Transcript Bhiwandi Agra DF Improvement

Distribution Franchise
… An Experience
Torrent Power – At a glance

Part of Rs. 8200 Crore Torrent Group
• Pharma (Turnover ~ Rs. 1916 Crores)
• Power (Turnover – Rs. 5958 Crores)
Distribution
• Licensee in Ahmedabad, Gandhinagar & Surat
• Franchisee in Bhiwandi, Agra & Kanpur*
Integrated Power
Generation
Company
Transmission
2
1647.5 MW Capacity
• 500 MW at Ahmedabad
• 1147.5 MW near Surat
• JV with PowerGrid for 400 KV network
* - yet to takeover operations
3
Why Distribution Reforms???

4
Present Distribution Scenario
• SEBs are majorly responsible for distribution
• Monopoly – Defined License areas
• Lack of requisite investment in T&D sector
• Lack of R&D in the distribution sector
Present Distribution Scenario – Drawbacks!

High AT&C losses

Frequent power failures due to very old and dilapidated network

Massive load shedding

Low customer satisfaction
• Customer service standards are poor
• Lengthy and tedious mechanisms for resolving consumer grievances

Uninspiring work culture

Old and obsolete technologies still being used

Unacceptable safety standards
5
Present Distribution Scenario – High Distribution losses
23.2
25
16.4
20
10.6
15
8.5
6.7
10
5
0
India
Russia
China
Brazil
World
Distribution losses in developing countries in 2008
6
Source: Think BRIC – Comparative Study of Power Sector by KPMG- Jan 2010
Present Scenario of Power Shortage
13.8
11.7
7.3
FY05
11.9
12.3
8.4
FY06
9.6
FY07
Energy deficit
7
16.6
11.1
9.9
FY08
FY09
Peak deficit
13.3
10.1
FY10
Need of the hour

The power sector requires huge capital outlay to reduce the current deficit
and to sustain future GDP growth

It is not possible for the government to fund the growth of the sector on its
own

Investment are forthcoming in Generation from the private sector but it is
not sustainable if distribution reforms are not undertaken

The government has embarked on an aggressive mission – “Power for All
by 2012” and the private sector has a key role in achieving the objectives
stated in the mission
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Models for Distribution Reforms
Allocation of
Responsibilities
Licensee
Asset ownership
Public
Public
Private
Operation & Maintenance
Private
Private
Private
Capital investment
Public
Private
Private
Commercial risk
Public
Private
Private
3-5 years
10-20 years
25 years
Duration
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Management
Franchisee
Contract
High
Distribution Reform Process Effectiveness and Acceptance Model
Contract
Management
Political Acceptance
SEB Driven
Reforms
Dist
Franchise
Low
Privatization
Slow
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Reform Process
Fast
Benefits of Franchise Model

Reduction in technical losses and theft

Improvement in Metering, Billing and Revenue Collection

Capital investments in upgradation of the network

Enhancement in customer service quality
A win-win scenario for all:
Consumers, DISCOM and Franchisee
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Technical Benefits

State of the art distribution system in franchise area

Lower peaking load due to better technical T&D management

Better overall grid stability due to lower system interruptions

Improvement in reliability parameters like SAIFI, SAIDI,
CAIDI, etc.
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Financial Benefits to the State

Assured returns from distribution franchisee

No investment in the franchise area by licensee

Reduction in losses

Contribution to the Government exchequer
• Increase in collection of Electricity Duty as the metering and billing
becomes more accurate
• Increase in collection of other Central and State taxes pursuant to
growth of economy of franchisee area
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Better services to Customers

Improved services
• Faster new connections/ load extensions
• Lower attendance time for faults
• Grievance Redressal mechanism
• Convenient bill payment facilities

Better availability and quality of power

Increased customer satisfaction
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What is a Franchisee?
As per Definitions of The Electricity Act, 2003
“franchisee” means a person authorised by a distribution licensee to
distribute electricity on its behalf in a particular area within his area of
supply;
Facilitation of Franchise Model in the Section 14 of the Act:
Provided also that in a case where a distribution licensee proposes to
undertake distribution of electricity for a specified area within his area of
supply through another person, that person shall not be required to
obtain any separate licence from the concerned State Commission
………………………
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Features of Input Based Distribution
Franchise
Role of a franchisee
State DISCOM
to supply power at
EHV substations
Fault Restoration
Planning
All Obligation and Rights of a
O&M
Revenue Collection
Distribution
Licensee
Energy Input
Metering
Generation
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Transmission
Meter Reading
Customer Care
Distribution
Construction
CAPEX
Rights of DF

DF to distribute power in the franchise area for a fixed term
as per the agreement

DF is an exclusive agent of Licensee in the Franchise Area

DF has all rights of a Distribution Licensee

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E.g. authorization under Section 126, 135,152 of Electricity Act 2003
Responsibilities of DF

Purchase of power


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From Licensee at EHV substations feeding the franchise area
Network Related

Network analysis and improvement planning

Make capital investment for renovation/ upgradation of network

Distribution asset maintenance
Responsibilities of DF

Consumer Related

Metering

Meter reading

Billing as per Regulatory Commission’s approved Retail Tariff

Collection (both current revenues and arrears)

Issuing new connections

Adherence to all relevant Regulations of ERC including Supply Code
and SOPs

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Attending consumer grievances
Responsibilities of Licensee

Supply of energy

As per the pre-determined schedule of supply on a non discriminatory
basis subject to power availability

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Payment to DF upon expiry / termination

For assets created during the agreement term at depreciated value.

For closing inventory

Arrears for last one month
Responsibilities of Licensee

Grant of Right to use of distribution assets in the circle

Network assets in field from the start of outgoing 22 kV feeders of
EHV s/s


Deputation of willing employees to DF

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Assets in stores as opening inventory
Deputation rules/ deputation package of DF will be applicable.
Commercial Terms
Payment by DF
Charges for input energy as quoted by franchisee
Arrears collected
Security Deposit for new connections
Electricity Duty etc
D
F
Payment by Licensee
Incentive on recovery of arrears
Subsidy
Specified payments upon termination / expiry
Competitive bidding ensures that the State Discom gets the
right price for input energy
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L
I
C
E
N
S
E
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Bhiwandi Franchise experience
Bhiwandi : Introduction

Government of Maharastra took the lead in distribution reforms and
introduced a franchisee model for public-private partnership

DISCOM consequently put through a process for selection and
appointment of a distribution franchisee for the Bhiwandi Circle of its
license area of Maharastra State

Torrent Power was selected as the Distribution Franchisee through an
open competitive bidding process

Distribution Franchise Agreement was signed
December, 2006

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Operations taken over from 26th January, 07
with DISCOM on 20th
Bhiwandi
( at the time of takeover)
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Area
721 sq kms
Population
10 lacs
No of Customers
160,000 Nos
Demand
800 MVA
Annual Energy Input
2500 MUs
Bhiwandi : At the time of takeover

AT&C losses : 58%

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

Distribution transformer failure rate of 40%

Poor reliability of supply

Only 23% of the customers have accurate
metering and there are many unregistered
consumers
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Key Challenges
Internal
• Human Resource
• Power Availability
 Manpower
 Load Shedding
 Integration
 Transmission Capacity
• Administrative Setup
 Offices
• T&D loss reduction
 Technical loss
 Commercial loss
• Reliability of system
• Safety
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External
• Customer Confidence
 Customer Service
 Becoming
Bhiwandi
a
part
of
Overcoming the Challenge
Problem:
Issue:
HR Challenge
Creating administrative setup
Recruiting & Training of Manpower
Integration of all employees – TPL, MSEDCL, Laterals
and Freshers
Measures:
Offices made functional before Day One
Training provided in batches at Ahmedabad
Providing basic necessities – food, commutation
Defining uniform policies for all employees
Developing a “team attitude”
Direct communication with all employees regarding Goals and
Targets
Uniform and quick appraisal & reward mechanism
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Bhiwandi Team Logo
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Sharing Goals and Targets
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Communicating Commitment
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Overcoming the Challenge
Problem:
Lack of Adequate Power
Issue:
Mandatory Load Shedding of 6 hrs increased to 8 hrs
Further distress load shedding of 2 to 4 hrs
Inadequate EHV transmission capacity
Measures:
Joint team with Transco & DISCOM formed
EHV network reconfigured
All support provided for creating additional capacity
Reduction in losses led to reduction in load shedding
as per MERC approved MSEDCL load shedding criteria
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EHV Network Augmentation

Joint Team of TRANSCO /
DISCOM / DF to identify the
bottlenecks in Transmission
Network

3-Years EHV Augmentation Plan
prepared and got approved
•
•
•
•

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Pre-takeover
Reconfiguration of EHV Lines
Additional power transformers
New EHV Substation
Switchyard extension for 22KV
feeders
250 MVA Transformation capacity
added so far
Proposed
Overcoming the Challenge
Problem:
Frequent Power Failures
Issue:
2 to 3 DTs failing everyday
Frequent conductor breakdown
Overloaded System
Lack of adequate maintenance leading to deterioration
of network
Long restoration time in case of faults
Measures:
Failed DT replaced within 24 hours
24 x 7 control room to ensure faster restoration
All DTs revamped
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Overcoming the Challenge
Problem:
Technical Losses
Issue:
Overloaded feeders leading to higher I2R losses
Improper crimping at joints
Poor power factor of the system
Measures:
Reconfigured the existing feeders
Added 29 new feeders to the existing 46 feeders
Added 125 MVA distribution transformer capacity
Proper termination and crimping provided
Installed capacitor banks to improve power factor
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Distribution System
22 KV feeders
Distribution Transformers and FSPs
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Shunt Capacitors
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Overcoming the Challenge
Problem:
High Commercial losses
Issue:
Only 23% customers metered
Rampant theft of energy
No substantial action against non payment of bills
Measures:
Provide systematic metering for accurately measuring
consumption of the customers
Securitization of the network and extensive vigilance
Filing of FIR in case of repetitive power theft
Streamline processes to improve collection efficiency
“Ujjwal Bhiwandi Abhiyan” for legalising connections
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Metering
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Ujjwal Bhiwandi Abhiyan
98000 connections since launch of UBA in Sept 07
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Overcoming the Challenge
Problem:
Safety
Issue:
Lack of adequate clearance with lines
Transformers located at roadsides without any fencing
Double feed through hooking
LT/HT lines in poor condition (conductor snapping)
Measures:
Lines replaced by underground cables at critical
locations where clearance are issue
Earthing provided for all poles, transformers
Removal of double feed
Fencing provided for transformers
Lines replaced, where necessary
Public Safety Awareness programs
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LT Network Revamping
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Safety
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Overcoming the Challenge
Problem:
Customer Service
Issue:
No concept of customer service
No consumer redressal system
Customers had lost confidence in utility
Measures:
Call Center started from Day One
Customer friendly bill introduced
2 Customer Service Centers Opened
Customer Redressal Mechanism established
Mobile Van as a value added service
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24 x 7 Call Center
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Customer Care Centers
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Outage Management
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Overcoming the Challenge
Problem:
Creating Customer Confidence
Issue:
Public was instigated against a private company taking
over
No knowledge about Torrent’s capability
Measures:
A series of programs with influential citizens
informing them about Torrent Power
Direct interaction with Customers through letters
Performance standards widely publicized in direct
mailers, cable TV, hoardings
Cultural adaptability – active participation in all festivals
Completing the communication loop through customer
feedback - Setup a Customer Advisory Committee
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Direct Interaction with Customers
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Community development activities
Dahi Handi
Ganesh
Chaturthi
Iftar Party
Becoming a part of the social fabric
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Customer Advisory Committee
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The results
Major Accomplishments :
Distribution Transformer Failure Rate
At the time of takeover
As on Nov 2010
40%
2.8%
DT Failure Rate reduced by 37%
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Major Accomplishments : Load Shedding
At the time of takeover
At present
10 to 12
hours
Less
than 3
Hrs
Reduction in losses has improved power
reliability in the area
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Major Accomplishments : Accurate Metering
At present
At the time of
takeover
23%
99%
99% of sales is based on actual reading.
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Major Accomplishments: AT&C Loss
At the time of takeover
As on March 10
58%
18.8%
12 month
Moving
Average
Reduction of 39%
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Agra
International Tourist Place
Area : 188 Sqkms
Population : 23 Lacs
Customer base : 2.8 Lacs
Peak Demand : 420 MVA
Energy Input : 1800 MU
33KV OH Line : 230 Kms
33/11KV Substations : 38 Nos
11KV OH Line : 713 Kms
DTCs : 3269 Nos
HT Consumers : 350 Nos
LT Network : 1500 Kms
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Agra Network : Major Issues

Power Supply Shortage
• For distressing the system
• Bottlenecks in EHV Network

Technical shortcomings
• Inadequate Network
• Aging T & D Network
•
•
•
•
Highly unsafe Network
Significant Overloading
Lack of Redundancy
Inadequate protection system
• Inadequate Reactive Compensation

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Sub-optimal Maintenance
• Poor Upkeep & Maintenance
Couple of major outages every day adversely affecting the reliability of supply
• Complete lack of standardization
Agra : Major Issues

Commercial Profligacy
• Inadequate metering
 Few consumers with accurate metering
• Incongruent billing processes
• Inconsistencies in database
• High theft & pilferage
 Many Unregistered consumers
• Low collection efficiency
• Huge backlog of new connections and customer
complaints

High distribution losses

Lack of Customer Services

Manpower problems
• Shortage of skilled manpower
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Crying need for complete overhaul of the system
 Complete lack of IT in overall business
Key Challenges
Reliability of Supply
Robust, Secured and Safe Network
through absorption of latest
technologies
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Customer Services
AT & C Losses
Bringing Value added systems and
technologies for Customers
Bringing efficiency in Network,
metering, billing & other Commercial
Processes
… easier said than done … the consumer base, complexity of network & geographical
spread being large, it’s a real challenge !!!
Key Requirements for DF arrangement
Key Requirements for DF Arrangement

Huge Capital expenditure is required to renovate and modernize the
network

Depreciation rates should be as per CERC norms

Longer tenure (20 to 25 years) increases the investment by Franchise
thereby increasing the pace of reforms

Franchise should have appropriate customer mix and have sufficient load
to have benefit of scale of operations (Input Energy of 2500 MUs per year)
Area will attract the large and experienced players &
Tenure will attract the required level of investment from them.
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Key Requirements for DF Arrangement

The required power should be made available
• Despite the marked improvement brought in Bhiwandi, change not
visible as load shedding continues
• Customers want quality power 24 x 7
• Availability of adequate upstream infrastructure (Transmission
Capacity) to cater to the demand in the franchise area
• Distributed Generation based Dist Franchisee is a step in the right
direction
Franchise should be provided with adequate power so that the benefits of the
improvement are realized
64
Key Requirements for DF Arrangement

In Franchise, the overall control lies with Distribution company but to
ensure success, independence in operations should be given to
Franchisee
• Right to do Capital Expenditure at its own discretion
 Only then can a franchisee bring in the required level of
improvement in the system which is the main objective of
franchising an area
• Rights under section 126,135 of Electricity Act 2003 to stop theft
• Non – interference in day-to-day activities
Franchise should be given the rights as long as it follows the orders of Regulatory
Commission and the prevalent laws of land
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Key Requirements for DF Arrangement

Adequate support from the State Discom
• Manpower (On deputation from Licensee)
 List of interested employees to be made available to DF
 DF should have the right to select / reject from the list without assigning any
reason
 Term of Deputation to be mutually decided
 Employee on deputation cannot go back on their own
• Coordination with local authorities / Govt. bodies
Support of Govt , Discom and general public is essential for success of DF
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Key Requirements for DF Arrangement

For certain statutory / regulatory processes, Franchisee should be considered
independent of licensee
• Levy of Service Line Charges
• Accelerated Power Development and Reforms Programme
• Regulator has to recognise the locus standi of the franchisee so as to ensure that
interests of the customers of the franchise area are protected
Franchisee should have the right to approach the regulator wherever required
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Thank you