Professional Documents
Culture Documents
Grid Indiscipline
Grid Indiscipline
Burgeoning Losses
No Corporate structure.
Lack of accountability, initiative & service
attitude
No administrative infrastructure and
Dilapidated/Unsanitary buildings/Offices
Utility’s Dilemma
Front-end Back-end
Generator
UTILITY
Tx. Utility
Govt.
Consumer Trader
Regulator SLDC
Distribution Scenario In General
This Distribution Scenario Is Not A Fiction
Consumer Priorities
Redresser Consumer
Payments Relationship
Convenience Management
Ow
n
Ch ersh
Billing Ad ange ip
Re ditio /
du
ctio n /
Lo n o
ad f
Meters
Reading
Fault
Management
New Connection
Power
Reliability
Quality
Customer Delight
Quality Value
Customer
Satisfaction
Service
Losses Jan;2013
Source: TERI
T&D LOSSES: INDIA TOPS THE WORLD
Bhatinda 31 Dausa 35
Ferozpur 28 Jhalawar 44
Muktsar 28 S.Madhopur 25
Khargone 40 Jind 44
Barwani 41 Panipat 26
Dhar 37 Jhajjar 33
Shajapur 47 Srinagar 39
Ratlam 33 Dehradun 25
AT&C LOSSES: MAJOR
FACTORS
Total Losses
Technical
Losses Commercial Losses Collection Efficiency
Commercial 44432
Agriculture 123724
Industry 181168
Railway 10064
Inter-state 12697
Others 43733
Total 547202
Ex-Bus 788355
Not Sold 241153
Country Losses 30.59%
Discoms Losses- ,000
Particulars 2010 2009 2008 2007 2006 Total
Crs
Subsidies 30 25 17 13 12 97
Other income 7 6 6 5 5 29
% subsidy/revenue 20 19 14 12 14 16
Net loss before subsidies (57) (51) (31) (23) (17) (179)
Net loss after subsidies (27) (26) (14) (10) (5) (82)
ALL INDIA ELECTRICITY DISTRIBUTION UTILITIES
PROFIT & LOSS STATEMENT (Rs in Crores)
2011-
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2012# 2006-2012
REVENUE
Revenue from sale of power 106599 118744 133708 150379 181218 191894 882543
Rev. subsidies and grants 12645 16562 25497 29692 28538 15200 128133
Other Income 4849 6086 6374 6938 7142 5354 36743
TOTAL REVENUE 124093 141392 165579 187010 216898 212448 1047419
Percentage of subsidies in Revenue 12 14 19 20 16 8 15
EXPENDITURE
Purchase of Power 103661 121277 148580 164348 185009 193666 916541
Repairs & Maintenance 2359 2566 3886 4634 4559 2310 20314
Employees cost 12284 13027 16087 18216 20946 19253 99813
Adm. & General exp. 1610 2322 2715 2912 2858 1462 13879
Other Expenses 2607 4175 3305 3533 3045 3040 19705
Depreciation & other related debits 4951 5003 5553 6412 6799 4397 33115
Interest & Financial Expenses 7128 8161 10432 14053 17624 13522 70920
TOTAL EXPENDITURE 134601 156530 190558 214109 240840 237650 1174288
Profit/Loss Before Prior Period
Adjustment -10509 -15138 -24979 -27099 -23942 -25202 -126869
Average Revenue Realisation ARR) 3.51 3.65 4.05 4.20 4.43 4.81 4.14
Total Loss for units lost 49222 54265 61693 67953 67027 65373 369546
Power Cost Comparison
COUNTRY COST (In Cents/kWh)
Canada 2
Norway 1
Sweden 2
Thailand 5
Egypt 7
India 12
Example Of Price Trend-Germany
The graph indicative of electricity prices since 1990 in Germany, shows
that the energy prices have never gone up.
EU has made enormous progress in restructuring its electricity market.
The most satisfying result so far is the drop in electricity prices for all
groups of consumers.
On an average industrial consumers have seen a drop of 25%.
State Indiscipline
At the time of worst ever successive Grid Blackouts on 30Th July
and 31St July;2012,Unscheduled Interchange (UI) transactions
peaked at Rs. 882 Crores when Grid Frequency was dangerously
fragile with power cost at its ceiling of Rs.10/KWh.
Discretionary overtures of the States drawing power wantonly
and Central Load Dispatcher watching haplessly at the looming
grid disaster was as a sequel to more than one System Operator.
The collision course set with the State Operator, nonchalant to
rapidly falling Frequency and the Central Operator sending one
telegram after another, in this age of electronics, forecloses any
debate on the inevitability of Grid Discipline.
UI Ram p Rate
1200
1000
1000
800
600
400 352
298 316 334
280
200
0 8 16
0
50.50 50.48 50.46 49.80 49.78 49.76 49.74 49.72 49.02
Frequency
Financial Distress
States of Rajasthan, Punjab and Jharkhand which have still to submit information at the close of
FY 2011-12.
Actual Actual
2009-10 2010-11 2010-11 2011-12 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Revenue from sale
157473 189274 188361 208712 225252 229295 251687 276310 303109 334087
of power
Subsidies and
29691 32721 28538 36090 27782 39520 43039 46943 51145 55780
grants
TOTAL REVENUE 187164 221994 216899 244802 253034 268815 294726 323252 354254 389867
TOTAL
214121 249754 240840 272351 283332 296024 321291 348879 378418 411977
EXPENDITURE
Profit/Loss -26957 -27760 -23941 -27549 -30298 -27209 -26565 -25626 -24164 -22110
Units consumed
44509 52634 48972 57992 53320 63652 69792 76546 83889 92299
(Mkwh)
Units Available
58635 68909 62601 75096 67963 81566 88506 96073 104175 113388
(Mkwh)
Units Lost (Mkwh) 14126 16275 13629 17104 14643 17914 18714 19527 20286 21089
% of Units Loss
24 24 22 23 22 22 21 20 19 19
(T&D)
Cost of Energy 214121 249754 240840 272351 283332 296024 321291 348879 378418 411977
ARR (Rs/Kwh) 4.21 4.21 4.43 4.21 4.75 4.21 4.21 4.21 4.21 4.21
Out of which
0.51 0.47 0.46 0.48 0.41 0.48 0.49 0.49 0.49 0.49
subsidy is (Rs/Kwh)
Gap Between PAF & PLF
It is believed that declining availability of power is
due to fuel, low plf, and obsolete equipment.
The fact is to the contrary.
Inability of Discoms to meet demand is due to lack of
finances to pay for power.
Constraint is evident from following graph and table
Trend of average PAF and PLF of coal and lignite based power stations in India and gap between the two
Source: CEA
Note: PAF and PLF are for coal and lignite based stations as reported by CEA. Lignite based capacity is very significant in India.
90% 10.0%
85% 9.0%
80% 8.0%
75% 7.0%
70% 6.0%
65% 5.0%
F Y07 F Y08 F Y09 F Y10 F Y11 F Y12 F Y13e
PAF % PLF % Gap % (R HS)
Estimate of generation shortfall under coal and lignite based power stations in India due to
demand constraints
FY10 FY11 FY12 FY13e
Actual PAF % 85.1% 84.2% 82.5% 81.2%
Actual PLF % 77.5% 75.1% 73.3% 72.0%
Actual Generation (MU) 769,178 810,516 876,888 922,654
Notional PLF % (at levels of 78.0% 78.0% 78.0% 78.0%
FY08/09) assumed
Generation if coal based plants 772,688 832,428 916,344 979,550
operated at notional PLF seen in
FY08/09 (MU)
Generation shortfall 3,509 21,912 39,456 56,896
% shortfall to actual generation 0.5% 2.7% 4.5% 6.2%
Source: CEA
Note: PAF and PLF are for coal and lignite based stations as reported by CEA.
Tariff Structure
Depreciation,
O&M Expenses,
Insurance,
Taxes,
40.
Discom Models and Performance Indicators
S. No. Ownership/ PPP Discom Ownership
Structure
Customer Density
• R-Infra and NDPL have high
levels of customer densities
because of highly dense areas
that are being served by them.
• JVVNL has very low customer
density due to a large area of
supply including rural areas as
well
Cost Recovery
Source: NDPL True-up order FY 10, R-Infra Tariff Oder FY 10, NPCL Tariff Order FY 10, JVVNL
While private Discoms have been spending about 25 to 35% of their O&M expense
towards Repair & Maintenance of their network, majority of JVVNL’s O&M costs is
towards employee and administration.
Distribution Transformer Failure-%
DTR failure rate lowest for R-Infra. Reasonably low for NDPL and NPCL.
JVVNL too has managed to bring down DTR failure rate to 8.4% from 18% in five
years
Significant reduction in DTR failure rate in Bhiwandi circle - from 32.5% in 2006-07
to 3.8% in FY 2009-10.
Distribution Franchisee
49.
Political Aberrations
After experiment number one in Orissa, experiment number two of privatization of
Distribution was consummated in Delhi in 2002. Making key departures from the
Orissa Model, though Delhi has brought certain satisfying results, yet travails
continue in many aspects.
Since 2002 no other State has imbibed Delhi Model or any other Model to fetch
positive turn round of their power sectors. So privatization started with and stalled at
Delhi.
Privatization of distribution having been vetoed by substantial political and apolitical
pressures, gave birth to the idea of Franchisee System which does not require
disinvestment of ownership but fetches the private sector management .
Ownership of the following three key elements remain with the State:
License
Assets
Employees
Privatization And/ Or PPP
An alternative to state owned utility is a privately owned company or
thru PPP with a privately owned company.
BSES & TPC in Mumbai, Torrent in Ahmedabad and Surat, RPGoenka
owned CESC in Calcutta and RPG owned Noida Power Company,
Reliance Energy owned NESCO, WESCO and SOUTHCO in Orissa
and CESCO earlier owned by AES, USA in Orissa (at present managed
by an administrator appointed by the Regulator), Reliance Energy
owned Rajdhani BSES and Yamuna BSES in Delhi and Tata Power
owned NDPL(Now TPDDL) in Delhi are operating at present in Private
or PPP Models in the country.
Outsourcing Is Not Privatization
Outsourcing of Company's responsibilities not to a panel of wise men
but to private companies is not a road to success.
An outsourced contractor quite often fails to make sure that the
principal client gets the best price
Frequently the work is further steered to their subsidiaries or business
partners instead of competitors.
A Private Company will do a worse job if its political connections
insulate it from accountability.
There is a fundamental error in judging that virtues of market
competition and private ownership is a magic matrix.
There is no substance that a private company would do better than the
people employed direct.
Private Sector can do no wrong and Government Sector can do no
right is a preposterous presumption.
There have been terrible failures of jobs outsourced by US in
Afghanistan (Training a Police Force), Iraq (Reconstruction work),
USA(Hurricane Katrina) to contractors.
Maharashtra Starts DF
As in the case of outright Privatization, the biggest resistance
which is faced in introduction of input-based Franchisee Scheme
is by the personnel of Electricity Boards Distribution Companies.
Vested interests don't want this to be introduced and create all
types of difficulties .
The most powerful of the initiatives taken in the recent years is the
one that Maharashtra Electricity Distribution Company took by
introducing Franchisee arrangement in Bhiwandi.
Current Status of DF
Torrent has put in concentrated efforts to upgrade the network, improve
metering and billing efficiency and bring down the AT&C losses.
Because of tenacious and perseverant business acumen of Torrent, Bhiwandi
experience is proving to be a rewarding one. Maharashtra has already
adopted this scheme for Nagpur, Aurangabad and Jalgaon
Emulating Maharashtra, UP has since gone ahead in Franchising
Distribution Circles of Agra and Kanpur to Torrent.
4 more have been assigned, namely, Sagar, Indore and Gwalior (in Madhya
Pradesh) and Patna (in Bihar)
Kanpur remains assigned but work has yet to commence.
Currently 11 Towns have gone in for DF
The potential has been highlighted for 235 Towns .
There have, however, been dissatisfying results too, as in case of Nagpur and
Aurangabad , where the investments by the DF did not pour in.
Up Front Capex
Franchise model is as capital intensive as any other model. It has now emerged
that not only is the model capital intensive, the capital intensity is front loaded.
In other words during the first few years of the franchise, large amounts of
money need be invested before effective progress can be accomplished. A
review of operations in Agra would show dramatic progress vis-a-vis Nagpur,
Aurangabad, Jalgaon etc. for this very reason. In Agra heavy capital investment
has been made upfront. A little over Rs. 12 Crores every month during the last
39 months (ending November 2012). Other Franchisees have not been able to do
so with the result that their progress remains very modest up-to date.
STATUS OF IMPROVEMENT IN FRANCHISED AREA
DTR Failure Distt. Losses%) Collection No. of Consumers Capex (Rs.
Rate (%) efficiency (%) Crs.
Bhiwandi
Agra 61,000
Augrangabad
Nagpur
Apr 11 to Dec. 3.49 3.33 29.99 27.16 99.06 99.18 3,89,665 4,30,063 29
12
Jalgaon
57.
BHIWANDI : AT THE TIME OF TAKEOVER
AT&C losses : 58%
Collection Efficiency : 68%
Mandatory load shedding of 6 hours at the
time of takeover and subsequently increased
to 8 hours
Further distress load shedding due to deficit
of 300 MVA in EHV Network
Overstressed distribution Network
Overloading
Breakdowns / trippings
Transformer failure rate of 40%
Poor reliability of supply
Only 23% of the customers metered & large
unregistered consumers
Major Improvements
Revamped all the transformers
Replaced 1499 Nos of transformers
Added 150 MVA of DT Capacity by adding and
replacing existing transformers by higher size
Changed more than 1 lakhs meters
As on Sept 2011
40% 2.25%
At present
10 to 12
hours
23% 99.9%
Major Accomplishments: AT&C Loss
At the time of takeover
As on Sept 2011
17%
12 month
58%
Moving
Average
Reduction of 41%
Agra Franchisee Model Of Power
Distribution
Torrent Power Limited
Operations taken over from 1St
April;2010
Major Accomplishments : Agra
Distribution Transformer Failure Rate
At the time of takeover-1.4.2010
As on Dec; 2012
31% 8%
At present-
Dec;2012
10 hours
At present-Dec;2012
23% 97%
Major Accomplishments: AT&C Loss-Agra
At the time of takeover 1.4.2010
As on Dec; 2012
78% 50%
Reduction of 29%
PGCIL To Control SLDCs
Inter regional Power transfer capacity of National Grid increased from 18,700
MW to 19,800 MW in Dec2008. By March 2010, this capacity was enhanced to
23,400 MW and doubled to 37,500 MW by 2012
NLDC is linked to five RLDCs, 31 SLDCs 51 Sub LDCs and 1080 RTUs