Electricity Distribution in India An Overview

Electricity Distribution in India -at a glance

Total No. of Distribution Utilities 61 Total energy billed by these utilities increased from 3,77,637 Mkwh in the year 2005-06 to 4,13,311 Mkwh in the year 2006-07 registering a growth of 9.45%. All India AT&C losses were 35.18% in the year 2005-06 which reduced by 2.11% to 33.07% in the year 2006-07. All India AT&C losses varies from 12.08% to 67.56% during 200607. The utilities incurred losses of 11.02% of the revenue earned by direct sales to consumers during 2006-07. Metering Status:
23 States have achieved 100% Metering at 11 KV Feeder level. 9 States have achieved 100% consumers metering.

Electricity Distribution in India -at a glancecontd..

Consumer Mix:
Category wise % of No. of Consumers
Agricultural 10% Industrial HT 0.05% Industrial LT 2%

Commercial 11%

Domestic 77%

Electricity Distribution in India -at a glancecontd..

Sales Mix:
Consumer Category wise Sale of Power in Mkwh (2006-07)
Public WaterBulk Supply 2% Works Railw ay PublicLighting 2% 2% 1% Industrial LT 7% Dom estic 24%

Industrial HT 30% Agricultural 24%

Com mercial 8%

In the presentation.
Legal/Policy/Regulatory Framework Distribution: Issue Forum of Regulators (FOR) Recommendations

Legal/Policy/Regulatory Framework

Earlier Sector Structure Vertically Integrated Utilities

Generation

Transmission

SEB ES Act 1948

BY VIRTUE OF BEING INTEGRATED NO SPECIFIC FOCUS ON DISTRIBUTION

Distribution

Customer Customer

NO SYTEM OF ACCOUNTING SEGGREGATION ! WHERE DOES THE PROBLEM LIE?

Strategy of GOI for ushering Reforms

Restructuring of the sector by unbundling of State Electricity Boards Corporatisation of Generation, Transmission and Distribution sector Setting up of Regulatory Mechanism Competition in various segments Liberal regime in underserved rural areas

Provisions in Electricity Act-2003

Provision for reorganisation of SEBs : unbundling G,T,D Generation delicensed Expanded role for the Regulatory Commissions Provision for private licensees entry in distribution through an independent network, Open access in distribution Distribution licensees would be free to undertake generation and generating companies would be free to take up distribution businesses after obtaining license. Metering of all electricity supplied made mandatory. Provisions relating to theft of electricity made more stringent Thrust to complete the rural electrification. Provision for license free generation and distribution in the rural areas Provisions for safeguarding consumer interests. Ombudsman scheme for consumers grievance redressal.
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National Electricity Policy Vision Statement

Encourage private sector participation in distribution for requisite reduction in losses Segregation of technical and commercial losses through energy audits IT systems may be implemented by the utilities on a priority basis by support of APDRP scheme Promote HVDS, implementation of SCADA and data management system The States and distribution utilities should ensure effective implementation of the provisions against theft of electricity

Tariff Policy Provisions

Mandates notification of performance for licensees. standards of

Encourage efficiency in operations by sharing of gains between licensees and consumers. Promote Multi-Year Tariff (MYT) framework. Encourage loss reduction Strategies. Tariff design : Linkage of tariffs to cost of service
- gradual reduction in cross subsidy (+/- 20% of average cost of supply)

Reasonable cross-subsidy surcharge additional surcharge for open access.

and

Distribution: Issues

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ISSUES
Open Access Distribution Losses Efficiency intervention, improvement Models of APDRP, IT

privatization,

PPP(franchisee), Pune Model. Energy Efficiency and Demand Side

Management Tariff Rationalisation

1. Open Access
Open Access, an important framework seeking to promote competition. Independence of State Load Dispatch Centers
- Lack of independence of SLDC impacting open access in some States due to conflict of interest between system operator and distribution licensee .

Role of State Governments

- SEBs unbundled but problems continue in some states - Single buyer model need to phased out - Need to insulate SLDC from influence of incumbent licensees.

Open Access

contd..

Regulatory interventions for facilitating open access

- Need to rationalize Open Access charges. - Monitoring of open access transactions and display of various charges in Commissions websites.

Status of Intra-State Open Access (as on 31.03.2009)

- Total OA applications received 174 (130 CPP) - OA capacity applied for 17474 MW - Total OA applications approved 116 (84 CPP) - OA capacity approved 14462 MW

2. Distribution Losses
High level of losses at distribution level poses the biggest challenge to reforms in power sector. Honest consumers have to bear the burden caused by dishonest consumers/officials. Issues:
- achieving loss reduction in a time-bound manner; - Relative appropriateness of technical solutions, such as separation of agricultural supply feeders, single phase supply, HVDS etc., - Development of baseline data and its verification by a third party; - Suitable incentive/disincentive schemes for rewarding/penalizing the areas with low/high loss levels.

3. Efficiency improvement
Accelerated Power Development & Reform Program (ARDRP)/IT intervention,
- aimed at bringing about improvement in the urban distribution sector by funding investment in the distribution network, and by incentivising the states who performed well in reducing losses. - The Govt. of India has restructured APDRP during the XI Plan with revised terms and conditions as a Central Sector Scheme. The focus of the program shall be on actual, demonstrable performance in terms of sustained loss reduction. Establishment of reliable and automated systems for sustained collection of accurate base line data, and - the adoption of Information Technology in the areas of energy accounting will be essential before taking up the regular distribution strengthening projects.

APDRP IT for Baseline

IT interventions being attempted by NDPL (DISCOM)

Spectacular achievement of reducing distribution losses from 50% to 20% in 6 years Boundary Metering- Introduced (Availability Based Tariff) ABT compliant metering on boundary and up 11kV Feeder Energy measurement. Meter Repository System - each Meter issued against a specific K No. based on a random selection through a customized application. - this eliminated the probability of misuse & installation at misdirected place institutional check on manipulation. Introduced GIS data Interface Automated Meter Reading - 60% of the Revenue generated through (all high end consumers >15 kW) Introduced Pre paid Metering enabled consumers to track and monitor their consumption.

Billing database of 100% of consumers on website, institutionalized transparency and enables consumers to:
View Bill View Consumption Graph

Efficiency improvement

contd

Models of: PPP I. Distribution Franchising In Bhiwandi, Maharashtra M/s Torrent Power appointed Distribution Franchisee on energy input basis in Dec 2006 Customer base of 0.16 million Area spread over 721 square kilometres. The estimated demand in the circle is 750 MVA with an annual power consumption of 2400 million units. Achievements :
15% T&D loss reduction in 9 months (Losses brought down to 30% from 45%). Improvement in Metering, Billing and Revenue Collection Defective Energy meters (25300 Nos.) replaced. Approx. capital investment : USD 20 million Enhancement in customer service quality DT failure reduced by replacement and revamping of DTs

Efficiency improvement

contd

II. Distributed Generation based Distribution FranchiseePUNE MODEL II Concept of Franchisee Public private partnership where the Franchisee need not have a separate license for distribution Vested with the specific activities related to distribution in the designated area Licensee supplies electricity to the Franchisee at a predetermined price as per Franchisee Agreement Franchisee retains pre-defined portion of the revenue as charge Tariff applicable in Franchisee area will be the same as that applicable in the respective license area Reliability surcharge, to recover the expenditure on additional generation/costly power purchase, will be determined by the Commission

Efficiency improvement

contd

Concept of Franchisee Franchisee system does not amount to privatisation Since license area will continue to be single, treatment of cross-subsidy will continue to be the same Expensive power purchase can be supplied to areas that can afford the price This model valid in cases where losses are at reasonable level.

Amendment Act 2007-New Theft Provisions

Thefts including abetment made cognizable offences with arrests where prescribed made non-bailable Immediate disconnection on theft detection Supplier to lodge complaint regarding offence within 24 hours of disconnection with Police Station Police Officer to have investigating power Court can take cognizance on the basis of report by Police Officer Restoration within 48 hours of deposit of assessed amount For load >10KW, for 2nd & 3rd convictions, power supply not to be restored before 3 months & the period may extend to two years. Consumer shall be debarred for taking power supply from other sources as well through open access. License of Discom personnel abetting theft to be cancelled

4. Energy Efficiency and Demand Side Management

Components in the tariff structure for incentivizing energy efficiency; Institutionalizing energy efficiency in the organizational structure of distribution utilities; Load Research, load forecasting and appropriate DSM options; Preparation of DSM plans and how to implement them; Special measures for promoting energy efficiency in pumping ground water for Agricultural use; DSM and energy conservation are as important as capacity addition to tide over shortage.

5. Tariff Rationalization
High level of cross subsidy is not desirable as it discourages competition and efficiency in operation. The Act and the Policies require the Regulatory Commissions to ensure that the tariff progressively reflects the cost of supply. Tariff Policy gives a target that tariff should be rationalised in a time bound manner and that tariffs of every consumer category should be within 20 % of the average cost of supply in States. Progress is somewhat slow on tariff rationalization.

Forum of Regulators(FOR) Recommendations

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1.

FOR Recommendations on Open Access : Theory and Practice

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Open Access : Theory and Practice

Independence of SLDC
- SLDC not to report to transmission or trading licensee. - Reporting requirements could be on lines of Electoral Officer under Election Commission. State

Operation of SLDC
- with STU as a subsidiary of transmission utility as stopgap arrangement; - by a separate entity as soon as possible

State Governments be advised to phase out single buyer model.

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Open Access : Theory and Practice

A model scheme for technological upgradation of SLDCs recommended. Urgent need of financial autonomy to SLDCs.
- CERC to make regulations for RLDCs to ensure recovery of not only operating and capital servicing costs but also generation of adequate surplus to provide equity for future investments. - Similar pattern to be adopted by SERCs for SLDCs.

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Open Access : Theory and Practice

Display of information on OA charges in the websites of SERC/FOR for transparency and to enable informed decision on open access. Monitoring of open access transactions by SERCs Standby arrangement for open access consumers
- by levying retail tariff as applicable for respective consumer categories only for the period during which such standby support is requested.

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Open Access Charges

State Assam Chhattisgarh Haryana Himachal Pradesh Karnataka (BESCOM) Maharashtra (MSEDCL) Orissa Punjab Rajasthan Uttar Pradesh Open Access Charges (Cents./kWh)* Tariff (Discom)** (Cents./kWh)*

5.88 1.96 1.62 2.78 3.8 1.68 3.2 1.14 1.94 1.52

6.5 6.22 9.1 6.08 8.3 9.06 5.82 10.4 7.96 8.58

*OA charges for a consumer of 5MW at 11 KV (33 KV in some cases) seeking OA for a month. This includes transmission & wheeling losses (Cents/kWh) calculated assuming power purchase cost as Rs 4/kWh. **Tariff for an embedded consumer of 5MW at 11 KV (33 KV in some cases).

2. FOR Recommendations on Loss Reduction Strategies

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LOSS REDUCTION STRATEGIES

Focus on reduction of distribution losses
- Transmission losses not to be clubbed with distribution losses

For segregation of technical and non-technical loss,

- baseline data should be compiled for each electricity division.

Trajectory for loss reduction

- keeping in view actual loss levels, capital expenditure made in the past for improving the network and future capital expenditure plans
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LOSS REDUCTION STRATEGIES

Segregation of feeder for agriculture supply

especially in states where proportion of supply to agriculture sector is substantial.

Sharing of gains
Under-achievement of loss reduction target should be borne by the licensee, In case of achievement over and above the targets the gain should be shared between the licensee and the consumers in the ratio to be determined by SERCs.
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LOSS REDUCTION STRATEGIES

The utilities should effectively use the theft related penal provisions in the Electricity Act, 2003 As stipulated in para 8.2.1(ii) of the Tariff Policy SERCs should encourage suitable local area based incentive and disincentive schemes
for the staff of the utilities linked to reduction in losses.
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3. FOR Recommendations on Demand Side Management and Energy

Efficiency

36

Demand Side Management

SERCs to direct all the distribution utilities to constitute a DSM Cell within their organizations. SERCs to also direct all the distribution utilities to submit DSM Plans along with ARR rates for the next tariff period. Recovery of cost of approved DSM

programmes should be allowed as pass-through in ARR.

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Demand Side Management

SERCs to consider appropriate tariff interventions (like ToD tariff, incentive for energy efficient buildings/ appliances etc) to support DSM. BEE has been requested
- to undertake development of Monitoring and Verification protocols for various DSM programmes which may be undertaken by utilities. - to prepare draft of a suggested Regulation for appraisal of programmes of DSM and Energy Efficiency in distribution sector.
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Demand Side Management

The State Governments to be requested to consider the following:
- Financially supporting the DSM programmes aimed at such category of consumers which are receiving tariff subsidy from the State Governments. - Enhancing effectiveness of the State Designated Agency (SDAs). - Reduction in taxes on energy efficient appliances.

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THANK YOU

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