Challenges and opportunities before Maharashtra State Electricity Distribution Company Ltd.

1. Challenges and opportunities before Maharashtra State Electricity Distribution Company Ltd.

2. If you can dream it, you can do it -- Walt Disney

3. On 6th June 2005 MSPGCL MSETCL MSEB MSEDCL MSEBHCL MSEB Heritage : 20th June 1960 to 5th June 2005 • Electrification of State (3.08 Lakh Sq. Km.) • Industrialisation / Green Revolution • Urban / Rural Maharashtra Development • 30/62.5/120/140/200/210/500 MW sets. • 132/220/400 kV & +/-500 kV HVDC.

4. Problems of Maharashtra Power Sector • Demand Supply Gap of 3500 to 4000 MW • High T&D Loss – 35.2% (04-05) • Low Collection Efficiency – 90.03% • Average Cost of Supply: Rs 3.68/Unit whereas Collection: Rs 2.97/Unit • Inability to Upgrade Infrastructure • 9 % of consumers subsidise for 73% consumers • Pending applications for Agricultural connections – 4Lakhs

5. MSEDCL used to be the LEADER / No.1 Board. • People used to follow us • What went wrong? • Financial Losses. • Lack of finances for development • Consumer dissatisfaction: Poor response from us • High T&D losses (38%) • High PD/Live arrears • Unmotivated employees • Corruption • Poor maintenance : Lack of safety • Poor inventory control • Load shedding • Negative public image

6. Now No. 13 SEB? Andhra / Gujarat / Punjab / TamilNadu • Provision of Electricity Act – 2003 (Restructuring). • Competition at Door step. We must assure good quality supply & good services to consumers. • Financial stability to be improved. • Conducive atmosphere for investors. • Accountability at all levels. • Transparency in working. Loss making entity (Rs. 1500 Cr/Year) : - Needed restructuring.

7. Revenue Expenditure FY 2004-05

8. Do you know this ? • Cost of Generation: 103 ps/unit • Cost of Power Purchase: 198 ps/unit • Weighted AVG: 130 ps/unit • Cost of fixed charges: 86 ps/unit • Total Cost @EHV : 216 ps/unit • Losses 35.28 % Cost = 216 / 0.6472 = 333 ps/unit • Cost of T&D losses = 333 – 216 = 117 ps/unit

9. Power Purchase Rates 2004-05 PGCIL Charges = Rs. 136 Cr for 1400 MUs p/u = 97 ps / unit

10. Our sentiments are important but we have to keep pace with other players. • Better late than never. • No change in employees service conditions. • “As is where is policy” • Absolutely transparent change over. Our Strengths • Our generation cost is low (no body can come to this level) • Our strong T&D network (7 Lakh ckt Km.) • Our efficient work force. • Our commitment for Nation.

11. ‘Competition at Our Door Step’ ( Electricity Act 2003) • ·Generation freed from licensing • ·Captive generation free & no surcharge • ·Open access in transmission • ·MERC becomes the licensing authority • ·Anti monopoly provisions • ·Transfer scheme • -STU & SLDC to be separated • -Corporatization compulsory

12. “THE GREATEST DIFFICULTY IN THE WORLD IS NOT FOR PEOPLE TO ACCEPT NEW IDEAS  BUT TO MAKE THEM FORGET THE OLD ONES.”   - - - - JOHN M KENYO

13. ‘Generation freed from Licensing’ • Except for hydro,no license required for setting up a generation plant ( 7,8 (b)) • Implications : • Increased Private investments in generation ( Good for the Sector as it reduced load shedding) • Merchant power plants may come up. • But not many GENCOs are expected in the beginning till introduction of open access

14. ‘Captive Generation freely permitted’ • No license required for Captive Generation 9 (1) • Right to open access from plant to destination on payment of wheeling charges • Associations of persons can set up a captive plant anywhere- primarily for their own use & MSEDCL will have to allow access through their lines on payment of wheeling charges ( Without any Surcharge) (42)

15. ‘Open access in Transmission’ Transmission licensee has to provide non-discriminatory open access to any licensee or Genco on payment of the transmission charges. ( 40 (c)) Implications : Facilitates trading & development of market

16. ‘Parallel Distribution Networks Possible’ MERC can grant distribution license to more than one persons for distribution through their own networks in the same area (6th provision of 14) ·Implications – MSEDCL will face competition in its HT & high revenue areas as new distribution licensees with their own networks may come there

17. ‘Open Access in Distribution in Phases’ Open access means that the customer can pick & choose their supplier & any supplier can use the existing lines to reach any customer On payment of wheeling charges, surcharge & any additional surcharge wherever applicable. (42 (2), 42 (4)) Implications : Competitors will be able to cherry pick MSEDCL’s high revenue customers Cross subsidy gets phased out & tariffs will reflect cost of supply

18. ‘New Anti-Theft Provisions’ -More stringent punishments for theft 135 (c) -Provision for Special Courts (153) -Abetting a theft a crime (150) Theft a cognizable & non-bailable offence ( 151) Implications : ·GOM will have to open special courts, authorize officers of licensee to inspect the premises. ·GOM to decide whether it the recently passed ‘Anti Theft Act’ to continue as before

19. Service provisions As per Sec 133 the provisions relating to officers and employees are as under The State Government may by a transfer scheme provide for transfer of employees to the transferee on vesting of properties, rights and liabilities in such transferee as provided under section 131 Upon such a transfer under the transfer scheme the personnel shall hold office or service under the transferee on such terms and conditions as may be determined in accordance with the transfer scheme Provided that such terms and conditions on transfer shall not in any way be less favorable than those which would have been applicable to them if there would have been no such transfer under the transfer scheme

20. Present transfer on Book value to Govt. of Maharashtra but with in one year it will be by market value. • No tariff shock envisaged. • Small & controllable size / Competition. MSPGCL :- Will be self sufficient / can create new Power stations leading to lesser load shedding. MSEDCL :- Our strength is our employees.

21. SEB Reforms

22. APSEB Reforms • Collection Efficiency from 90-98% to 100-112% • AG connections released from 1.9 Lakhs to 2.3 Lakhs /year

23. KEB Reforms Orissa Reforms

24. Delhi Reforms (NDPL) • Transformer failures reduced from 272 to 248 in NDPL and from 513 to 259 in BRPL • Consumer complaints / day reduced from 4000 to 2500 • Distribution capacity addition 80 MVA / 350 MVA / 490 MVA in FY 03 / 04 / 05

25. Vision without action is merely a dream Action without vision merely passes time Vision with action can change the Organisation

26. MSEDCL’sMISSION STATEMENT • We, as a professional company, rededicate ourselves to serve all our customers by extending reliable and quality power supply at reasonable and competitive tariffs so as to boost agricultural, industrial and overall economic development of Maharashtra. • We commit to Honesty, Integrity and Transparency in actions to achieve higher standards of Consumer Satisfaction. • We aim at achieving technological excellence and financial turnaround for the overall benefit of the customers. • We will strive hard for system improvement and stress upon preventive maintenance. • We will ruthlessly curb the theft of electricity. • We will encourage and support energy savings activities and Demand Side Management thereby optimizing the use of electricity. • We will fulfill our commitment to society by improving quality of life.

27. MSEDCL’s Ten Point Program • Distribution loss reduction (5% p.a.) • Improvement in collection efficiency (3% p.a.) • Circles to act as profit center : self sufficient / Improve work culture. • Use of Technological advances for improving efficiency. • Improving quality of supply / Reducing interruptions. • Improved services to Ag. consumers : Reduction in DT failure. • DSM & peak load measures. • Improved Customer Grievance Redressal / SoP • Proactive – Power Distribution network planning. • Improve safety / working conditions / Special training programs

28. MSEDCL’s Ten Point Program • Distribution system loss reduction • Introduction of complete accountability through Energy Accounting . and complete metering of consumers. • 100% DTC metering and DTCwise loss reduction program. • Catching & prosecution of theft & severe action against those who abet in theft. • Reducing line and transformer losses through HVDS & improve HT /LT ratio. • Installation of LT/ HT capacitors. • Improvement in Collection efficiency • Reduction of live arrears. • Reduction of P.D. arrears. • Zero tolerance for non payment of bills. ( proper timely disconnection) • Elimination of average billing and 100% billing on the basis of actual meter • reading. • Spot billing.

29. MSEDCL’s Ten Point Program • 3) Circles to act as profit centers • Circles to buy the power they require, pay for it and make their other expenses through their income • 4) Use of technological advances and computers systems for • improving the efficiency, accountability, information level & • consumer satisfaction. • Circles Distribution automation projects like AMR, SCADA, MIS • Call center at major cities • Customer facilitation centers at 50 sub-divisions • E-tendering • E-billing and online payment, ATM type collection centers • Network mapping through Graphical Information System (GIS) • 5) Improving quality of supply and reduction of interruptions • Priority focused on upgradation, renovation and modernization of distribution system. • Repairs & preventive maintenance of distribution systems

30. MSEDCL’s Ten Point Program 6) Improved services to Ag. consumers • Reduction of distribution transformer failure rate • 7) Demand Side Management and peak load management. • (Measures to reduce load shedding • Separate feeders for Gaothans. • Single phasing for Gaothans. • Energy saving schemes for residential, public lighting, public water works and Agricultural consumers. • Reactive power management through capacitor installation • 8) Consumer Grievances Redressal Systems • Single window customer facilitation center. • MERC's Standard of Performances (SOP) as consumer charter • Training of employees • RCI connection to be released on demand priority focused on upgradation, renovation and modernization of distribution system • Repairs & preventive maintenance of distribution systems

31. MSEDCL’s Ten Point Program • 9) Proactive distribution network planning with viable funding plan • Preparing sub-division wise information about consumer load profile and demand growth • Infrastructure strengthening plan. • Preparing viable funding plan • 10) Measures to improve working conditions of employees • Improvement in work culture • Measures to improve safety during working • Working conditions of employees to be improved • Honesty, Integrity & hard work of employees to be rewarded • Special Training programs for employees to improve motivation for dealing with consumers

32. Present status of MSEDCL Shri. Sanjay Bhatia (IAS) as MD Shri. Vinayak Rao as Director Shri. A.D.Palamwar as Director (Operations) Strong Work Force of about 64,000 employees Consumers about 1.40 Crores. 33/11 kV Sub-Stations : 1658 nos. 2.17 Lakh DTCs Total Revenue 2004-05 : Rs. 14,180 Crores Estimated Revenue 2005-06 : Rs. 14,937 Crores Capital Outlay for 2005-06 : Rs. 868 Crores

33. State Level overview T&D losses 2002-03 : 38.59 % 2003-04 : 38.20 % 2004-05 : 35.28 % Collection Efficiency 2002-03 : 89.36 % 2003-04 : 90.32 % 2004-05 : 98.74 % 79 Divisions have shown loss reduction but in 45 divisions the losses have increased

34. Status of Pune Zone FY 04-05

35. Tariffs • Generation Tariffs : MSPGCL will send bill to MSDCL on 6th of every month and composite tariff is Rs.1.36 / unit • Transmission Tariffs : MSTCL will send bill to MSDCL on 6th of every month and composite tariff is 19 paise / unit transmitted • MSDCL will purchase • 4000 MUs from MSPGCL (Rs. 544 Cr) • Purchase from outside 1700 MUs (Rs. 357 Cr) • Transmission charges for 5700 MUs (Rs. 108 Cr) • MSDCL will have to pay Rs. 1009 Cr. / month • Our revenue should go up to Rs. 1250 Cr / month

36. Case Study • If Pune zone wants to purchase power from pool • Power cost at Rs. 1.58 / Unit for 624 MUs : Rs. 99 Cr/ month • Transmission cost at Rs. 0.19 / Unit for 624 MUs : Rs. 12 Cr • Total Input cost = @ Rs.111 Cr • Monthly revenue = @ Rs.139 Cr • Balance ( 139-110)=Rs.29Cr for salary/depreciation/R&M and interest on loan • If HT load is not there, LT sale is 251 MUs / month • Input = 372 MUs x 1.58 = Rs. 59 Cr • Transmission Charges = 372 x 0.19 = Rs. 7 Cr • Total = Rs. 66 Cr (HT revenue = Rs.57 Cr) • Balance ( 57-66) =Rs.(-) 9 Cr for salary/depreciation/R&M and interest on loan

37. % Collection Efficiency Pune Zone % DTC Failure

38. If it is to be, It is up to me -- Mother Teressa