New Delhi, Sept. 16 -- An average tariff hike of 4.5 per cent coupled with a reduction in aggregate technical and commercial (AT&C) losses below 15 per cent is essential to eliminate the gap between the average cost of supply (ACS) and average revenue realisation (ARR) for power distribution companies (discoms), rating agency ICRA noted on Tuesday.

According to ICRA, the all-India ACS-ARR gap stood at 46 paise per unit in FY2024, which is causing stress for the distribution segment. While tariff orders for FY2026 have been issued in 23 out of the 28 states, the median tariff hike was limited to just 1.9 per cent.

The rating agency flagged that the regulatory assets (RA) of seven major state discoms remain elevated at around Rs 3 lakh cr...