RENOIR - Best Practice - Improving Efficiency and Profitabil

‘Improving Efficiency And Profitability
In Distribution’
POWER SECTOR
Renoir Consulting Limited

December 2003
Current Indian Scenario – Distribution
• Estimated level of billing efficiency of 55%

• Estimated collection efficiency of 41%
• Estimated total cost of inefficiency of Rs 57000 crores
• 2001-2002 SEB losses of Rs 33000 = 1.5% GDP
• SEB lose 110 paise for every unit of electricity sold
(SOURCE: MINISTRY OF POWER APDRP OVERVIEW)
2003 © Renoir Consulting Limited

• Since 1994-95 _SEB has claimed that it has carried out regular audits
of ‘Express Feeders’ (Go_1996).
• _SEB re-iterated this claim in its tariff proposal submitted in March

2000.
• It repeated this claim again in the proposal submitted August 2001.
• August 2001 _SEB made available six months of data for 220
‘Express Feeders’.
• Out of a total of 1320 data points (ie six months multiplied by 220
feeders) nearly 45% of these data points indicate loss figures that are
either less than –0.5% or greater than +5%! (Prayas 2001).

• This is striking because, usually, the technical losses on such type of

feeders is usually 1% to 2%.
• This implies either ineffective metering, commercial losses or

excessive technical losses.
• This is a clear indication of _SEB failure to carry out effective metering

even for these 220 ‘Express Feeders’.
• It is worthwhile to note that these 220 ‘Express Feeders’ account for

nearly 20% of _SEBs yearly revenue (considering a HT industrial tariff
of Rs 4.2 unit).
(Prayas 2001)

“There is a lack of accountability in distribution,

outdated rules, regulations, management structures,
and practices…..unless you establish accountability at
all levels, you can never improve performance”.
Mr Suresh Prabhu – Union Minister
Source: Financial Express 18 March 2002

C
u
s
to
m
e
rs
N
o
t
in
C
IB
S
U
n
b
il
le
d
U Records do not exist
n
?
d
e
r-
b
il
le
d
Lost in CIBS
D
e
b
to
rs
B
a Theft/Faulty Meter
d
D
e
b
ts
Non-Technical Loses
Outstanding
O
p
p
o
tu r

Not n
followed up
it
Cash flow
y
The Issues Illustrated – Non-Technical
Opportunity
Technology of Change
6 stage process
Change Sustaining
Definition Development Installation Results
Management Results

6 stage process
Change Sustaining
Management Results
• Process
• The Issues
• System
• Training
• Structure
• Creative Tension
• 4 Stages
• Minds Path
• Measurement
• Time Frame
• Behaviour
6 stage process
Change Sustaining
Management Results
• Process
• The Issues
• System
• Training
• Structure
• 4 Stages
• Minds Path
• Measurement
• Time Frame
• Behaviour
Public Sector Customer Service Issues
•Many customers details were not in customer information billing

system (CIBS).
•Many customers were in the billing system but no bills were
sent.
•The customer address information was sometimes incorrect.
• Formal procedures for disconnection were not always
observed and practices varied by zone.
• There were differing practices in the zones of the same
organisations concerning the selection of accounts to
disconnect.
• Disconnectors often spent time waiting for disconnection and
reconnection notices to be produced.
• There was normally extensive daily planning, but little weekly
or monthly planning to control work.

Public Sector Customer Service Issues
• Meter readers had stopped completing Irregularity Reports

(IRs) for faulty and tampered meters because they were not
being used to take action.
• Meter readers were often seen as solely responsible for
customer billing. There were many customer contact points that
the MRs did not control where customer billing should have
happened. No-one else was being held accountable.
• In Shops, tellers used to ask ‘how much do you want to pay’
providing the customer with the opportunity not to pay the full
bill.
• There was a substantial debtors problem across all customer
types. The enforcement mechanisms laid down by the
Electricity Acts were not being followed and this was resulting in
customers building up debts sometimes in excess of 1 year and
millions of dollars.
Public Sector Network Service Issues
• The supply network and maintenance systems in place were

not adequate to provide the levels of supply reliability demanded
by the nations.
• Often a lack of information, particularly at middle management
level upon which to make business decisions.
• Often a lack of accountability/ownership, particularly at
supervisory level for problems that arose. Typically, a
breakdown was always someone else’s fault and someone
else’s problem.
• Critical elements were often missing from the maintenance
management frameworks. There were often no measures of
mean-time between failure (MTBF) at a component level to
facilitate effective preventative maintenance.

Public Sector Network Service Issues
• There was generally a lack of accountability for restoration

performance unnecessarily increasing customer outages.
• Organisations had a substantial number of projects in progress
at the same time and needed to reduce these numbers to
improve lead times for improving supply reliability and reduce
cash flow requirements.
•There was normally no established discipline of carrying out
root cause analysis of re-occurring problems.
• A general lack of co-ordination across departments.
• There was a general culture of lack of accountability and
performance orientation.

6 stage process
Change Sustaining
Management Results
• Process
• The Issues
• System
• Training
• Structure
• 4 Stages
• Minds Path
• Measurement
• Time Frame
• Behaviour
Behaviour Change
What is the definition of madness?
“ Doing what you have always done and

thinking somehow magically performance
will improve”

Stage 2 - Development
Internal Business Framework
Activities Processes
Information Systems
Behavioural Results
Change
People Structures
Training Education

Sub Process Example: Disconnection Issue
Management
Government Special
JBE
Accounts Letter
Counter
Faulty Meter W/O 30
Clerk
Cross Meter Counter Back billing

W/O 90 UPJ
Clerk NTL
Disconnection
Direct Illegal Theft
Restoration Clerk
Unpaid &
W/O Close Account
Access Vacated
40 Deduct Deposit
Found Supply Unpaid & Clerk
Disconnected Vacated
Higher Level Disconnected Unbilled Team
No Access
Disconnection Account Status Follow-up
Metered Illegal
Restoration
Higher Level Disconnection
Disconnectionn Expense
Slap-on
No Access
Notice
Address Not Found Take to MRE Next MR To Check

Process Planning

Process Planning

Process Planning

Management Control Systems Development

Performance Measurement
KPI Format (Weekly Report)

Standard Operating Procedures

Change - Stage 3
Change Sustaining
Management Results
• Process
• The Issues
• System
• Training
• Structure
• 4 Stages
• Minds Path
• Measurement
• Time Frame
• Behaviour
Stage 3- Installation
Training Tools - Skills Matrix Figure indicates the %

Multiskill attained by a
area/ division/ region.
Skill Matrix for TSSL
% Multi-Skill attained by area 90.0 Figure indicates

the %skill
attained by
% SKILL ATTAINED BY INDIVIDUAL 100.0 0.0 100.0 100.0 100.0 100.0 100.0 100.0 individual.
100.0 100.0
Prashant Nagle
Rajesh Jadhav
Sanjeev Singh
Jagdish Anne
% TRAINED
PEO PLE BY MULTI-SKILL
SKILL
The individual
90.0 Influencing Skills
T UT TR TR TR TRto be
TR trained
TR TR TR
90.0 Team Building

T UT TR TR TR TR TR TR TR TR
% people 90.0 Team Motivation
trained for T UT TR TR TR TR TR TR TR TR
particular skill 90.0 Change Management

T UT TR TR TR TR TR TR TR TR
The skill required
by individual
Training Modules
• Technology of Change
• Active Supervision
• Managing with numbers
• Training Skills
• Communication Skills
• Time Management
• Team Building
• Management Systems

Creative Tension
Effective Meetings
Structure and set up
Information Action solving root causes
Individuals responsible
Transparency Confrontation
Systems Positive Confrontation
To provide accountability
To change behaviour
Procedures
Problem Analysis
Root Cause, not symptoms
Accountability 5 Why analysis
Determination, not deferral

Change - Stage 4
Change Sustaining
Management Results
• Process
• The Issues
• System
• Training
• Structure
• 4 Stages
• Minds Path
• Measurement
• Time Frame
• Behaviour
Change Assessment Management System (CAMS)
Where Most Things Go Wrong!
The lack of awareness and understanding that a successful change

process has to go through ‘four changes in mindset’ is a common
reason why many strategic change programmes fail…
We also make false assumptions about peoples ability to adhere to new

ways of working, and to manage and accept change.

The Four States of Mind!

…No shortcuts possible...
The Four States of Mind! Renoir Minds Path Matrix

Incompetent Competent Incompetent Competent
Conscious
Conscious
Support Coach Understanding Usage
Unconscious
Unconscious
Direct Delegate Compliance Culture

The Key to Success!
The secret to successful change management is to be able to assess

and measure your progress through the ‘minds path’.
“ If you can’t measure it, you can’t manage it.”
The four mindsets must be measured by auditing.
Auditing is a quantitative measure of a qualitative thing!

Measuring the Four Mindsets
• Audit questionnaires are developed to assess the mindset levels using a

structured approach:
1. Closed ended questions for compliance.
2. Open ended questions for understanding.
3. Demonstrative questions for usage.
• The audit questionnaire answers get converted into a scoring scheme…

• 0 for wrong or not done.
• 1 for partially right or partly done.
• 3 for correct or demonstrated.
• The percentages of each system performance category are plotted
• The target is 100%.
Installation Status
Installation Status
100%
90%
80%
70%
Achievement
60%
50%
40%
30%
20%
10%
0%
-5 -4 -3 -2 -1 0 Current
Period
Installed Partially Installed Not Installed System Utilization Status
100%
80%
Achievement
60%
40%
20%
0%
-5 -4 -3 -2 -1 Current
Period
Mechanical Understanding Usage

Change - Stage 5
Change Sustaining
Management Results
• Process
• The Issues
• System
• Training
• Structure
• 4 Stages
• Minds Path
• Measurement
• Time Frame
• Behaviour
Section 1
System Performance

System Performance – LV Breakdowns
Project Headlines As At End October 2000
Reduction In Breakdowns (No. LV Breakdowns). (25% improvement).

Base (Date) Current Target Imp
270 (03/99) 115 135 57.4%
366 (12/99) 253 170 30.9%
64 (03/00) 53 11 17.2%
46 (03/00) 47 14 -0.1%
218 (03/00) 71 54 67.4%

0
9
/0
4
/0
100
150
200
250
300
0
50
0
2
3
/0
1
1
2
2
3
3
4
0
5
0
5
0
5
0
0
0
0
0
0
/0
5
0
0
0
0
7
/0
5
/0
0
2
1
/0
B
5
a
3
s
2
e
/0
8
0
0
4
/0
6
/0
0
1
6
/0
6
/0
0
3
0
/0
6
/0
0
1
4
/0
7
/0
0
LVB
4
2
8
wk
/0
a
7
v
1
/0
4
0
3
0
8
/1
1
/0
reakdow
0
2
5
/0
8
/0
0
0
9
/0
8
n(Johor)
/0
0
2
2
/0
9
/0
0
1
0
/0
T
a
6
r
g
/0
et
0
7
9
2
0
/1
0
/0
0
0
3
/1
1
/0
0
1
7
/1

1
/0
0
0
LV Breakdowns
1
/1
2
/0
0
1
5
/0
8
base
56%
/0
0
2
9
/1
2
/0
0
1
2
/0
% Improvement over
1
/0
1
Section 3
Projects

Reduction in WIP – Value
Reduction in WIP (WIP Value). (15% improvement).

Base (Date) Current Imp
1,123m (03/99) 770m 31.4%
127m (03/00) 62m 51.1%
160m (03/00) 89m 44.4%
114m (03/00) 62m 45.6%

Project Average Closing Duration - Days
350
% Improvement
326
300 72 %
250
No. of Days
200
150
92
100 60
50
0
Base 4 Wk Avg Target

Section 2
Non Technical Losses

AT&Cs
Reduction In Losses: (Total losses % measurement). (15% improvement).
15.5% (03/99) 6.06% 5.00% 60.9%
8.85% (03/00) 5.40% 5.00% 38.9%
13.% (03/00) 8.55% 5.00% 34.3%
12.8% (03/00) 8.60% 5.00% 32.65%

Unbilled Customers
60000
52457 % Improvement
93%
No. of Unbilled Customer
50000
40000
30000
20000
10000
3574
1000
0
B as e 4 Mth. Avg . Tar g e t

Faulty Meters
9500000 8000000
7500000
9.12 mil*
9000000 7000000
6500000
BACKBILLED
COLLECTION
8500000 6000000
5.74 mil
5500000
8000000 5000000
4500000
7500000 4000000
Total Recovery To Date : RM 5.74 m
3500000
7000000 3000000
24/09/00 10-08- 22/10/00 11-05- 19/11/00 12-03- 17/12/00 31/12/00 14/01/00
00 00 00
WEEK
B ack billed (Cumulative) Collection (Cumulative)

Tampered Meters
10200000 10.12mil 10000000
10000000
8000000
BACKBILLED
COLLECTION
9800000
6000000
9600000
4000000
9400000 3.45mil
2000000
9200000
Total Recovery To Date : RM 3.45 m
9000000 0
09-10- 24/09/00 10-08- 22/10/00 11-05- 19/11/00 12-03- 17/12/0031/12/0014/01/01
00 00 00 00
WEEK
B ac k bille d(Cumulative ) C olle c tion (Cumulative )

Section 4
Cash Flow Management

Cash Flow Management
Reduction Debtors/ACP: (ACP days measurement). (15% improvement).

47.5 (03/99) 38.1 27 19.8%
39.0 (12/99) 33.2 27 14.9%
39.4 (03/00) 35.4 27 10.1%
36.8 (03/00) 30.5 27 17.1%
33.3 (03/00) 29.9 27 10.1%

Change - Stage 6
Change Sustaining
Management Results
• Process
• The Issues
• System
• Training
• Structure
• 4 Stages
• Minds Path
• Measurement
• Time Frame
• Behaviour
Project Results
“I appreciate the discipline that you have put into the workforce, as it was
severely lacking in our culture . . . .Everyone used to promise to do things, but
rarely delivered. . . . Now people promise, and they deliver . . . People don’t
like to loose face, so if they have promised and everyone knows they have
promised, they will deliver. Everyone’s job is now very transparent, so
everyone else knows what you should be doing as well”.
“I used to be concerned that my people spent too much time in meetings, as I did
not think that the meetings were of any real benefit. Now I realize that they were
not of benefit. Now with a KPI and action focused meetings at all levels, I
know that the meeting is at least a focused one. As a result, meetings
conducted are generally a lot shorter and more focused, so on the whole,
meeting time is reduced, but more effective”.

Project Results
TNBD-Renoir BPI - Monthly Evaluation At December 2000
100,000,000
Project Commited Savings
95,209,077
90,000,000 Actual Savings (Till Date)
Invoiced Amount
80,000,000
70,000,000 Current ROI (Actual) = 7.95 : 1. 66,369,461

60,000,000
Value in RM
50,000,000
40,000,000
30,000,000
20,000,000
11,980,000
10,000,000
0
February
February
May
May
January
January
July
July
November
November
March
March
October
June
April
December
December
August
June
April
August
September
September
October
Month [1999-2000]
Conclusions
• India has an estimated level of billing efficiency of

55% and collection efficiency of 41%
• Estimated cost of inefficiency of Rs 57000 crores
(SOURCE MINISTRY OF POWER APDRP OVERVIEW).
• The Power Sector can never be financially viable

until these issues are addressed.
• Precedent suggests that privatization with help
address these issues, but it is not ‘a precondition’.
• The only precondition is addressing the issues we
have illustrated.
• Failure to do so will put the viability of the
government initiative into question.
Queries
Danny Carroll,
Head of Operations - India,
Renoir Consulting (India) Limited
2nd . Floor, Raheja Chambers,

213 Nariman Point,
Mumbai, India
Tel : 022 - 2282 1923

Mobile : (0) 98218 92000
Email : carroll@renoirgroup.com
Website: www.renoirgroup.com

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‘Improving Efficiency And Profitability

Renoir Consulting Limited

• Estimated level of billing efficiency of 55%

2003 © Renoir Consulting Limited

• _SEB re-iterated this claim in its tariff proposal submitted in March

• It repeated this claim again in the proposal submitted August 2001.

2003 © Renoir Consulting Limited

• This is striking because, usually, the technical losses on such type of

• This implies either ineffective metering, commercial losses or

• This is a clear indication of _SEB failure to carry out effective metering

• It is worthwhile to note that these 220 ‘Express Feeders’ account for

2003 © Renoir Consulting Limited

“There is a lack of accountability in distribution,

2003 © Renoir Consulting Limited

2003 © Renoir Consulting Limited

2003 © Renoir Consulting Limited

•Many customers details were not in customer information billing

2003 © Renoir Consulting Limited

• Meter readers had stopped completing Irregularity Reports

• The supply network and maintenance systems in place were

2003 © Renoir Consulting Limited

• There was generally a lack of accountability for restoration

2003 © Renoir Consulting Limited

What is the definition of madness?

“ Doing what you have always done and

2003 © Renoir Consulting Limited

Internal Business Framework

2003 © Renoir Consulting Limited

Cross Meter Counter Back billing

Address Not Found Take to MRE Next MR To Check

2003 © Renoir Consulting Limited

2003 © Renoir Consulting Limited

2003 © Renoir Consulting Limited

2003 © Renoir Consulting Limited

2003 © Renoir Consulting Limited

2003 © Renoir Consulting Limited

2003 © Renoir Consulting Limited

Training Tools - Skills Matrix Figure indicates the %

% Multi-Skill attained by area 90.0 Figure indicates

90.0 Team Building

particular skill 90.0 Change Management

• Managing with numbers

2003 © Renoir Consulting Limited

2003 © Renoir Consulting Limited

Where Most Things Go Wrong!

The lack of awareness and understanding that a successful change

We also make false assumptions about peoples ability to adhere to new

2003 © Renoir Consulting Limited

The Four States of Mind!

The Four States of Mind! Renoir Minds Path Matrix

Direct Delegate Compliance Culture

2003 © Renoir Consulting Limited

The Key to Success!

The secret to successful change management is to be able to assess

“ If you can’t measure it, you can’t manage it.”

The four mindsets must be measured by auditing.

Auditing is a quantitative measure of a qualitative thing!

2003 © Renoir Consulting Limited