The suggestions of the committee, to be headed by former CAG V K Shunglu, will be used as input for the 12th Five Year Plan (2012-17), according to sources.
As per the terms of reference, the panel will assess the financial position of distribution companies and state electricity boards, and project losses between 2010 and 2017.
Besides, it will review the managerial structure of the utilities and "recommend a plan of action to achieve financial viability in distribution of power by 2017," the sources said.
The panel includes former food secretary S K Tuteja, chiefs of Power Finance Corporation, Rural Electrification Corporation, Central Electricity Authority and representatives of SEBs and distribution companies.
It will submit the report by February 28, 2011.Planning Commission Principal Advisor (Energy) Pronab Sen will be convenor of the committee.
The Prime Minister, while addressing a meeting of the National Development Council (NDC) on July 24, had expressed concern over mounting losses in the power sector and asked Chief Ministers to pay personal attention to the problems as such huge losses were not sustainable.
"These (power sector) losses arise from low levels of aggregate technical and commercial (AT&T) losses. The total loss in 2009-10 is estimated at Rs 40,000 crore... This is simply not sustainable and unless corrected it will make the whole power sector unviable", Singh had said.
He had further stated, "power sector is particularly important if we want to achieve 9 per cent growth. There are problems in the sector. One of these problems is the need to reduce the high level of losses in the utilities."
The mid-term appraisal of the 11th Five year Plan (2007-12), which was approved by the NDC on July 24, too had pointed out that the weakness in the power sector.
The MTA also indicated that AT&T losses have been coming down but a lot slower than was targetted and currently stood at about 30 per cent.The losses are as high as 51 per cent in Jharkhand, 45 per cent in Madhya Pradesh and 40 per cent in Bihar.
Among other things, MTA suggested the meter-ing of free power to farmers and upfront subsidy by States and separation of (power) feeders in rural areas as done in Gujarat, Rajasthan.