In a key policy clarification aimed at strengthening the financial sustainability of power distribution utilities, the Ministry of Power (MoP), through a letter dated 28 November 2025, has advised all State Electricity Regulatory Commissions (SERCs), Joint Electricity Regulatory Commissions (JERCs), and the Forum of Regulators (FOR) to allow recovery of smart metering expenses while determining tariffs for DISCOMs.
The advisory underscores that smart metering is a critical enabler of cost-reflective tariffs, improved billing efficiency, and reduction in Aggregate Technical & Commercial (AT&C) losses. Given the scale of investment involved in Advanced Metering Infrastructure (AMI), the Ministry has emphasized the need for regulatory clarity to ensure that legitimate costs incurred by DISCOMs are duly recognised in tariff orders.
MoP has further clarified that, as per the Central Electricity Authority (CEA) guidelines dated 30 January 2025 on Operation & Maintenance (O&M) norms for DISCOMs, reimbursement of expenses related to AMI and smart metering is recommended on a TOTEX basis—that is, considering the Total Expenditure comprising both Capital Expenditure (CAPEX) and Operational Expenditure (OPEX).
The TOTEX approach marks an important shift from traditional CAPEX-only or asset-centric recovery models. By allowing both upfront infrastructure costs (such as smart meters, communication networks, and IT systems) and recurring expenses (including data management, system maintenance, and service fees) to be recovered in tariffs, regulators can better reflect the true cost of digital distribution operations.
This clarification is particularly relevant as DISCOMs across India accelerate smart meter deployment under national programmes and utility-led initiatives. Without adequate tariff recognition, many utilities face cash-flow constraints despite operational improvements delivered by AMI, such as improved billing accuracy, faster outage detection, and better demand analytics.
By advising SERCs and JERCs to align tariff determination with CEA’s O&M norms, the Ministry of Power aims to bring regulatory consistency, encourage faster adoption of smart metering, and support DISCOMs in transitioning toward financially viable and digitally enabled distribution systems. The move is also expected to strengthen investor confidence in AMI service models and support long-term reforms in India’s power distribution sector.
