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Tata Power-Project Report

Project Management (Indian Institutes of Management)

Studocu is not sponsored or endorsed by any college or university

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SUMMER INTERNSHIP
On
Distribution Cost Reduction Strategy and Methods
( Evaluating comparing and recommending various strategies and
methods adopted by Discoms in the private sector to ensure cost and loss
reduction)

Akshit Aggarwal (2019PGP068)

MBA Class of 2019-21
Indian Institute of Management, Shillong

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Declaration

Distribution Loss Reduction Strategy and Methods

(a) That the work presented for assessment in this summer internship
Report is my own, it has not previously been presented for another
assessment and my debts (for words, data, arguments and ideas) have
been appropriately acknowledged.
(b) That the work conforms to the guidelines for presentation and style
set out in the relevant documentation.

Date: ……………
AKSHIT AGGARWAL
MBA- IIM SHILLONG

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Certificate

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Acknowledgement

This project bears the imprint of many people who have assisted me in
the successful completion of this report. I wish to express my sincere
gratitude Finance and Accounting Department at TATA POWER -DDL and
acknowledge the contribution of all the people who took active part and
provided valuable support to me during the course of this project

With due reverence, I acknowledge the valuable support of “Mr. Hari Om

Singh, Mentor”, for giving me the opportunity to add to my knowledge
reservoir.

Lastly, I would like to thanks to the ALMIGHTY and my parents for their
moral and financial support and my colleagues with whom I shared my
day-to-day experiences and received lots of suggestions that improved
my work quality.

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Contents

Declaration............................................................................................................................................2
Certificate..............................................................................................................................................3
Acknowledgement.................................................................................................................................4
Project Summary...................................................................................................................................6
Research Methodology..........................................................................................................................8
Context and Introduction.......................................................................................................................9
Company Overview..............................................................................................................................10
Geographical Area of Operation (TPDDL)............................................................................................14
Shareholding Pattern...........................................................................................................................15
Business Profile....................................................................................................................................16
The objective of the study...................................................................................................................20
Background & Current Scenario..........................................................................................................21
Power Scenario in Delhi in 2002..........................................................................................................23
Competitive Scenario...........................................................................................................................24
Distribution Reforms Planned by the Government..............................................................................26
Distribution Loss Components.............................................................................................................27
Reasons for High AT&C Losses in India................................................................................................30
Focused approach to reduce AT&C Losses (TPDDL).............................................................................32
Brief profile of Companies in in Private Sector....................................................................................35
Comparison of Companies in the Private Sector.................................................................................37
AT&C Losses scenario in Delhi.............................................................................................................38
.............................................................................................................................................................38
Solutions and Recommendations to reduce Commercial Losses.........................................................41
References...........................................................................................................................................50

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Project Summary

The overall purpose of this final report is to describe the tremendous

internship experience that I had this summer during my work at TATA
POWER DDL. This experience has given me a unique opportunity to
explore the real world by acquiring and applying the theories, principles,
observation and knowledge that I have practiced in college in professional
setting.

During the internship period I was encouraged to seek out activities that
expand my personal talent and interest. The first part of the report deals
with history, background and introduction to TATA POWER DDL which will
give know-how of electricity distribution and will help understand things in
a better way.

The second part of the report entails the study about the current situation
of the AT&C and other distribution losses in the power sector. It record
the initiatives taken in Delhi and by private companies to reduce their
AT&C losses exponentially over the years.

The report further focuses on the reforms made by the government in

order to boost the distribution sector. Also the report compares the
strategies adopted by the private players to reduce their distribution
losses and recommend what strategies TATA POWER TPDDL can adopt to
further reduce its distribution losses.

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Research Methodology

1. Research objective
To create and develop new ideas and strategies to reduce distribution
losses by TATA POWER DDL

2 Research design Methodology used in research is both qualitative

and quantitative. The data used is primary as well as secondary. MS
Excel and SPSS is used for the evaluation of data

A. Primary data collection: Data was collected through the

existing dataase of consumers provided by TATA Power
B. Secondary data collection
 TATA POWER DDL portal
 Research articles
 Websites

3. The data was analysed using SPSS software. The data which was
already present on the net , various articles and journals were given a
read. Various practices taken up by countries were studied and then
data analysis was done to look into the various strategies adopted to
reduce the distribution losses

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Context and Introduction

The Covid-19 pandemic has taken a huge toll on India and countries
across the globe in terms of humanitarian impact as well as on the
economy. India also feeling the effect with a dynamic shift in the
production and the demand pattern
The Power sector continue to ensure uninterrupted power supply in the
country in these unprecedented times.

Electricity is the blood stream of the economy, specially at this time as

the sector plays an important role in ensuring a smooth functioning of all
critical institutions such as healthcare facilities, law & order services, and
to millions of households as almost the entire population is home bound.
Electricity is therefore rightly classified as an essential serve.

While the sector is working 24*7 to ensure smooth functioning of all the
activities, the demand has plummeted by around 25-27 percent in the
time of the lockdown. This demand reduction coupled with delays in
collections is expected to cause a substantial liquidity shortfall for
DISCOMs. which further adds to the woes of the power sector.

Hence this project report analyses how can the distribution companies
minimise losses by reducing their distribution & AT&C losses

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Company Overview

Tata Power Co Ltd is a Tata Group company and is the biggest integrated
power company involved in the business of Generation, Transmission ,
Distribution, Power Trading, Power Services, Coal Mines and Logistics,
Solar PV manufacturing, and associated EPC services.

It is serving more than 2.6 million consumers of electricity spanning the

cities of Delhi, Mumbai, and Ajmer. The total operational generation
capacity of the company stands at 10957 MW of power as of March 2019.

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Its’s major plants are located in Mundra , Trombay, and Maithon. The
company is also currently executing projects of 100 MW

Tata Power Delhi Distribution Limited (Tata Power-DDL) is a joint venture

between Tata Power and the Government of NCT of Delhi with the
majority stake being held by Tata Power Company (51%).

Tata Power-DDL has implemented various power distribution reforms in

the capital city and is acknowledged for its consumer-friendly practices.

Since privatization, the Aggregate Technical & Commercial (AT&C) losses

in Tata Power-DDL areas have shown a record decline from 53% in July
2002 to 7.79% as of today.

Tata Power-DDL has a registered consumer base of 1.76 million and a

peak load of around 2074 MW (recorded on July 2, 2019), the company's
operations span across an area of 510 sq. km1

To ensure a constant supply of electricity to its customers, Tata Power has

enforced various several world-class technologies like Advance
Distribution Management system or ADMS which is designed to replace
the conventional SCADA-DMS-OMS system with features like real-time
integration of Smart Meter

1 https://www.tatapower-ddl.com/corporate/our-company/company-profile

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Distributed Generation integration and single data model from GIS ,

Integrated Geographical Information System (GIS) for instant services,
Advanced Metering Infrastructure (AMI), Automated Demand Response
(ADR), Smart Street Light Management system, Field Force Automation,
Upgraded Network, Integrated Toll-Free Helpline No. 19124, etc. Also, it
provides them with various services for their ease and convenience, such
as 24X7 Integrated Helpline, Mobile Application for both iOS and Android
users, bilingual website, Multiple Payment Avenue, End to End online
services for New Connection, etc.

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Key Developments

 Tata Power signed the implementation agreement with Tata

Advanced Systems Ltd (TASL) to sale its Strategic Engineering
Division (SED) which is engaged in the business of indigenous
design, development, production, integration, supply and life cycle
support of defence systems at an enterprise value of Rs. 22.3 billion
in April 2018.

 The Supreme Court (SC) in Oct 2018, directed Central Electricity

Regulatory Commission to decide on tariff revision and re-
negotiation of power purchase agreements of Tata Power's
Mundra power plant.

 Tata Power through its joint venture company, Resurgent Power

(joint venture with ICICI Bank) has signed a share purchase
agreement with a consortium of lenders led by State Bank of India
(SBI) to acquire 75.01% stake in Prayagraj Power Generation
Company Ltd (PPGCL), which owns and operates a 1,980 MW super
critical power plant in the state of Uttar Pradesh.

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Geographical Area of Operation (TPDDL)

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Shareholding Pattern

Following is the shareholding pattern as of September 20192

Category Percentage(%
)
Promoters holding- Individuals and Bodies 36.2
Corporate
Mutual Funds 0.00
Financial Institution and Banks 0.00
Public 63.8
Total Shares 100

2 https://www.crisilresearch.com/#/industry/power/companyProfileView/TATPOWE

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Business Profile

TATA POWER

Generation Renewables

Power
Transmission Trading

Distribution Coal Mining

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Power generation

Tata Power group of companies have an operational power generation

capacity of 10,957 MW as on March 31, 2019 of which 7340 MW is
thermal, 375 MW is thermal waste heat-recovery, 693 MW is hydro and
2,549 MW is renewables.

Fuel wise share of installed capacity as on March, 2019

Source: Company reports, CRISIL Research

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Coal business

Tata Power, through its subsidiaries, holds 30% stake in PT Kaltim Prima
Coal and a 26% stake in PT Baramulti Suksessarana Tbk in Indonesia. In
fiscal 2019, Tata Power signed an agreement to sell its 30% stake in PT
Arutmin Indonesia and associated companies in coal trading and
infrastructure.

Distribution business

Tata Power has 51% stake in Tata Power Delhi Distribution Limited
(TPDDL) which supplies power to northern Delhi, while rest is held
by Delhi Government. Revenue of TPDDL rose 7% on-year in fiscal
2019 to ~Rs. 76 billion supported by higher sales which rose ~3% on-
year to 8.8 billion units (BU) during the year. Moreover, the AT&C losses
of TPDDL stood at 8.2% against 7.9% last year.

Sales from Mumbai business increased by ~3% on-year to ~4.5 BUs from
4.4 BUs in fiscal 2018 even as the company’s total customer base
expanded to over 7.01 lakh in fiscal 2018 from 6.86 lakh in previous year.

Tata Power won the bid floated by Ajmer Vidyut Vitran Nigam
Ltd for appointment of a distribution franchisee in Ajmer city,
Rajasthan. Tata Power Ajmer Distribution Ltd is the wholly owned
company of Tata Power formed in April 2017.

Trading business

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The company has agreed to revise the terms of power purchase

agreement (PPA) with Dagachhu Power to reflect the current regulatory
and market constraints in importing power from Bhutan.

Renewable business

Tata Power Renewable Energy Ltd (TPREL) is Tata Power's primary

investment vehicle for renewable energy based power generation
capacity. TRPEL acquired Welspun Renewables Energy Private Ltd.
(WREPL) in March 2019 which had an operating capacity of ~2,549 MW
(1161 MW -Solar and 1388 MW- Wind) thereby surpassing the 2,500 MW
operating capacity mark. WREPL is now a fully owned subsidiary of TPREL
and has one of the largest operating solar portfolios spread across India
in the states of Rajasthan, Madhya Pradesh, Andhra Pradesh, Tamil Nadu,
Karnataka, Punjab, Maharashtra, Gujarat and Bihar.

Under this acquisition deal, significant green-field risks, including

construction and evacuation risks, have been mitigated. Also the assets
consists of large solar portfolio with PPAs contracted at healthy tariffs for
a period of 25 years.

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The objective of the study

Although there have been several mandates and regulations that have
been developed for the regulation of the power sector. However, there’s
been a considerable amount of reoccurring losses in the power sector,
which affects the financial health of Discoms, further putting pressure on
the regulatory tariffs.

This report evaluates, compares and recommends the various strategies

adopted by different Discoms in the power sector for Distribution Loss
reduction

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Background & Current Scenario

After more than 15 years of the introduction of the Electricity Act 2003,
which focuses on the promotion of the electricity industry, protecting the
interest of the consumers, ensuring a regular and constant supply of
electricity, etc. The Indian power sector has witnessed some major
transformation and development including 100% electricity access in rural
areas and supply of electricity in a reliable and economical manner

However, the distribution utility underperformance has still been a

hindrance to the growth of the power sector, with it being a critical link
between the power sector and the consumers.

To name a few the significant challenges faced by the distribution

segment include

 Aggregate transmission and commercial losses

 High aggregate financial losses
 Poor Cost recovery
 Insufficient tariffs

Although there has been a downward trend in the AT&C Losses, however,
the AT&C Losses have remained constant for a decade now. With the
AT&C losses at close to 23% in the FY2010-2011, there has only been a
gradual decrease to 21.4% in the FY2019-203

Reducing the AT&C cost is of critical importance and has a two-pronged

advantage

1) It would lead to a reduction of losses

3 https://www.livemint.com/news/india/india-to-privatise-all-electricity-discoms-in-union-territories-
11589542552771.html

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2) It will provide additional energy that can be supplied to existing or

new customers.

Apart from the AT&C losses is the under-recovery of the fixed charges by
the state Discoms. The retail tariff consists of two parts: a fixed charge
and a variable charge.

The under-recovery fixed charges occur due to the mismatch between the
actual fixed liability and variable cost liability incurred by a utility to the
proportion of cost recovered through fixed charge and energy charge.
This kind of tariff structure leads to a mismatch between the cash flows of
the discoms as they have a set payment obligation to the generation and
transmission companies irrespective of the sale made to the retail
consumers. Now, as the significant portion of the fixed cost is collected
through the energy sales made every month, having high volatility due to
weather conditions/seasons further adds to the financial burden of the
discoms. Any abrupt change in the consumption pattern can profoundly
impact the cash flow of the discoms, as currently being witnessed during
the COVID-19 crisis. This has led to a reduction in the demand for
electricity, with all business units and factories being shut down, leading
to a fall in consumption.

In order to cope up with the situation the Indian government this year
also announced a 90000 core injection to provide relief to the already
stressed discom sector

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Power Scenario in Delhi in 2002

AT&C/Theft losses range between 53% to 60% of Input

• Govt. Subsidies approx. Rs 1,500 cr per annum to bridge Revenue Gap
• Condition of Network pathetic
• Billing Receivables close to 1 year outstanding
• Poor Condition of Consumer Records • Consumer nowhere in
focus/Regular black-outs and brown-outs of 4-6 hours

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Competitive Scenario

The power sector in India is regulated by the government, and each

distribution defined with its geographical area of operation. Due to the
complexity of the regulation in the power sector and long learning
duration, there are a lot of barriers to entry in this sector. Also, coupled
with the public resistance against the privatization of this sector, entry
becomes far more difficult for private players to enter this sector.
However, with government support and demand for quality electric supply
and increasing demand for electric vehicles and appliances, there is
furthermore scope for privatization in this sector in the coming years.

Electricity is a scarce resource; the difference between the supply and

demand for electricity is enormous. The increasing cost of crude oil for
power-generating plants is leading to increased power generation cost to
end-users. Since the power sector in India is regulated by the
government , power distribution companies do not have the
interdependence to raise the power prices on their own.

The end-consumers of electricity do not have the option of chosing their

electricity supplier, and even after the introduction of the Electricity Act
2003, in open access, consumers have to pay whooping charges to
change the electricity supplier. Moreover, the electricity rates are decided
by the government, and the existing scenario of the monopoly of power
distribution companies does not offer any choice for consumers to
purchase power at a competitive price from other power distribution
utilities. The power distribution licenses are allocated to distribute power

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in different geographical areas, and there is no practical competition.

But however due to open access and to gain government support, the
power distribution utilities are silently competing to sustain in the future.

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Distribution Reforms Planned by the

Government

The government plans to implement several policies to resolve the ailing

issues of the distribution segment, as it impacts the entire value chain.
Key announcements pertaining to the same are:

1. Fresh trajectory for reduction of AT&C losses to below 15%.

Possible cumulation of targets and funds under DDUGJY and IPDS;

2. Privatisation of distribution circles - separation of content and

carriage. Distribution system remains with utilites and they will get
wheeling charges. However, make available power in wholesale to
the supply licensee (private sector) who services the end
consumers. Recently, Tata Power has won the bid to service five
circles within Odisha - roughly a consumer base of 2.5 million;

3. Letter of credit (LC) mechanism was also implemented in August

2019. This order mandated discoms to issue LCs or provide
payments upfront before purchase of power. Despite its limited
success so far, we expect gradual improvement in its
implementation in the future;

4. Ensuring 24x7 power supply on a sustainable basis across India

5. Possible allocation of power subsidies via direct benefit transfer

6. A revised tariff policy to make tariff revisions more effective and

cost encompassing but at the same time not passing on costs due
to discom inefficiencies.

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Distribution Loss Components

Aggregate technical and commercial losses, also referred to as AT&C

losses, generally are used as performance measurement yardstick in the
power distribution sector.

A&T Loss is the difference between the energy input and the energy for
which the revenue is actually realized. They can further be bifurcated into
two types of losses

 Technical losses : These losses basically arise because of the

electric current flowing in the electrical network. However, these
losses are inherent and cannot be eliminated. The following are
some of the technical losses caused:

a) Copper losses are due to heat produced by electrical currents

and are inherent in all inductors because of the finite resistance
of conductors

b) Dielectric losses are losses that result from the heating effect on
the dielectric material between conductors

c) Induction and radiation losses are produced by the

electromagnetic fields surrounding conductors. Technical losses are
possible to compute and control, provided the power system in
question consists of known quantities of loads.

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 Non-technical losses : Under this energy is consumed in the

distribution network as against technical losses but remain un-
accounted. These non-technical losses can be both internal and
external

 Internal Non-Technical Losses: These internal technical losses

may arise from connection mismanagement, theft, incorrect
meter

a) Connection management: Efficient and accurate

management of existing and new connections is an important
activity of revenue cycle management. Instances like release
of connection without meters, mismanagement of billing
records, cleaning of past accounts on same premises before
release of new connection etc. contribute heavily to the non-
technical losses. Further the non-technical losses may be
hidden due to illegitimate or non-existent consumers in the
database leading to billing of non-existent sales. These
instances can be managed by adopting efficient and industry
level connection management practices.

b) Meter reading: The timely, accurate recording of

consumption data from energy meters enables the
containment of non-technical losses further. The major
challenges faced with respect to meter reading may include
no meter reading due to installation of the meter at
inaccessible places, premises lock, conniving activities, under
recording, no recording, absence of any quality checks on the
actual meter readings, inaccurate posting of the readings,

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tampering the data recorded etc. These all immensely

magnify the non-technical losses in the system and also
create considerable revenue loss for the Discoms.

c) Field vigilance: Limited or no checks on the field leads to higher

power pilferages, incorrect billing of theft cases, staff collusion
with conniving consumers etc. enhance the losses further and
deteriorates the health of the Discoms. Hence, regular visits to
the fields and being vigilant is very important for the Discoms,
etc. d) Billing: Generating right bill based on the correct energy
consumption data is of foremost

importance for a Discom in order to realize the right revenue.

Discoms
tend to incur huge amount of losses owing to factors like
generation of average bill due to delayed/erroneous readings,
untimely delivery of bills, faulty billing software etc.

 External Non- Technical Loses : The external non-technical

losses include losses from credit management, collection
management, etc

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Reasons for High AT&C Losses in India

The power distribution sector primarily occurs high AT&C Losses

primarily because of the following reasons

 A weak transmission and distribution system

 Large Scale rural electrification

The technical losses incurred by the power distribution

companies have a high inverse co relation with the voltage
configuration. While bulk transfer of high voltage over long
distances lead to an energy loss of 4-5 percent , the same
when done with low voltage configuration leads to a loss of
14-15 percent

 Improper Load Management

Overloading of transmission lines is another key factor leading

to AT&C losses The transmission line should as per
recommendation carry 50-60 percent of their load capacity.
However in India the transmission lines carry 90 percent of
their load capacity. Thus transmission lines often operate on
high alert pattern, any significant variation in the load can
cause cascading grid failure.

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 Pilferage and theft of energy

 Number of Transformation Stages

The number of transformation stages in India Transmission
and Distribution Network is high (around 5-6). This is due to
the high

demand for low voltage consumption. This leads to loss of

electricity, thus leading to high AT&C Losses

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Focused approach to reduce AT&C Losses

(TPDDL)

Immediately after Privatization (FY2002-03)

 Energy Billing System: Fully implemented a homegrown online

Decentralized Energy Billing System (DEBS) connected from its
central server to all its Consumer Care and Cash Collection Centers.

 Communication Backbone establishment: All the Grids and

major commercial offices were also connected through a strong
optical fiber backbone with capacity of 2.4 Gbps in core ring and
644 Mbps in sub rings. The Communication backbone is used for
both operational (SCADA) and enterprise requirement like System
Application Product (SAP), etc. and other data requirement such as
internet, mail, video conferencing etc. This backbone has availability
of more than 99.9%. Last mile connectivity to all zones is extended
through radio frequency and optical fiber with min. bandwidth of 2
Mbps
.

Between 2003 and 2006

 Grid Substation Automation: 66/11 and 33/11 kV grids of TPDDL

have been automated with latest technology for remote connectivity
to SCADA center. These grids are remotely monitored. Grid station
automation include change of 66/33 KV /11 control and relay panel

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replacement with new panels fitted with state of Art Intelligent

Electronic Devices and data concentrator. These stations are
equipped with devices to make all control, monitoring and
protection signal available at remote control center for efficient
control and monitoring of Electrical network

 Geographical Information System (GIS): TPDDL also

implemented GIS system for complete TPDDL area. All Assets such
as transformers, Buildings, Poles, Cables etc. have been mapped in
GIS and helps TPDDL in various processes such as Capital
Expenditure Management, Asset Management and Revenue
Management.

 Automatic Meter Reading (AMR): TPDDL also established

Automatic Meter Reading (AMR) system for all of its high end
consumers which have the capability to read meters of any make.
This system has completely eliminated manual intervention in the
process of meter reading to the final printing of the bill.

Between 2006 and 2009

 Supervisory Control and Data Acquisition system (SCADA): It

has enabled TPDDL to control all connected grids from a SCADA
Master Control Center at Pitampura - III. SCADA system is designed
with the concept of main control center and backup control center is
part of disaster management.

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 Customer Relationship Management (CRM): with the challenge

to integrate all modules/commercial processes, a home grown work
flow based CRM application SAMBANDH (Building Relationship) was
implemented.

2009 till date

 In Apr 2011, as an integrated solution for commercial processes,

SAP ISU (Industry Solution for Utilities) was implemented. This has
facilitated online accounting of sales and collection without any
manual intervention.

The application has been seamlessly integrated with other

applications like OMS, GIS, AMR, HHD, Spot Billing, IVRS, Payment
Gateway, Lab testing M/c, etc. and with other ERP module like
PS/MM/PM/FI. Distribution loss reduction initiatives followed in
Indian States Best practices and strategies for distribution loss
reduction - Final report Forum of Regulators 50

 Unified Call Centre for attending to ‘No Supply’ & ‘Commercial

Complaints’. This has meant the sun-set of thirteen in house
applications like BBS, DEBS, SAMBANDH, etc.

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Brief profile of Companies in in Private

Sector

1. Torrent Power Ltd (TPL) is an integrated power utility with presence

across power generation, transmission and distribution segments. Under
distribution business, it supplies electricity to over 3.32 million consumers
in Agra (Uttar Pradesh) and Bhiwandi (Maharashtra) through the
distribution franchisee route and in Ahmedabad and Surat (Gujarat)
through the licence route. As of March 2019, TPL had a total installed
capacity of 3,703 MW.

2.Reliance Power is an independent power producer with ~6,000 MW of

operational power generation assets. The projects under development
include three coal-fired projects, one gas-fired project and twelve
hydroelectric projects, out of which six are in Arunachal Pradesh, five in
Himachal Pradesh and one in Uttarakhand.

3. CESC Limited is a flagship company of RP-Sanjiv Goenka Group and is

primarily into generation and distribution of electricity in West Bengal.
CESC distributes power to ~3 million customers in Kolkata and Howrah. It
has also diversified into retail business - Spencer's - which is the
company’s flagship subsidiary and business process unit under Firstsource
Solutions.

4. Adani Power Ltd (APL) was incorporated in June 2002, as a

subsidiary of Adani Enterprises Ltd. The company was established with

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the objective of developing, operating and maintaining power generation

and transmission projects in India. Apart from power, Adani Group has its
presence across businesses like oil and gas, infrastructure, logistics, ports
and mining.

5. Tata Power Co. Ltd a Tata Group company, is India's largest

integrated power company involved in the business of Generation,
Transmission, Distribution, Power Trading, Power Services, Coal Mines
and Logistics, Solar PV manufacturing and associated EPC services. It is
serving more than 2.6 million distribution consumers in India - spanning
Mumbai, Delhi and Ajmer. The company's total operational generation
capacity of 10,957 MW as of March, 2019, is based on various fuel
sources - thermal, hydroelectric and renewable energy (wind and solar).
Its principal generating plants are located in Mundra (4,150 MW),
Trombay (1,430 MW) and Maithon (1,050 MW). The company is currently
executing projects with a total capacity of ~100 MW.

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Comparison of Companies in the Private

Sector

AT&C Losses is often considered as a benchmark for comparing the

performance and operational efficiency in the power sector. Following
table compares the AT&C Losses incurred by private companies in the
power distribution sector

Compan Location Year of AT&C Losses EBIT Margin

y operatio Openin FY 18 FY18 FY19

n g
BSES Delhi 2002 55% 10% NA 16%
(Rajdhani)
BSES Delhi 2002 55% 10% NA 25%
(Yamuna)
Torrent Ahmedaba 1910 6% 16% 20%
Power d
Torrent Surat 4% 16% 20%
Power
CESC Kolkata 1899 9% 21% 20%
TATA Mumbai 2008 4% 29% 36%
Power
TATA Delhi 2002 53% 8% 10% 11%
Power (TPDDL)

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AT&C Losses scenario in Delhi

Following are the initiatives taken in Delhi to reduce the AT &C losses

1. Managerial initiatives

a. A dedicated corporate strategy planning and performance management

group

b. A robust management team of 30 professionals with distributed

leadership

c. Three-tiered balanced scorecard approach to execute strategy,

inculcating a performance-driven culture and a focus on sustained
improvements

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d. Assimilating employees of DVB into the TPDDL workforce by taking

proper steps to build the capacity and confidence of these employees

e. Adopting policies such as code of conduct, whistle-blower policy and

sexual harassment policy, etc., to inculcate an ethical and transparent
work environment

f. Introduction of various initiatives such as establishment of committees

to oversee safety issues, enabling portals and call centres to register
safety concerns, use of media and other tools to disseminate safety
information, etc.

g. Proper communication with workforce by appointing human resource

nodal officers at all locations, surveys to identify workforce satisfaction.

2. Technical initiatives

a. Decreased AT&C losses by replacing electromechanical meters,

improving the low tension/high tension ratio by installing small capacity
transformers near the load centre

b. Improving system reliability through various initiatives such as

decentralisation of operations and maintenance with dedicated
maintenance, distributed automation across operations, replacement of
old 11kV switchgear with state-of-art supervisory control and data
acquisition (SCADA), etc.

c. Meeting growth in load by establishing new grid sub-stations and

augmenting the capacity of overloaded grid sub-stations.

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3. Consumer-centric initiatives

a. Economically weaker consumers be taken under their ambit so that

they don’t resort to thieving electricity

b. Initiatives to reduce electricity theft such as waiving a small part of

outstanding dues, establishing certainty of punishment, and waiver of
25% of the billed amount for those consumers opting for settlements 89
Reaching out to consumers through initiatives such as conducting
meetings with individual resident welfare associations, consumer
satisfaction surveys

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Solutions and Recommendations to reduce

Commercial Losses

1.Theft

In INDIA theft consumes most of the revenue of utilities. People have

different means to steel the power. And most of the states in India are
suffering from this problem. When we go in depth of this we find that the
bigger offenders are the industrial consumers because they are the bulk
consumers on the HT side. Whereas the consumer on the LT side also
steel power but theft made by them are comparatively very low than HT
consumer, but have significant value. One can follow two kind of approach

1) Scientific approach

2) Management approach

Scientific Approach:

a) Ensuring 100% Metering: In order to reduce losses due to

theft one should need to confirm accountability of the no. of unit
consumed by the consumers as well as the no. of units deliver to
the feeder. For that purpose it is necessary to have meter at each
level of distribution network i.e. at transformers and consumers, so
that one can easily detect theft by comparing the figures. Meter
helps to find out the losses and in turn help to detect theft.

b) Fixing of responsibilities : In order to ensure greater

accountability, it is better to make a person in charge of the
respective feeder and made accountable for the preparation of
feeder-wise energy accounting / audit. And this will make the
person accountable to find out theft and the losses due to other
reasons.

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c) HVDS (High voltage distribution system): Highvoltage

distribution system helps to reduce theft because in it HT lines lay
up to the consumer end poles. So this makes difficult for the people
to steel electricity due to high voltage in the cable. Consumer
equipment works at the lower voltage than the voltage in line, so it
is of no use to steal electricity on such high voltage. Stealing of
electricity from such system is harmful for the consumer equipment.

Also this helps to reduce the transmission of electricity as the loss

on distribution is lower

d) Low voltage distribution system (LT ABC) : In LT ABC is a

aerial bunch cables installed at up to poles at consumer end. These
cables carry voltage of 440V. This cable ends up in the distribution
box, from this distribution box 8 consumer can be connected. These
cables save any kind of direct connection by the people.

e) Underground cables: Underground cables like XLPE cable can

be used for theft reduction. Such cables are drawn underground to
consumer end.

f) GIS System: GIS system gives the status of the consumer that
at which DT consumer is connected and what kind of consumer he
is whether he is industrial consumer, agriculture consumer,
commercial consumer or domestic consumer. It also helps in doing
energy accounting. This in turn helps to calculate the losses due to
theft, so with the assistance of this system one can easily detect the
theft in particular area.

g) Franchise The Distribution: Theft can also be reduced by

outsourcing distribution of electricity. Franchise can be allotted an
area for electricity distribution.

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Maharashtra had implemented distribution franchise in Bhiwandi in

order to reduce theft. Distribution franchise takes care of all the
system and by reducing losses it earns its share. Utility can
implement franchise model at various levels like for billing,
metering, collection and for operation and maintenance.

h. Automated meter reading (AMR): Automated meter reading

consists of meter with GSM/PSTN modem which is than connected
to data base by GSM/PSTN network respectively. In such kind of
system utilities can gather data and information of the consumer
without visiting the consumer premises. With the help of it one can
able to detect theft like meter tampering and meter by passing.

i. Pre-Paid meters: In Pre-Paid meter consumer require to

purchase a card from utility office. This card has a number which is
require to fill in the meter with the help of key pad already there on
the meter. It enables consumers to track and monitor their
consumption. And in turn helps to reduce theft.

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MANAGEMENT APPROACH:

a) Enforcement Department : Every utility have this department

for theft reduction. This department use to conduct field survey and
try to catch up the consumers who make theft by checking their
premises. They issue notice to the offender and remove meter from
offender premises. This department use to categories the offender
above 10kw and below 10kw. And according to the sections in
electricity act 2003 they use to punish offenders.

b) Other Initiatives :

Different utilities implements different schemes in order to reduce

losses like voluntary disclosure scheme (VDS) and late payment
surcharge scheme (LPSE) implemented by BSES and JJ cluster
scheme.

In VDS consumer need not to pay any penalty but required to pay
new meter deposit fee. In LPSE consumers need to pay surcharges.
And in JJ cluster scheme NDPL persuade consumer to have
electricity from meter. If in a region 90% of people doesn’t have
meter in their premises than in that case NDPL will not going to
provide any service and facility to that region. In this way NDPL
concentrate on the particular cluster. Now day’s discoms also give
reward to those people who inform the discom about the theft.
5.3.2.2 UN-METERED POWER SUPPLY: 100% METERING OF
CONSUMERS: The only solution for un-metered power supply is
100% metering. Due to 100% metering of consumer utility can

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have an account of subsidized units of electricity in comparison to

the actual consumption of subsidized consumer. DT METERING:
With the help of DT metering one can able to find out transformer
wise consumption and due to it can able to measure unit consumed
in subsidized area.

DEFECTIVE METER, METER STOPPED AND METER BURNT:

Solutions for such kind of factors are:

a) ENFORCEMENT DEPARTMENT: Enforcement department use

to detect such kind of factor by periodic checking of consumer
premises. And on the basis of this periodic checking utilities try to
find out the consumers who have such kind of meters. Enforcement
department people use to issue notice to such consumer. Some
time they put penalty on the consumer who do not places any
complaint. NDPL people follow same procedure and guidelines of
electricity act 2003. And it is mandatory for all utility to exercise the
proceeding against offender according to electricity act 2003.

b) REPAIR AND REPLACEMENT: Other solution for this is either

replaced stopped and burnt meter or repair the defective and
stopped meter. BSES are used to exercise this thing.

c) FRANCHISE: Utility can franchise the metering, billing and

collection so in that franchise take care of the all the meter related
activity.

d) AUTOMATED METER READING: AMR can be implemented to

detect the stopped, defective and burnt meter. In it all the
information of the consumer meter can be downloaded in the data
base. So with the help of it utility can have information of stopped,
defective and burnt meter. e) RELIABLE METERS: Now a day utility
are installing electronic meters which are more reliable than the

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previous meters. Electronic meters can store various information

about the meters and units consumed by the consumers. This
information helps to find out the meter status. This data can be
analyses to find out the reason for defective, stopped and burnt
meter.

f) Meter Testing Department: Utility generally has their testing

department, which use to test the faulty meters. Such department
needs to be strengthening in order to reduce the chance of
defective, stopped and burnt meter by technical and non technical
fault.

WRONG READING, REDUCED COLLECTION EFFICIENCY AND

UNBILLED METERS: These factors directly effects the revenue
generation of the distribution company. The possible solutions for
such kind of problems are

a) Electronic Meters with digital display: When we talk about

electromechanical meters thesemeter have arotating disk and a
mechanical reader. As these meters gets old their functioning get
poorer and poorer and also numbers on the display get blurred due
to which it become difficult to record correct reading. For this
purpose electronic meter can be installed. These electronic meters
have digital display which doesn’t have tendency to get blurred and
therefore remove chances of recording wrong reading.

b) Spot Billing: Spot billing can be used to reduce the chances of

wrong reading, improve collection efficiency and reduce unbilled
meters.

In spot billing a person use to keep a hand handling device and

with the help of this device he generates bill in the consumer

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premises. So with the help of spot billing one can improve revenue
collection.

c) Pre-Paid Meters: Pre paid meters are those meters in which

doesn’t require reading of meters, it also helps in improving the
collection efficiency because meter works only when a consumer fill
it with the recharge card and it eliminates the chances of unbilled
meter as consumer need to take care of recharging of meter.

d) Automatic Meter Reading: With the help of AMR the chances

of wrong reading will going to become nil and more over every
meter will going to have an account in the data base of discom
which will going to help discom for generation of bill.

e) Software Upgradation: Many states like Punjab, Haryana,

West Bengal, Kerala and Maharashtra are trying to upgrade their
billing software in phases so that every meter get the correct bill
without any discrepancy.

MISUSE OF TARIFF AND UNAUTHORIZED EXTENSION OF

LOAD:

a) ENFORCEMENT CELL: Enforcement cell use to implement

different method to detect and to reduce these factors.

1) Reward System: In reward system discom generally provide

reward to those people who use to provide information of misuse of
tariff.

Discoms also use to conduct consumer awareness program to

motivate the people to complaint against the defaulter.

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2) By Meter Reader Information: Meter reader also use to inform

the enforcement department and helps out to find out the
defaulters.

3) Periodic Checking: Periodic checking of consumer premises helps

in finding out the misuse of tariff.

b) Data Analaysis of Electric Meter (MDI) Electronic meters use to

carry many information of consumer consumption out of these
information one can get the maximum demand information of the
consumer by the MDI value.

c) Data Analaysis: Data analysis helps to find out the consumption

pattern of the consumer. So with help of it one can easily find out
the increase in load demand of the consumer.

Delayed and Unaccounted Payments:

a) Spot billing can be used to generate bill at consumer premises

and therefore helps to reduce the delayed payment and defaulters.

b) Prepaid meter can also be implemented for the reduction of

unaccounted payments and delayed payments.

c) Up gradation of software is required to improve the performance

of billing in order to reduce unaccounted payments.

d) Online billing can also help to reduce the delay in payment by the
consumers.

e) Stress asset management is can be one of the solutions for

accountability of the defaulters.

f) Data analysis can be help to find out the defaulters and ultimately
will help in stress asset management.

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Outsourcing Bill Distribution and Collection: Outsourcing of bill

delivery is the better option because in the outsourcing all the
liability of bills is transferred on to the other person.

CT Ratio Errors: CT ratio errors can be improved by having a CMRI

of proper rating according to the meter. CMRI is a hand handling
device with a multiply factor for different categories.

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References

https://www.crisilresearch.com/#/industry/power/companyProfile

https://www.uday.gov.in/home.php

https://www.tatapower.com/investor-relations/annual-reports-archive.aspx

https://www.bsesdelhi.com/web/bses

https://www.livemint.com/news/india/india-to-privatise-all-electricity-discoms-in-union-
territories-11589542552771.html

http://www.google.com/url?q=https%3A%2F%2Fptop.only.wip.la%3A443%2Fhttp%2Fsamanvay.ndpl.com%3A50000%2Firj
%2Fportal&sa=D&sntz=1&usg=AFQjCNGyE0TqZ8KJLpg4tOWyJJXF88AYNA

https://www.tatapowerddl.com/UploadedDocuments/TPDDL%20_Excellence%20Journey
%202014_media_2602%20(2).pdf

http://indianpowersector.com/home/tag/atc-losses/

https://npp.gov.in/glossary

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