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THE POWER SECTOR

THE POWER SECTOR. THREE CONSTITUENTS: GENERATION TRANSMISSION DISTRIBUTION. GENERATION. MAIN SOURCES OF ENERGY: THERMAL HYDRO CO-GENERATION NUCLEAR RENEWABLE. TRANSMISSION. AKIN TO WHOLESELLING AND TRANSPORTATION IN THE PHYSICAL GOODS SECTOR. ONLY DIFFERENCE: CANNOT BE STORED.

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THE POWER SECTOR

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  1. THE POWER SECTOR • THREE CONSTITUENTS: • GENERATION • TRANSMISSION • DISTRIBUTION

  2. GENERATION • MAIN SOURCES OF ENERGY: • THERMAL • HYDRO • CO-GENERATION • NUCLEAR • RENEWABLE

  3. TRANSMISSION • AKIN TO WHOLESELLING AND TRANSPORTATION IN THE PHYSICAL GOODS SECTOR. • ONLY DIFFERENCE: CANNOT BE STORED. • TECHNICAL TERM: “WHEELING”.

  4. DISTRIBUTION • RETAILING OF POWER TO END CONSUMER. • THREE TYPES OF CONSUMERS: • EHT • HT • LT

  5. OWNERSHIP • FOR ALMOST ALL STATES IN INDIA, ALL THREE CONSTITUENTS ARE STATE OWNED. (GENERATION LARGELY IN THE CENTRAL GOVT., TRANSMISSION & DISTRIBUTION COMPLETELY IN THE STATE GOVERNMENT).

  6. THE NEED FOR REFORM • SUBSIDY TO POWER SECTOR IN A.P = Rs. 2,300 CRORES PER ANNUM. • IN ORISSA, THE FIGURE WAS Rs. 600 CRORES PER ANNUM. • THIS MONEY IS NEEDED FOR SECTORS LIKE HEALTH AND EDUCATION.

  7. WHY THE SUBSIDY? • THE SUBSIDY IS NOT FOR SOCIAL EQUITY. NEITHER IS IT TO STOP A MULTIPLIER EFFECT. • THE SUBSIDY IS DUE TO ENORMOUS LOSSES IN THE SECTOR.

  8. TYPES OF LOSSES • TECHNICAL LOSSES (I SQUARE R AND HYSTERISIS). • NON-TECHNICAL LOSSES (A POLITE TERM FOR THEFT)

  9. NON-TECHNICAL LOSSES • HOOKING. • BYPASSING METERS. • LINE EXTENSION. • KUTIR JYOTI.

  10. ECONOMICS - EHT • INPUT = 100 UNITS @ Rs. 1.40/UNIT • BILLING = 98 UNITS @ Rs. 4.00/UNIT. • COLLECTION = 100%. • PROFIT MARGIN = Rs. 2.52/UNIT.

  11. ECONOMICS - HT • INPUT = 100 UNITS @ Rs. 1.40/UNIT. • BILLING = 85 UNITS @ Rs. 3.50/UNIT. • COLLECTION = 90%. • PROFIT MARGIN = Rs. 1.28/UNIT.

  12. ECONOMICS - LT • INPUT = 100 UNITS @ Rs. 1.40/UNIT. • BILLING = 35 UNITS @ Rs. 2.00/UNIT. • COLLECTION = 40%. • LOSS MARGIN = Rs. 1.12/UNIT.

  13. PORTFOLIO OF A SEB • FOR EVERY 100 UNITS OF INPUT GENERATED: • 20 UNITS GO TO EHT • 15 UNITS GO TO HT • 65 UNITS GO TO LT

  14. ECONOMICS OF A SEB • INPUT = 100 UNITS = Rs. 140. • EHT = 20 UNITS = Rs. 78.40. • HT = 15 UNITS = Rs. 40.16. • LT = 65 UNITS = Rs. 18.20. • GROSS LOSS = Rs. 3.24 (2.3%).

  15. THE VICIOUS CYCLE • RETAIL END DOES NOT COLLECT. • WHOLESELLER DOES NOT RECEIVE MONEY. • GENERATOR DOES NOT RECEIVE MONEY. • ERGO: GOVERNMENT STEPS IN WITH THE SUBSIDY.

  16. STAGES IN REFORM • FORMING CORPORATE ENTITIES FROM A SEB. • PRIVATISING THE CORPORATE ENTITIES. • ORISSA & DELHI ARE THE ONLY STATES TO HAVE GONE THROUGH THE ENTIRE PROCESS.

  17. ORISSA POWER SECTOR • POWER SECTOR REFORMS STARTED IN 1994-95. • DIVIDED INTO 4 COMPANIES IN 1998. • PRIVATISED IN 1999. • REGULATORY COMMISSION SET UP (OERC). • GENERATION PART PRIVATISED.

  18. INITIAL WORK • A CONSORTIA OF CONSULTANTS STARTED THE REFORM PROCESS. • ONE OF THE MODULES WAS REVENUE IMPROVEMENT. THIS WAS DONE BY PwC - LARGELY IN URBAN AREAS OF ORISSA. • METERING, SEALING AND GOOD DATABASE MANAGEMENT WERE THE KEY TASKS PERFORMED.

  19. POST 1999 • THE PRIVATE COMPANIES (BSES AND AES) INHERITED A MORE STREAMLINED URBAN REVENUE COLLECTION MECHANISM. • THE PROBLEM: RURAL AREAS.

  20. THE LEGACY • IN WESCO, 37.6% OF CONSUMERS GIVE 4.4% OF BILLING (IN Rs.), COLLECTIONS OF 1.5% AND DEBTORS OF 18.9% (FIGURES FOR FISCAL ‘98-’99.) • THESE WERE THE DOMESTIC CONSUMERS WHICH WESCO INHERITED IN RURAL AREAS.

  21. PROBLEMS OF RURAL CONSUMERS • LACK OF STEADY SUPPLY AT DESIRED VOLTAGES IN VILLAGES. • BIGGEST CASUALTY: EDUCATION OF CHILDREN. ECONOMY, EMPLOYMENT AND ENTERTAINMENT WOULD BE NATURAL LONG TERM CASUALTIES. • DIFFICULTIES IN LODGING COMPLAINTS AND GETTING NEW CONNECTIONS.

  22. PROBLEMS FOR WESCO • TRADITIONAL METHODS OF REVENUE COLLECTION DO NOT WORK IN RURAL AREAS. • DISPERSION OF POPULATION AND HIGH OVERHEADS INCREASE THE COST OF COLLECTIONS. • METER READING AND BILL DISTRIBUTION ARE DIFFICULT.

  23. THE METHOD TO BREAK THE IMPASSE • BRING ABOUT A WIN-WIN SITUATION BETWEEN THE VILLAGERS AND THE UTILITY. • THE VILLAGERS WIN BY GETTING IMPROVED QUALITY OF SUPPLY AND SOLVING OF COMPLAINTS. • THE UTILITY WINS BY INCREASED REVENUE.

  24. LESSONS FROM OTHER SECTORS • THE GRAMEEN BANK EXPERIENCE IN BANGLADESH. • MICRO-CREDIT IN INDIA. • STD/PCO BOOTHS IN INDIA. • PALLI BIDYUT SAMITIS OF BANGLADESH. • THE SAHAJBAHAL CASE.

  25. THE INTERVENTION • FORMATION OF “BIDYUT SANGHAS” (VILLAGE COMMITTEES) TO MANAGE THE ELECTRICITY RELATED AFFAIRS OF THE VILLAGE. • THESE BODIES ARE FORMALLY RECOGNISED BY THE UTILITY. • EACH COMMITTEE ALSO SELECTS A “VILLAGE CONTACT PERSON”.

  26. THE PROCESS • STEP 1: A VILLAGE MEETING TO EXPLAIN THE CONCEPT. • STEP 2: IN SOME CASES, MORE MEETINGS TO CLARIFY DOUBTS. • STEP 3: FORMATION OF COMMITTEE. EXPLANATION OF PROCEDURES. • STEP 4: FORMAL HANDING OVER OF LETTER IN A FUNCTION HOSTED BY UTILITY.

  27. ROLES & RESPONSIBILITIES OF VILLAGE COMMITTEE • ONE POINT CUSTOMER COMPLAINT CENTRE. • VCP HANDLES METER READING AND BILL DISTRIBUTION. • DECISION ON NEW CONNECTIONS, DISCONNECTIONS, INSTALLMENT AGREEMENTS & REGULARISATION. • COLLECTION CAMP CO-ORDINATION

  28. ROLES & RESPONSIBILITIES OF WESCO • RECOGNITION OF THE VILLAGE COMMITTEES AS INTERMEDIARIES. • RAPPORT BUILDING WITH THE VILLAGE COMMITTEE IN ORDER TO WORK WITH THEM CLOSELY. • CO-ORDINATING REVENUE CYCLE ACTIVITIES AND COMPLAINT REDRESSAL WITH THEM.

  29. HOW THE VILLAGERS WIN • THE UTILITY UNDERTAKES SYSTEM IMPROVEMENT TO IMPROVE QUALITY AND STABILITY OF SUPPLY. • VILLAGERS HAVE A CUSTOMER COMPLAINT CENTRE IN THE VILLAGE.

  30. HOW THE UTILITY WINS • STREAMLINED METER READINGS AND BILL DISTRIBUTION. • A ONE POINT COMPLAINT CENTRE. • DISCONNECTIONS, INSTALLMENT AGREEMENTS & NEW CONNECTIONS - REGULATED. • COLLECTION LOGISTICS SIMPLIFIED

  31. PROJECTS • 100 VILLAGES IN ATTABIRA AREA IN BARGARH DIVISION OF BURLA CIRCLE. (WESCO) FORMED THE “PILOT PROJECT”. • THE PROJECT WENT ON TO COVER 4,900 VILLAGES IN ORISSA, ALL OF KARNATAKA AND 120 VILLAGES IN GREATER NOIDA.

  32. BENEFITS TO VILLAGERS • MORE THAN 62,000 COMPLAINTS SOLVED. • MORE THAN 70,000 METERS INSTALLED/REPAIRED. • MORE THAN 47,000 NEW CONNECTIONS GIVEN. MOST OF THESE ARE “REGULARISATIONS”.

  33. BENEFITS TO VILLAGERS • VOLTAGE IMPROVEMENTS THROUGH METERING AND SYSTEM IMPROVEMENT. • TRANSPARENCY IN PROCEDURES FOR NEW CONNECTIONS - Rs. 652 • CONSUMERS ARE AWARE OF THEIR RIGHTS AND ABOUT ELECTRICITY CONSUMPTION.

  34. BENEFITS TO WESCO WESCO COLLECTIONS • Division Normal Actual Growth • Rourkela 75.46 102.90 36.37% • Sundergarh 76.10 128.70 69.12% • Bargarh 84.99 204.40 140.48% • Deogarh 19.45 25.00 28.52% TOTAL 256.00 461.00 80.08%

  35. BENEFITS TO NESCO NESCO COLLECTIONS • Division Normal Actual Growth • Anandapur 63.87 130.16 103.78% • Jajpur 319.50 513.30 60.65% • TOTAL 383.38 643.46 67.84%

  36. BENEFITS TO BSES BSES COLLECTIONS • Company Normal Actual Growth • WESCO 256.00 461.00 80.08% • NESCO 383.38 643.46 67.84% • TOTAL 639.38 1104.46 72.74%

  37. BENEFITS TO BSES • INCREMENTAL COLLECTIONS FOR BSES = Rs. 465.08 LAKHS. • FEES PAID BY BSES = Rs. 354.00 LAKHS. • FINANCIAL BENEFIT = Rs. 111.08 LAKHS (31.4%)

  38. BENEFITS TO KPTCL KPTCL COLLECTIONS • Project Normal Actual Growth • Bangalore 101.67 141.34 39.02% • Hubli 106.82 167.48 56.78% TOTAL 208.49 308.82 48.12%

  39. BENEFITS TO KPTCL • INCREMENTAL COLLECTIONS FOR KPTCL = Rs. 100.33 LAKHS. • FEES PAID BY KPTCL = Rs. 72.00 LAKHS. • FINANCIAL BENEFIT = Rs. 28.33 LAKHS (39.35%)

  40. NPCL • PROJECT SETS A HIGH TARGET OF 95% COLLECTIONS. • PROJECT IS CURRENTLY OPERATING AT 93% (AFTER 7 MONTHS OF OPERATION). • THE PROJECT IS OF 60 MONTHS DURATION.

  41. Vill-Name :- GULIJABA Vill - Code :- 2839 Section :- CHARBAHAL Sub - Div :- JUNAGARH Division :- KWED INDEX JOIST POLE -- P S C POLE -- OTHER POLE -- SC -- BPL SC -- ST -- BPL ST -- GEN -- BPL Gen -- 25KV S/S 0479 REG-3 0750 2618 0737 U.C-2 0731 0736 SI-2 0747 0748 2609 0741 0732 0734 0740 0745 0733 2686 0730 3φ4W 1φ2W 33 31 23 32 24 25 26 27 28 29 30 0728 0738 REG-2 22 2608 2607 5 21 To Wards Biramal W.POLE 4 0739 20 1φ2W BAMBOO POLE 1φ2W W.POLE 3φ4W 2 9 1φ2W 3φ4W 18 7 6 19 8 3 1φ2W (NAIK PADA) 10 1 11 3φ4W 12 2565 13 2010 0744 14 2496 0743 15 U.C-1 16 17

  42. OTHER BENEFITS • SURVEYING IS COMPLETE IN MORE THAN 5,000 VILLAGES. THESE SURVEYS WILL HELP IN: • SANITISING DATA. • PREPARATION OF WORK PLANS. • GENERATION OF ASSET REGISTERS.

  43. OTHER BENEFITS • FOR EXAMPLE, IN KALAHANDI, SURVEYS SHOWED THAT OF THE 40,288 USERS OF ELECTRICITY, ONLY 19,506 WERE AUTHORISED CONSUMERS. MORE THAN 17,000 CONSUMERS HAVE SINCE BEEN REGULARISED.

  44. OTHER BENEFITS • MESSAGE OF ENERGY CONSERVATION HAS GONE THROUGH DUE TO METERING. • CONSUMERS HAVE BECOME MORE AWARE OF THEIR RIGHTS. • WESCO/NESCO IS ABLE TO DIVERT MORE MANPOWER INTO TECHNICAL ASPECTS.

  45. THE EXIT PLAN • CRITERIA #1: REVENUE GROWTH IS TO MAINTAINED. • CRITERIA #2: SERVICE TO CONSUMERS SHOULD CONTINUE TO BE GOOD. • CRITERIA #3: THE BENEFIT VS COST SHOULD BE VIABLE.

  46. WHO TAKES IT UP? • HANDING IT BACK TO THE UTILITY MAY BE COUNTER PRODUCTIVE. • XIM CANNOT DO THIS ON AN ONGOING BASIS. • HENCE, LOOK FOR A FRANCHISEE ON COMMERCIAL TERMS.

  47. THE FRANCHISEE • COLLECTIONS WILL BE HIGH DUE TO PROFIT MOTIVE. • FRANCHISEE WILL HAVE TO KEEP THE VILLAGE COMMITTEE HAPPY. HENCE, SERVICE IS TAKEN CARE OF. • MARGINS SHOULD BE IN THE RANGE OF 6-7% OF COLLECTIONS.

  48. COST-BENEFIT • CURRENT COST OF COLLECTIONS FOR UTILITIES IN RURAL AREAS = 8% OF AMOUNT COLLECTED (EXCLUDING SALARIES). • HENCE, ANY MARGIN LESS THAN 8% SAVES MONEY FOR UTILITY BESIDES GIVING HIGHER COLLECTIONS.

  49. LOSS REDUCTION? • FRANCHISEE TAKES CARE OF IMPROVED CASH COLLECTIONS AT A LOWER COST. • HOWEVER, THIS OPTION DOES NOT TAKE CARE OF LOSS REDUCTION, WHICH CONTINUES TO BE AT 65% OF INPUT ENERGY.

  50. INPUT BASED FRANCHISEE • MAKING THE FRANCHISEE A PARTNER IN LOSS REDUCTION. • FOR THIS, METER ONE 11 kV TRANSFORMER. METER ALL DISTRIBUTION TRANSFORMERS CONNECTED TO THIS. • METER ALL CONSUMERS.

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