Rating Framework and Scoring Methodology

Rating Framework - State and Private Utilities
Rating Framework -
State and Private Utilities
Detailed Methodology for 12th IR Report
Financial Sustainability 75%
ACS - ARR Gap (cash Adjusted) 35
Days Receivable3
Days Payable to GenCos & TransCos10
Adjusted Quick Ratio10
Debt Service Coverage Ratio (cash adjusted)10
Leverage (Debt/ EBIDTA) (cash adjusted)7
Performance Excellence 13%Performance Excellence
13%
BIlling Efficiency5
Collection Efficiency5
Distribution Loss (SERC approved)2
Corporate Governance1
External Environment 12%
Subsidy Realized (Last 3 FYs)4
Loss Takeover by State Government3
Government Dues (Last 3 FYs)3
Tariff Cycle Timelines1
Auto Pass Through of Fuel Costs1
Specific Disincentives 1, 2
Auditor's Adverse Opinion		-15
Availability of Audited Accounts		-15
Default to Banks / FIs		-15
Audit Qualifications-4
Governance (Audit Committee, Exclusive MD & DF, Quarterly Accounts)-3
Tariff Cycle Delays-4.5
Tariff Independent of Subsidy-1
Uncovered Revenue Gap (Current Year)-4
Regulatory Assets 3-5
Note:
  1. The cumulative impact on the integrated score from all Specific Disincentives will be capped at -10 points, except in the case of Red card metrics
  2. Red card metrics carry a heavy disincentive score which is not capped under the limit for Specific Disincentives and results in ineligibility for A+, A grades
  3. Increase in cumulative regulatory assets balance will result in ineligibility for A+, A and B grades
  4. Any utility placed under SMA-2 (in the current quarter) (i.e overdue for 60 days or more) is directly downgraded to D grade

Rating Framework - Power Departments
Rating Framework -
Power Departments
Financial Sustainability 55%Financial Sustainability
55%
ACS - ARR Gap (cash Adjusted) 55
Performance Excellence 35%Performance Excellence
35%
BIlling Efficiency10
Collection Efficiency10
Distribution Loss (SERC approved)10
Corporate Governance5
External Environment 10%
Subsidy Realized (Last 3 FYs)6
Tariff Cycle Timelines2
Auto Pass Through of Fuel Costs2
Specific Disincentives
Tariff Cycle Delays-4.5
Tariff Independent of Subsidy-1
Uncovered Revenue Gap (Current Year)-4
Regulatory Assets3-5

Scoring Methodology

Score

Integrated Rating Score derived basis performance on 15 base rating metrics and 9 specific disincentives for DISCOMs
Integrated Rating Score derived basis performance on 8 base rating metrics and 4 specific disincentives for Power Departments

Rank

Rank of the DISCOM is based on the Integrated Rating Score and Grade.

GradeRating ScoreAdditional overriding ACS-ARR gap condition
A+
Greater than or equal to 85Gap should be less than or equal to 0 paisa/kWh i.e., surplus
A
Greater than or equal to 65 and less than 85ACS-ARR Gap should be less than or equal to 15 paisa/kWh
B
Greater than or equal to 50 and less than 65ACS-ARR Gap should be less than or equal to 50 paisa/kWh
B-
Greater than or equal to 35 and less than 50ACS-ARR Gap should be less than Rs. 1.0/kWh
C
Greater than or equal to 15 and less than 35
C-
Less than 15
D
Utilities under SMA-2 (in the current quarter)