomline For Consumers

AT&C losses are ultimately built into the final cost of power. These are, to some extent, as agreed by the state regulators, passed on to the end customers, and the rest builds up into the poor financial health of distribution companies. According to rating agency ICRA’s earlier estimates, suitable tariff hikes coupled with a reduction in AT&C losses below 15% was needed to eliminate the gap between what discoms earn as revenue and what they pay as cost of power, known as the ARR-ACS gap.

Either way, customers gain through improved tariffs or as taxpayers, as the majority of India’s discoms are still state-owned.

Next Stop: Below 10% ATC losses

Industry analysts such as Devaguptapu from CESP believe that the 10% target at the national level is achievable.

“The national number can improve. However, without DisCom-level granular accountability, the problem can remain “stuck” and continue to pull resources and attention,” he said a word of caution, as he expected the AT&C loss parameters to continue showing outliers.

“Considering the national average, some DisComs are likely to be the outliers, and these anomalies are likely to persist in the near future.”

To meet these targets, Sachdeva points out the National Electricity Policy (NEP) 2026 promotes “market-based procurement, virtual PPAs, separation of grid ownership and operation, competitive bidding for network expansion, and stronger focus on intra-state transmission where renewable bottlenecks are emerging.

However, execution remains the binding constraint. If the smart meters roll-out, if this rollout accelerates and is paired with cost-reflective tariffs, timely subsidy settlement by states, stronger billing and collection discipline, and improved utility governance, the conditions for sustained loss reduction will fall into place.”

At certain state levels, those like Singh from Bihar’s energy portfolio are already feeling optimistic, having had a head-start. In his recent press briefing, the state energy secretary noted Bihar’s plans for an integrated data portal to analyse smart meter data, with a target of reducing AT&C losses to 10% in the coming years.