Abstract

The menace of power theft is one that has hamstrung the electricity sector for decades. It inhibits social progress, affecting domestic, commercial and industrial consumers in varied magnitudes. Electricity suppliers are in financial turmoil as pilferers have caught up with modern metering systems. This Post seeks to analyse the underlying socio-political factors and economic repercussions of power theft. It examines the elaborate legal regime which regulates power theft management as well as the role of functionaries in curbing power theft and sustaining good governance in the sector. Further, it seeks to outline numerous technical and non-technical methods of power theft management. Lastly, it suggests revaluating the policy surrounding power theft management to face the uphill battle of catching the invisible thieves.

Introduction

Electricity is an indispensable facet of development and economic growth. As one of the largest consumers of electricity, India has been dependent on its power sector to a great extent. The demand for power in India has projected to grow at 5% per annum through 2030. [1] To keep abreast with the needs of this sector, which have been adumbrated by ambitious targets, the Government has to bring into effect an efficacious, resilient and financially robust system for power supply.
The mercurial supply of electricity can be, to a certain degree, attributed to theft. With the widespread occurrence of power theft, the lack of a robust vigilance mechanism and the hassle of identifying and booking offenders, power theft is child’s play for residential, commercial and industrial users alike. Power theft has racked up substantial financial losses for the Government as well as suppliers and licensees. This diminishes their capacity to maintain the infrastructure or invest in power generation, eventually leading to increased power shortages and dissatisfied consumers. Thus, the growing menace of electricity theft has presented itself as the clarion call for a coherent strategy for power theft management.

A. Means of Power Theft

The predominant reason for power theft is that it is cheaper to steal. Most pilferers easily tamper with meters and seals to stop the mechanical disk from functioning. Additionally, by illegally connecting to the fuse, they are able to bypass the meter, consequently preventing the recording of energy consumption. A common method of power theft is damaging or removing the meters. Electronic devices are used to stop the meter or reverse it by opening the meter without damaging the seal, which requires technical acumen and skill. Interfering with the equipment used for two-rate tariff is another technique to purloin electricity. [2] Moreover, squatters search for empty properties and utilise a connection of supply with a disconnected meter. [3]

An alternative method is bypassing the meter with the use of a cable. Illegally tapping wires and underground cables is done through the supply-side of the metering installation, which includes meter terminals, metering cables or service cable.

Pilferers have resorted to illegal terminal tapping of overhead lines on the low voltage side of the transformer. This method can be further classified into two: fish pole connections and flying connections. [4] Unauthorised use of electricity, for instance, extending the service connection for commercial or industrial purposes, is a form of power theft. Apart from billing irregularities and unpaid bills, misuse of electricity is unbridled.

B. Socio-political factors leading to power theft

Power theft is indeed an inescapable blight. Pilferers have moved ahead of the technology behind the Advanced Metering Infrastructure System, which involves smart meters and two-way communication networks. Power thieves use a remote system that can switch the electricity meter off, and no unit would be registered even when electricity was being consumed. [5] Almost 80% of the total pilferage comes from residential areas, whereas the remaining 20% comes from commercial and industrial sectors. [6]

Employee theft is not uncommon. Power utilities suffer due to the connivance of their employees and have imposed strict regulations for the same. In Meghalaya, the industries based at Byrnihat have concocted furtive mechanisms to steal electricity, allegedly with the help of officials of the Meghalaya Energy Corporation Limited. [7] An employee engaging in power theft in Haryana would face a hefty penalty under the Electricity Act as well as the Haryana Civil Service Rules of 2016. [8] Additionally, departmental action would be initiated against such employees.

Domestic users often engage in power theft to increase savings in utility bills and the consequential taxes on the basis of electricity consumption. In most rural areas, pilferage is rampant due to the unpredictability of electricity supply. To overcome regulations during power cuts and peak periods, as well as delay in resuming power connection, they resort to pilfering power. In such areas, power theft is seen as a sign of revolt against the officials, citing their inefficacy to justify stealing electricity. In the Bajitpur village, which reported over 49% loss, the raid team of Tata Power Delhi Distribution Limited, along with the local police, were met with attacks by local strongmen. [9]

Energy loss is usually higher where public services and agriculture are prominent. Considering the fact that agricultural lands are usually located far from generating stations and industries, heavy loss occurs, including theft. Technical losses are prevalent in less efficient systems as the power supply inevitably degrades over long distances. [10]

Tolerating theft is a manoeuvre often adopted by the ruling side. The lack of political will is embedded in the functioning of utilities as well. Laxness about revenue collection has proved to win votes for political parties, especially in rural and agricultural areas. Government officials have provided cheap or free electricity at the expense of charging industries higher. [11] As a result, they view free electricity as a matter of right. [12] On the other hand, industries and corporations that were charged more began to resort to theft to reduce cost.

C. Economic repercussions of power theft

Power utilities around the globe have suffered a loss amounting to $25 billion annually owing to power theft. [13] In developing countries, around 50% of electricity is lost through theft. [14] The Aggregate Technical and Commercial (AT&C) losses range from 15% to 65% across India, with an average of 34%. [15] Thus, the cost of pilferage was estimated at ₹20000 crore annually. [16]

The vicious grips of inefficiency, corruption and heavy subsidies have increased losses and run utilities to the ground, unable to pay for the power purchased. [17] Moreover, the loss resulting from power theft prevents the reduction of tariffs paid by consumers and subsidies provided for agriculture. It disallows access to electricity to the poor. Therefore, eliminating losses from power theft is a matter of improving the standard of living.  

Vigilance mechanisms have been particularly useful in collecting hefty fines for power theft. The distribution company (DISCOM) in Jaipur had uncovered over 28,000 cases of power theft and unauthorised use in a span of 5 months, from which they collected ₹91 crore in fines and revenue. [18]

Legal Regime governing Power Theft

Power theft is governed by a complex framework of laws encompassing the following: The Electricity Act of 2003, State Electricity Supply Codes, the National Electricity Policy, and the Tariff Policy. In addition to this, certain states have implemented guidelines for dealing with cases of unauthorised use and theft of electricity under Section 126 and 135 of the Electricity Act, respectively.

Section 135 covers a wide range of acts related to electricity theft. Under this provision, anyone who, with a dishonest intention:

i) taps or makes or causes to be made any connection with lines, cables, service wires or facilities of a licensee or supplier; or

ii) tampers a meter or installs or uses a tampered meter or any such device or technique to interfere with accurate or proper registration, calibration or metering or causes electricity to be stolen or wasted; or

iii) damages or destroys a meter, apparatus, equipment, or wire or causes them to be damaged or destroyed in order to interfere with proper or accurate metering; or

iv) uses electricity through a tampered meter; or

v) uses electricity for unauthorised purposes, will be subjected to imprisonment up to 3 years or fine, or both.

The section demarcates electricity theft that comes within 10 kilowatts or exceeds 10 kilowatts. Pilferers can be debarred from receiving electricity supply from any source or generating station for a period not less than three months, extending up to 2 years. Apart from this provision, Section 136 provides for theft of electric lines and materials, and Section 137 lays down the punishment for receiving stolen property.

Section 149 provides for offences by companies. In Haryana, authorities had detected around 2,500 cases of power theft during raids conducted at industries and commercial establishments. [19] Considering the fact that 30-35% of the electricity supplied was pilfered, the Government in 2007 had made offences related to power theft cognisable and non-bailable. [20] Further, Section 152 provides for compounding of the offence. It is generally allowed once per consumer.

Section 153 of the Act calls for the creation of special courts for the speedy disposal of offences covered by Sections 135 to 140 and 150. In U.P. Power Corporation Ltd. & Ors. v. Anis Ahmad, the Apex Court held that clear cases of electricity theft could not be decided by Consumer Fora when Special Courts have been constituted. [21] Before disconnecting electricity, the consumer must be given the opportunity to be heard, as held in M.P. Electricity Board v. Harsh Wood Products. [22]

A. Procedural requirements

Once power theft is detected, the officer of the licensee or supplier, as authorised for the purpose by the Commission, will disconnect the supply line of electricity. Thereafter, the officer is required to lodge a written complaint in the police station within 24 hours. The Act gives vast powers to the officer, including the power to search and seize any facilitator or article used for consuming electricity unauthorisedly in any place or premise. He can examine or seize any books of accounts or documents relevant to any proceedings in respect of the offence. Section 126 provides the modalities for assessing the electricity charges payable for unauthorised use of electricity.

Indeed, the Act provides protections for the accused as well. The occupant of the place of search is required to be present during the search, and a list of all things seized during the search is to be delivered and signed by the occupant. Inspection, search or seizure cannot be carried out between sunset and sunrise unless an adult male occupant is present. The provisions of the Code of Criminal Procedure are applicable with respect to search, seizure and investigation.

B. Electricity Supply Codes

The Electricity Supply Code in each state provides detailed procedures for booking a case of power theft, including the conduct of the inspection team and preparation of reports. Reports are required to indicate whether sufficient evidence is available to substantiate the theft of electricity on the basis of consumption patterns and related evidence. The prescribed Assessment Formula is to be used to assess the energy consumption. The Code(s) ensures that the suspected consumer is given the opportunity to be heard by the licensee or supplier. The Madras High Court had ruled that the Tamil Nadu Generation and Distribution Corporation cannot demand consumption charges and penalty in case of power theft by passing a final assessment order without issuing a provisional assessment order. It has to allow the accused to exercise his right to be heard. [23]

C. National Electricity Policy and Electricity Plan

The National Electricity Policy is the guiding policy underlying the electricity laws of the country. Despite having connected virtually every household in India with the national power supply grid, the sector is crippled by the manacles of increased AT&C loss, lack of planning and inadequate equipment maintenance, exacerbating power theft concerns. The Union Budget 2021 had highlighted a multitude of reforms for DISCOMs, with a budget of ₹3.05 trillion. [24] Against this backdrop, an expert panel has been set up by the Ministry of Power to prepare the Draft National Electricity Policy 2021. [25] Until now, the Central Government, upon the advice of the Central Electricity Authority, had revised it from time to time in consultation with the states. The Authority is in charge of preparing a National Electricity Plan in tune with the National Electricity Policy, which serves as a blueprint for the electricity sector. The National Electricity Plan mandates campaigns to monitor power theft under the UDAY scheme. [26]

The current National Electricity Policy focuses on the use of modern information technology systems to facilitate the establishment of a network information and customer database to assist in load management as well as theft and tampering detection. It aims to ensure prompt and accurate billing and collection with the support of the Accelerated Power Development and Reforms Programme (APDRP).

D. The Tariff Policy

Under the 2016 Tariff Policy, it has been stated that retail tariffs would reflect the relative efficiency of DISCOMs in procuring power at competitive costs, managing theft and reducing distribution losses. However, before doing so, State Governments have to make assignments taking care of various load profiles to ensure retail tariffs are uniform. [27]

To curb power theft, the Tariff Policy requires State Electricity Regulatory Commissions to mandate the use of the Supervisory Control and Data Acquisition (SCADA) system with distribution management and energy audit functions. Moreover, in the draft amendments, the provision with respect to the prescription of a Multi-Year Tariff dispensation with different levels of consumer tariffs linked to AT&C loss levels has been removed. [28] The Policy stated that this could generate the requisite political will for reducing power theft since the only option would be stiffer tariff increases. [29]

On the Qui Vive: Role of Authorities

India’s power sector has undergone sweeping reforms to minimise distribution losses and create a resourceful and accountable system of electricity supply. An unhesitating evolution was observed from the welfare model to the business model, under which electricity was seen as a commodity rather than a necessity. [30] After 1991, State Electricity Boards (SEBs) were rejigged to unbundle the generation, transmission and distribution segments. [31] Following the Electricity Regulatory Commissions (ERC) Act of 1998, ERCs were set up in each state to regulate the state power supply.
Power theft, which is deemed an internal non-technical loss, is regulated through a system of loss reduction strategies adopted by the various utilities across India. Loss monitoring units and energy audit cells collect and process information and recommend solutions. Trained and experienced personnel for loss monitoring and control are inducted into the system for this purpose.

Field vigilance is an essential function of the electricity supplier. Lack of investigation and inspection on the field leads to an increase in theft cases, incorrect billing, staff collusion with consumers, which in turn deteriorates the financial health of DISCOMs. Furthermore, major challenges faced with respect to meter reading include invalid meter reading due to installation of the meter at inaccessible places, error in recording, absence of quality checks, inaccurate posting of readings and data tampering, which immensely magnifies non-technical losses in the system.

The Gujarat Electricity Board has set up a vigilance department headed by an IPS officer in the rank of Additional Director General of Police, designated as the Director of Security & Chief Vigilance Officer (DSCVO). The Board has created squads working under the Additional Chief Engineer, whom the DSCVO controls. [32] Separate police stations are set up as well, specifically to deal with power theft cases in Surat, Baroda, Rajkot, Mehsana and Bhavanagar Zones.

Following a massive spike in theft cases in Maharashtra, a theft detection drive was launched by the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to improve its collection efficiency and handle corruption cases with a tight rein. Six dedicated police stations have been established to handle power theft cases. In November 2020, a drive launched by the Chief Engineer led to the capture of 728 consumers engaging in power theft with a total of 9 lakh units of electricity pilfered. [33] In 2021, MSEDCL had formed special squads in Pune to monitor residential, commercial and industrial areas. Around 1,096 cases of electricity theft were uncovered in 45 days, indicating a loss of ₹3.99 crore. [34]

The nomination of feeder managers has aided in regulating power theft. Responsibility for each feeder is given to specific personnel for controlling and managing the losses more efficiently. The MSEDCL feeder franchise scheme has a team of trained youth who are accountable for managing power theft as well as educating and sensitising consumers to pay bills in the interest of the state.[35]

Means of Power Theft Management

The methods for managing power theft can be broadly classified into two: Technical solutions and Non-technical solutions.

A. Technical solutions

Metering technology has come a long way, culminating in the present-day smart meters. Samuel Gardiner had attempted to measure energy using a lamp hour meter and a clock with a start-stop mechanism. The internal circuitry of such meters was simply a set of start-stop arrangements with an electromagnet, provided in series with the load of the end-user. [36] Thomas Edison invented the first fair form of measuring power, the electric chemical watt-hour meter in 1881. Around this time, German scientist Ferraris put forward the concept of induction meter. After a century of modifications, the metering scenario was revolutionised by semiconductor technology. [37] In 1970, electric registers and devices were introduced. Ten years later, hybrid meters containing electronic and induction systems were developed.

With the advent of technological advancement, India, in view of the National Smart Grid Mission, has implemented the Smart Meter National Programme under a ‘Build, Own, Operate, Transfer’ model of public-private partnership to replace over 25 crore conventional meters with smart meters. [38] A total of 2, 392,137 smart meters have been deployed as of April 23, 2021. [39] Wireless meter reading with an effective communication mechanism can drastically reduce the menace of power theft. However, the swift deployment of high technology metering at the feeder level as well as the consumer level requires a sound infrastructure. [40]

Through the High Voltage Distribution System (HVDS), Low Tension (LT) network in areas where power theft was rampant was replaced by High Tension (HT) network. Small capacity transformers were installed, which were closer to the load centres and covered few consumers. HVDS has enhanced reliability by localising faults and contributed to a better quality of supply. [41] In the Low Voltage Distribution System (LVDS), large capacity transformers are provided at one point, and the connections to each load are extended through long LT lines, resulting in high technical losses and poor consumer profile. HVDS reduces technical losses, thus helping suppliers meet the AT&C loss reduction targets. Further, the replacement of LT bare conductor with LT Aerial Bunched Cable has decreased direct hooking on the bare conductor, thereby reducing theft-driven commercial losses drastically. Providing a meter on the Distribution Transformer for agriculture consumers is another method to reduce power theft.

Billing irregularities and unpaid bills are minatory issues that affect the system. For the verification of energy billed from metered consumers, the utility’s billing database can be analysed for consumers with high past arrears or invalid geographical mapping. Comparing consumption patterns can help identify consumers with meagre Average Billing Rate (ABR) as well as unmetered consumers. In the case of assessment-based consumers, the billing database can be examined to search for spikes in consumption. Most importantly, consumer indexing and electrical network mapping technologies must adapt to the novel methods and techniques of power theft.

B. Non-technical solutions

The inspections and raids conducted by vigilance teams of suppliers across India have been successful in exposing power theft. It is often centred around locations or facilities that have significant potential for power theft in terms of electricity use. Apart from rural areas, urban localities must be targeted, wherein power theft is common among industrial and commercial users. It is unfortunate that the poor are often singled out for inspection. The vigilance mechanism has two major hurdles to cross: Firstly, employees are scattered across the region, which makes monitoring and managing an incommoding hassle and; secondly, the connivance of employees with respect to power theft arising due to various psycho-social factors, which impairs the vigilance mechanism from the core.

To counter these issues, employee incentive schemes have been put in place. The MSEDCL had paid 10% of the incremental revenue to its employees. [42] In Haryana, the Performance-Based Group Incentive Scheme was created based on fair and equitable sharing of gains between DISCOMs and the subdivisions that contribute to the reduction of AT&C losses. [43] In addition, programmes for employee capacity building have been used to train and equip them with managerial skills, technical expertise, safety training, performance benchmarking, quality and financial management, as well as commercial and consumer behaviour and patterns related to power theft. The Restructured Accelerated Power Development and Reforms Programme (R-APDRP) emphasises capacity building as well.

For consumers, theft reporting incentive schemes have been established in various states. Consumers that report power theft are rewarded with a percentage of the amount realised. Moreover, public awareness programs through advertisements and videos can educate the masses regarding increased penalties for the offences related to power theft. Further, public participation must be encouraged to help utilities reduce financial losses. Community engagement through workshops and meetings can be a propitious tool to inform and devise methods to curb power theft and reduce losses. Power theft as a ‘way of life’ must be reduced to a mere ‘fact of life’ that should be wholly eliminated from the electricity sector. [44]

The ultimate solution to power theft is guaranteeing the supply of cost-effective, reliable, quality power. Theft is interlinked with governance, socio-economic factors and political considerations. Corruption and power theft thrive off each other. The plans and schemes put in place must be based on an exhaustive study of the specific nature of power theft.

Conclusion

The road to revolutionising power theft management entails promoting good governance in the sector. The institutional design of suppliers and licensees must involve a partnership with civil society to sufficiently address socio-economic determinants. Regulation of charges should ideally cover the interests of the utility, investors, consumers and the Government, which might be far-fetched in practice. Electricity theft is an offshoot of mal-governance. [45] Creating an independent, non-partisan governance framework would require holding the regulators accountable for setting the environment that improves the performance of suppliers.

Further, a shift in the political attitude and perception of the masses is crucial to deter power theft and prevent violent tendencies of rural consumers against inspection teams. The effectiveness of the vigilance mechanism is underpinned by the quality of public service, competence and expertise of officers, as well as independence from political pressure.
As stated by Christopher Flavin, “The real potential of electricity lies not in providing social amenities but in stimulating long-term economic development.” To this end, power theft management should modulate the ebb and flow of electricity to untether cascades of innovation and technological advancement. However, the question of whether this fosters a better quality of life still remains to be seen in the future.

About the Authors

Swarnendu Chatterjee, AOR, Supreme Court of India and Managing Associate-L&L Partners, New Delhi.

Hamna Viriyam is a 3rd Year Law Student at the National University of Advanced Legal Studies (NUALS), Kochi and is an Associate Editor at IJPIEL.

Editorial Team

Managing Editor: Naman Anand

Editors-in-Chief: Akanksha Goel & Aakaansha Arya

Senior Editor: Aakaansha Arya

Associate Editor: Hamna Viriyam

Junior Editor: Swadha Sharma

Preferred Method of Citation 

Swarnendu Chatterjee and Hamna Viriyam, “Power Theft Management: The India Chapter – Is it Time for a Refurbishment” (IJPIEL, 11 May 2021)

<https://ijpiel.com/index.php/2021/05/10/power-theft-management-the-india-chapter-is-it-time-for-a-refurbishment/?et_fb=1&PageSpeed=off>

Endnotes

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[3] Id.
[4] Vinay Kathera, Power Theft in India, ENERGY CENTRAL (Oct. 28, 2019, 12:22 PM), https://energycentral.com/c/um/power-theft
[5] Ashish Roy, Power theft via ultra-modern device detected, TIMES OF INDIA (June 1, 2012, 5:21 AM),
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[6] G SREENIVASAN, POWER THEFT (4th ed. 2016)
[7] Probe unearths massive power theft at Byrnihat Industrial Area, ASSAM TRIBUNE (Apr. 9, 2021,
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[9] Delhi discom claims annual loss of Rs 150 crore due to power theft, TIMES OF INDIA (Sept. 29, 2018, 4:37 PM), https://timesofindia.indiatimes.com/city/delhi/delhi-discom-claims-annual-loss-of-rs-150-crore-due-to-power-theft/articleshow/66006574.cms
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[15] Supra note 12.
[16] Supra note 12.
[17] ARUNDHATI ROY, POWER POLITICS: THE REINCARNATION OF RUMPELSTILTSKIN (2001)
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[19] Sukhbir Siwach, Power theft raids: How they happened, and why Haryana govt carried them out, INDIAN EXPRESS (Mar. 1, 2021, 9:45 AM), https://indianexpress.com/article/explained/power-theft-raids-how-they-happened-and-why-haryana-govt-carried-them-out-7209166/
[20] Cabinet approves amendment to make power theft cognizable offence, ECONOMIC TIMES (Dec. 19, 2006, 3:23 AM), https://economictimes.indiatimes.com/industry/energy/power/cabinet-approves-amendment-to-make-power-theft-cognizable-offence/articleshow/843872.cms?from=mdr
[21] U.P. Power Corporation Ltd. & Ors. v. Anis Ahmad, (2013) 8 SCC 491.
[22] M.P. Electricity Board v. Harsh Wood Products, (1996) 4 SCC 522.
[23] TANGEDCO cannot demand consumption charges with penalty: Madras HC, THE HINDU (Aug. 13, 2016, 3:09 PM), https://www.thehindu.com/news/national/tamil-nadu/TANGEDCO-cannot-demand-consumption-charges-with-penalty-Madras-HC/article14568173.ece
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[26] National Electricity Plan-Volume 1, Ministry of Power, 2018,
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[27] National Tariff Policy, Ministry of Power, 2016.
[28] Draft Amendments to Tariff Policy, Ministry of Power, 2018,
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[29] Supra note 27
[30] Vasant Surdeo, Power Sector Policies in India: History and Evolution, JINDAL J. OF PUBLIC POLICY,
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[31] Best practices and strategies for distribution loss reduction: Final Report, Forum of Regulations (July 2016), http://www.forumofregulators.gov.in/Data/study/11.pdf
[32] GUVNL Vigilance Department, https://www.guvnl.com/vigilance.html
[33] Somit Sen, Maharashtra: Power theft of more than 9 lakh units detected by MSEDCL, TIMES OF INDIA (Dec. 4, 2020, 9:01 PM), https://timesofindia.indiatimes.com/city/mumbai/maharashtra-power-theft-of-more-than-9-lakh-units-detected-by-msedcl/articleshow/79570217.cms#:~:text=Maharashtra%3A%20Power%20theft%20of%20more%20than%209%20lakh%20units%20detected%20by%20MSEDCL,-Somit%20Sen%20%7C%20TNN&text=A%20drive%20conducted%20by%20chief,was%20found%20to%20be%20pilfered.
[34] Dheeraj Bengrut, 1,096 electricity theft cases lodged in Pune district, HINDUSTAN TIMES (Feb. 3, 2021, 4:41 PM), https://www.hindustantimes.com/cities/pune-news/1096-electricity-theft-cases-lodged-in-pune-district-101612350714084.html
[35] Supra note 31.
[36] Supra note 6.
[37] Supra note 6.
[38] Smart Meter National Programme (SMNP), ENERGY EFFICIENCY SERVICES LIMITED, https://eeslindia.org/en/smart-meters/#:~:text=Smart%20Meter%20National%20Programme%20aims,tool%20in%20power%20sector%20reforms.
[39] Smart Meters (Nos.) Installed in India, NATIONAL SMART GRID MISSION, https://www.nsgm.gov.in/en/content/sm-stats
[40] Supra note 14.
[41] Supra note 31.
[42] Report on Loss Reduction Strategies, Forum of Regulators (2008), https://forumofld.in/download/for-report-on-loss-reduction-strategy-11.11.2008/?wpdmdl=311
[43] Study to evolve an appropriate model of incentive-disincentive mechanism for Distribution Utilities: Final Report, Forum of Regulators (2010), http://forumofregulators.gov.in/Data/study/Final_report_incentive_mechanism.pdf
[44] Supra note 14.
[45] Supra note 14.