CAG begins first integrated audit of 39 state power discoms, with a 10,000-consumer survey

The Comptroller and Auditor General of India has begun its first integrated audit of the operational and financial performance of 39 public-sector power distribution companies and five state power departments, according to reports of the auditor’s briefing on November 12, 2026. State-wise reports are expected next year.

The exercise covers five years of data and involves 28 officers. It comes as the companies, known as discoms, carry accumulated losses above ₹3.41 lakh crore and outstanding borrowings above ₹7.26 lakh crore as of the end of March 2025, with an annual interest bill of ₹77,653 crore.

What the audit will examine

The CAG has set a common method for all states so that local findings can be added up into a national picture. The indicators include aggregate technical and commercial (AT&C) losses, billing efficiency, collection effectiveness, power supply performance and the financial sustainability of each company.

Short-term power procurement is in scope, including electricity bought through power exchanges. The audit also looks at demand forecasting, metering and regulatory accounting, which preliminary analysis has linked to the stress in discom finances.

The Centre’s Revamped Distribution Sector Scheme (RDSS) is folded into the same audit, so its implementation and outcomes will be assessed alongside the discoms it was meant to repair.

For the first time in an audit of this kind, about 10,000 consumers across categories and regions will be asked to rate the quality of service they receive. The CAG designed the audit matrix and a common sampling method after consultations with state audit offices, power secretaries, utilities, regulators, the Central Electricity Authority and the Central Electricity Regulatory Commission. The Indian Institute of Management Ahmedabad is helping with the audit strategy and with gaps in capacity.

The discoms under audit

• ₹3.41 lakh crore accumulated lossesPosition at the end of March 2025.
• ₹7.26 lakh crore borrowings outstandingDebt carried by the distribution companies.
• ₹77,653 crore annual interest burdenThe cost of servicing that debt.
• 10,000 consumers surveyedAcross categories and regions.

The money behind the audit

The reported figures for 2024-25 show a split sector. 41 discoms reported combined profits of ₹32,661 crore, while 23 reported combined losses of ₹29,959 crore. These totals count more utilities than the 39 now under audit, and the reports do not explain the difference.

A senior official involved in the exercise said revenue grants from governments have grown more than four times as fast as capital grants. In effect, public support is increasingly going to cover losses, debt and interest rather than to build new networks, the official said.

One report on the briefing, citing the same figures, said 24 discoms had negative net worth in March 2025 and that the national average AT&C loss was 15.04% in 2024-25, with 27 discoms missing the prescribed benchmark. That account has not been matched with a second source, so the numbers should be read with care.

How we got here

The Ministry of Power’s 14th Annual Integrated Rating of power distribution utilities, released in January 2026, covered 65 of 73 utilities and power departments. Gujarat’s utilities and Odisha’s private discoms ranked at the top, while utilities in Telangana and Jharkhand were among the weakest.

The audit is the first to use a single design across the country, with a consumer survey attached to it. The auditor chose distribution first because discoms are the point where the power sector meets consumers, an official said at the briefing.

Our earlier reporting on the sector includes the Union government’s push on renewable investment and the strike that disrupted supply in Haryana.

Why it matters to consumers

Distribution is mainly a state responsibility, so discom losses end up in state budgets and, often, in tariffs. Metering, billing and collection decide what a household is charged and how often supply is cut. A common audit across states gives legislatures and the public a comparison that no single state report could provide, and the consumer survey adds a measure of service that balance sheets do not carry.

What happens next

Findings for each state will go to its legislature as a State Audit Report, and one account says they are expected to be tabled in the second half of 2027-28. Common and systemic problems will be consolidated and sent to the Ministry of Power for policy action.

The distribution audit is the first phase of a four-year programme. The CAG plans to extend it later to transmission, generation and renewable energy.