When APSEB came into existence in 1959, APSEB started functioning with the objectives of maintaining the power sector efficiently and economically simultaneously ensuring demand meets the supply.
During the last decade inadequate capacity addition and low system frequency operation of less than 48.5 Hz for more than half a decade considerably reduced the power supply reliability.
The imbalance of the revenues against the cost of production, no significant reduction in technical losses and energy thefts, high cost purchases from IPP's, other SEB's gradually worsened the financial position of APSEB
HIGH LEVEL COMMITTEE AND ITS RECOMMENDATIONS
Government of Andhra Pradesh realizing the declining tendency of the financial position of APSEB and considering the Government of India's Liberalized policy for attracting private investment into power sector, set up a high level committee in January 1995 to look into present working of the APSEB and suggest remedies for improvement. The committee after detailed deliberations with all the concerned and critical analysis submitted the report in which it suggested some recommendations
Government of Andhra Pradesh considering the recommendations made by committee had embarked upon the AP Electricity REFORMS ACT in 1998.As a sequel the APSEB was unbundled into Andhra Pradesh Power Generation Corporation (APGENCO) & Transmission Corporation of Andhra Pradesh Limited (APTRANSCO) on 01.02.99. APTRANSCO was further unbundled w.e.f. 01.04.2000 into "Transmission Corporation" and four "Distribution Companies" (DISCOMS).Thus APGENCO was incorporated as a company under the provisions of Companies Act, on 29.12.1998. According to the Andhra Pradesh Electricity Reforms Act, 1998, APGENCO commenced its business operations effective from 1.2.1999 and according to the memorandum of Association APGENCO has to Acquire, Establish, Construct and Operate Power generating stations.