Performance evaluation of Indian electricity distribution companies: an integrated DEA-IRP-TOPSIS approach

Abstract

Energy is a fundamental building block of human growth and plays a significant role in developing emerging economies such as India. The Indian electricity sector has a strong generation and transmission system but a weak distribution system. This is considered the weakest link in the electricity sector's value chain, and regulators are primarily concerned with the performance of electricity distribution companies (DISCOMs). Despite numerous reforms introduced to attain financial sustainability, most DISCOMs consistently incur losses and are financially unsustainable. Therefore, evaluating the performance of DISCOMs is essential by measuring their efficiency to ensure competition among them and to make reforms successful. This study aimed to identify and compare the performance efficiencies of 48 electricity DISCOMs from 24 states across India between 2015/16 and 2018/19. This study used the integrated DEA-IRP-TOPSIS technique to segment efficient and inefficient DISCOMs. The study recommends that states provide operational and financial autonomy to power Discoms. The study will be helpful for DISCOMs professionals to understand their performance and design suitable strategies based on efficiency assessments and their position concerning their peers. By comparing Indian DISCOMs with their contemporaries, this study contributes new evidence at the policy level and to the literature on the efficiency analysis of Indian DISCOMs.