Retrospection of Reforms in Distribution -A Way Forward

1. Retrospection of Reforms in Distribution -A Way Forward By Lead AcC’s (NTPC) 12th May, 2006

2. Opening of sector in early nineties didn’t result into much capacity addition in Generation by I PP’s • The same was studied by No. of Committees Chaired by eminent persons • The committees were of the opinion that Reforms in distribution be initiated to provide comfort to prospective developers to attract investment in the sector

3. TheObjectiveof Reforms : • Improve Commercial viabilitythrough reduction of AT&C losses • Improve Customer Satisfaction through reduced outages & interruptions • Initiatives Taken for Reforms by • Investment support • Incentivization • APDP • APDRP • RGVVY

4. Methodology Support Utilities who agree to Reforms By Signing MOU,MOA,TPA • MOU • Complete Feeder Metering by 31st Dec,02 • 100% Consumer Metering • Energy auditing & Accounting • Minimum Agricultural Tariff

5. MOA-Based on Interventions in • Administrative • Designation of Circle in charge as CEO / BUH with delegation • Designation of JE as feeder manager • Technical • Turnkey execution with standard specifications • IT enabling with consumer indexing and data logging • Commercial • Energy Audit & Commercial Accounting with 100% Feeder Metering • Franchising & Outsourcing Policy ( Salient Points of MOA) Other initiatives • Appointment of AcC’s for monitoring implementation • Capacity building exercises through NTPC, PMI and DRUM Project • Regular review by MOP at all levels

6. Schemes-Sanctions-Investments Sanctioned after review for each of scheme to comply with APDRP objectives and scheme bundled in Cat-A & Cat-B components with agreed Key Performance Indicators ( Bench Mark Targets ) . The categorization had been done in consultation with Ministry of Finance • Cat-A ( Mandatory ) Targeted to reduce commercial losses and increase reliability by Feeder Metering – ( For measuring energy flow & Identification of losses at feeder level) Distribution Transformer Meters – ( For measuring losses in 11 KV Feeder and enabling energy audit/accounting below DT level) Sub-Station R&M (Reliability improvement ) Power Factor improvement(Capacitor Placement for loss reduction ) Distribution Transformer R&M - (Reliability improvement) Service connection Improvement ( Prevention of tampering and fraud atconsumer level) IT Enabling based on IT Road map incl. Sub Station Automation- ( For bringing efficiency, transparency, and accountability in business process ) • Cat B (ST&D) Targeted to reduce technical losses and capacity augmentation by New Sub Stations Bifurcation New Lines Reconductoring

7. Teething Problems • Programme Implementation quite fast - Lack of understanding by Utilities • Utilities prepared schemes in conventional manner lacking business like approach • Implementation by departmental works rather Turnkey approach • Organizational set-up and existing systems & procedures not conducive for fast implementation • Non availability of initial bench-marks -nonexistent MIS • Slow dissemination of objectives and guidelines of schemes, its intent and purpose of scheme and to treat the schemes as funding normal development works

8. Analysis of Implementation • Initially circle was selected for implementation of the scheme as in smaller area i.e., in Division /sub division electrical network was not congruent to territorial jurisdiction of controlling officer. • With circle as scheme area it had been difficult to finalize the bench mark parameters since it includes high component of assessed energy. Subsequently focus of the program has been shifted to urban areas to have measurable bench mark parameters.

9. Analysis of Implementation • Even though agreed in MOA following conditions not adhered / improperly implemented • Reluctance of Utilities to enforce MOA conditions. This is on account of resistance of middle level staff (DE/EE) • Inability of utilities for creating separate Energy and Revenue accounting system on Business unit basis with distinct responsibility centre i.e., revenue,O&M,const, contract & Procu,Stores, Customer relations etc. • Turnkey Execution- Even where implemented, lack of Project Mgmt. and turnkey concept not followed in true spirit, besides lack of enabling systems and procedures,delay in award of contracts & execution of schemes Business units • Empowerment of CEO of circle- Delegation • Fixing Accountability/Responsibility • Franchising/Outsourcing Policies

10. Analysis of Implementation • Frequent transfer of the officers in charge of implementation • R&M of old and defective equipments. – A non starter in most of the schemes, the utilities are not keen to execute this portion. • Delay in release of funds from State Finance department to Utility. The Counter part fund though available with funding agency but utilities preferred to exhaust grant component before drawal of counter part fund. ( Delay in Fund Release) • Tendency to include all expenditures under APDRP and treat APDRP as a central assistance funding program as most of the States/ Utilities have stopped/reduced funding for normal developmental works in annual budgets. (Reduced Support)

11. Delay in implementation of Cat A component of the Scheme. • Energy Audit and Accounting –lack of willingness to implement except Feeder Metering –Meters provided not being read where read data not utilized • Distribution Transformer Metering- Progress of meter installation is slow. • Customer indexing not carried out in proper way. The energy audit has started in urban Towns of BESCOM and MSEDCL only BESCOM could reduce commercial losses considerably whereas due to improper indexing by MSEDCL results did not accrue • Do not want to implement integrated IT platform across different business processes Data acquisition and IT enabling. Even though IT Task force has identified methodology and for steps for deployment of IT as a key enabler of business process improvement and bringing transparency. There are isolated examples of IT deployment which is not bringing desired outcome • Priority execution of CAT B items- Targeted to Capacity augmentation No administrative measure to bridge the gap between ARR and ACS thereby demand grows due to improved ST&D network , increasing revenue gap. ( Example )

12. Observation • Energy accounting was being done in rudimentary form manually without any responsibility. Moreover there had been a gap in data availability of four months or more for accounting purposes. Energy accounting is not been linked to revenue collection. • Unable to implement precise reliability index to international standards in absence of proper data acquisition. Presently only manually recorded no of interruption along with it’s duration is being used for reliability calculation. • MIS is not based on reliable data. Moreover MIS is not based on exception reporting which is feasible only through IT enabling.

13. INITIATIVES FOR TURN-KEY EXECUTION OF PROJECTS • CLEAR AND STRICT QUALIFYING REQUIREMENTS AT THE SAME TIME ENSURING ADEQUATE COMPETITION • WELL DEFINED EVALUATION CRITERIA • SCOPE CLARITY • WELL DEFINED EQUIPMENT PERFORMANCE PARAMETERS – ENHANCED GUARANTEE/WARRANTY PROVISIONS • STRICT QUALITY AND INSPECTION NORMS PRIOR VENDOR APPROVAL • TURN-KEY CONTRACTOR MADE RESPONSIBLE FOR MEETING THE PROJECT PERFORMANCE BENCHMARKS • PROPER PROJECT MANAGEMENT

14. Improvements • Improvements in bench mark parameters captured are illustrated Here (AT&C Losses.. ) (AT&C IMPROV..)

15. Suggested implementation methodology-Next Step • The amount of information required for efficient management of distribution system is not possible manually hence IT support is mandatory for the size of our units 0f Divisions/Sub Divisions. • The created IT infrastructure will be scalable to include adjoining areas and replicable for further deployment • Analysis of loss monitoring on real time basis • The schemes to be prepared in consultation with utility officials of the scheme area. • The existing bench mark parameters shall be validated by the implementing agency. • Ring fencing ensured (Missing or defective meters shall be provided) before establishing bench mark parameters.

16. Suggested implementation methodology-Next Step • The responsibility of scheme execution should be entrusted to third party in line with the principles adopted for RGGVY i.e., SPV etc. • The IT platform ( Technology/ Vendor neutral) adopted shall be uniform for all states. • Implementing agency to act as catalyst necessary for implementing change management and Business Process Reengineering necessary for adopting the IT based Business Process. • The out sourcing of Customer Care Center along with the maintenance of electrical network below Primary substations (33/11 KV) for increased Customer satisfaction. • To select one town from each State on pilot basis in the FY 2006-07 before extending the same to all district towns and major urban areas

17. Building Integrated IT Backbone • Foundation of building IT backbone is GIS based customer indexing and asset mapping/indexing. • The basic features of GIS platform considered are • The satellite imagery map of resolution 2.5 meter GSD per pixel shall be used for land base. • The indexing exercise shall be carried out by DGPS survey along with recording of necessary attributes of consumer and assets. • Only OGC compliant GIS software shall be used for GIS application. • For storing spatial data and network information only ODBC compliant RDBMS such as Oracle shall be used. • The GIS application shall be integrated with MBC, CRMS, Network analysis, Energy Audit, AMFM system and will have facilities to integrate with network management applications such as SCADA/DMS in future

18. Building Integrated IT Backbone • The most critical function of Distribution i.e., Metering Billing & Collection shall be IT enabled and linked to GIS application by • Interconnection of billing/ collection centers through a dedicated network in WAN formation • The system shall be equipped for spot billing and will be enabling for deployment of AMR/Pre Payment metering in future with online disconnect feature for loads up to 15 kw . • This will also be enabled for Web Deployment and On line Payment facility as per requirement. • System will track all meters from deployment to completion of life.

19. Building Integrated IT Backbone • To establish and monitor performance bench marks it is essential to record energy flow at all transformation levels DT upwards • For fool proof energy auditing/accounting and theft control it is essential to collect all information without human intervention hence automatic data logging has been proposed with following features. • Collect data, convert and store from meters irrespective of source/make through API provided by the respective meter provider. • Linking of all S/Stns to central database server • Store data at central server by use of hybrid (PSTN/GSM/RTU/PLC/LPR) communication medium. • HT consumers shall be brought under this system for online monitoring of their consumption/Temper with alerts. • All manned primary sub station’s will be provided with a PC for monitoring sub Station energy flows.

20. Building Integrated IT Backbone • For proper energy accounting and auditing following features are to be adopted • Linking of Consumer billing, collection energy and revenue data to DTs, feeders and substations with help of indexed data base . This will help feeder manager to function as a business unit • GIS based indexing coupled with network analysis tools to provide technical loss estimation based on power flow in the system to identify commercial losses in each of network elements/nodes. • Demand Side Management

21. Proposed IT Infrastructure

22. Expectations from Utility • Along with the scheme implementation the followings need to be carried out by utility • Business Process Reengineering to suit electronic work flow and initiate necessary change Management. • Creating atmosphere in the organization for adopting IT and Capacity Building of employees at all Level. • Empowering employees to take necessary administrative measures to reduce losses

23. The IT enabled business process coupled with above measures will enable utility to create globally acceptable bench mark.

24. RGGVY • Implementing Infrastructure/Mechanism • REC is nodal agency for implementation and responsible for • Project planning & monitoring • Sanction of Project (by Monitoring Committee) • Funding of Projects • REC entered into MoU with • CPSUs (NTPC,POWERGRID,NHPC and DVC) • State Govt. • State Utility • For assisting REC in the execution of RE projects under three options • Turnkey execution • Assistance in tendering, engineering, project monitoring &quality assurance during field execution • Project monitoring &quality assurance during execution Continue..

25. Project execution envisaged following stages • Agreement –formulation of working arrangement • Preparation of Detailed Project Report(DPR) • Specifications, tendering and award • Detailed Engg. and site execution

26. Detailed Project Report DPR preparation involves the following • Data collection/validation • Technical detailing w.r.t Engg. guidelines/practices • Estimation of BOQ and Cost estimate • Sustainability analysis • Data Collection -To be provided by State utility • Existing distribution system details • Census data e.g. List of villages, population, list of BPL,APL -Constraints • No data available with some states • Partial data available/inconsistency of data • Authenticity of data • Very old data Continue..

27. Lessons learnt from APDRP have been utilized to modify implementation methodology in RGGVY. • The fund in the form of additional central assistance is given to implementing agency and not to States. • Turnkey execution is mandatory • Revenue sustainability through franchisee . • A single nodal agency has been fixed for implementation

28. Specification,Tendering &Award The practices followed by state boards are at variance with in terms of • Quality standards and its enforcement • CPSUs practices - Payment terms - Qualifying requirements • REC estimates Vs CPSUs • Market Trends -Availability of material -Sub –venders infrastructure/capability • Availability of agency -Numbers of executing agencies -Few leading to over loading of agencies -shortage of raw material like copper/steel

29. Project execution involved the following -Engg. , manufacturing & quality -Delivery of equipment to site - Site execution with field quality assurance Challenges during Implementation Agencies not accustomed to manufacturing quality -Sub vendor approval -Type test -Project Planning -Quality systems during manufacturing -Inspection/Dispatch of material as per schedule and sequence • Inadequate manufacturing Capacity • Lack of experienced /expert field personal • Lack of System /Procedure -Store management -Project Planning -Monitoring -Quality System -Reporting system

30. New technology /Interventions • Use of Satellite Imaginary Method for survey work • Voltage regulation calculation by Advance Software(NEPLAN) • Use of -ABC cable -Low loss Transformer(Amorphous core) -Type tested AB switches -PC base mimic display of S/S along with parameter -GI lattice structure -Standardize hardware material

31. Post Execution Problems • Planning by utilities to deal with change • Change in organisation set up • Takeover by the State Utility • Higher consumption • Additional area to be served • Additional O&M cost • Franchisee system • States not geared up • No previous experience-As envisaged system not in place • Speedy efforts from utility are required

32. Thank You