Utility reforms in developing countries: Learning from the experiences of Delhi

• The viability of power distribution companies (Discoms) is key to successful power sector reforms.
• In developing countries, traditionally, the distribution has been affected by sub economic price levels as well as large losses of the supplied power.
• Delhi, the capital of India, presents an interesting case study with significant improvements in performance following reforms.
• We present study of Delhi's power distribution before and after reforms and the challenges that the reforms face.

The power sector reforms of Delhi, the capital of India presents an interesting case in the evolution of power sector reforms in India, targeting improvements in distribution side. The Delhi reform design has benefitted from the experience of an earlier partially successful experiment in the state of Orissa. The reform format has tried many new ideas such as defining Aggregate Technical and Commercial (AT&C) losses, auctioning of Discoms based on highest AT&C loss reduction, direct privatization and transitory support provision. In the span of a little more than a decade from the year 2002, there has been tangible progress on many fronts. Other utilities planning the reforms may benefit from this experience. However, newer challenges such as an unexpected increase in power purchase costs with limited scope of passing these costs to the end customers seem to have emerged in the recent years. The paper ends with a cautionary note that for any utility not having access to lower cost power, the distribution reforms will reach a dead-end unless a competitive market is created at the generation side too.