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Distribution Franchise

Distribution Franchise. … An Experience . Licensee in Ahmedabad, Gandhinagar & Surat Franchisee in Bhiwandi, Agra & Kanpur* . Distribution. 1647.5 MW Capacity 500 MW at Ahmedabad 1147.5 MW near Surat. Generation. Integrated Power Company. Transmission.

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Distribution Franchise

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  1. Distribution Franchise … An Experience

  2. Licensee in Ahmedabad, Gandhinagar & Surat • Franchisee in Bhiwandi, Agra & Kanpur* Distribution 1647.5 MW Capacity • 500 MW at Ahmedabad • 1147.5 MW near Surat Generation Integrated Power Company Transmission • JV with PowerGrid for 400 KV network Torrent Power – At a glance • Part of Rs. 8200 Crore Torrent Group • Pharma (Turnover ~ Rs. 1916 Crores) • Power (Turnover – Rs. 5958 Crores) * - yet to takeover operations

  3. Gold Shield

  4. Why Distribution Reforms??? • 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

  5. 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

  6. Present Distribution Scenario – High Distribution losses Source: Think BRIC – Comparative Study of Power Sector by KPMG- Jan 2010

  7. Present Scenario of Power Shortage

  8. 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

  9. Models for Distribution Reforms

  10. Contract Management SEB Driven Reforms High Dist Franchise Political Acceptance Privatization Low Fast Slow Reform Process Distribution Reform Process Effectiveness and Acceptance Model

  11. 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

  12. 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.

  13. 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

  14. 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

  15. 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 ………………………

  16. Features of Input Based Distribution Franchise

  17. State DISCOM to supply power at EHV substations Fault Restoration Meter Reading O&M Customer Care Planning Energy Input Metering Construction CAPEX Revenue Collection Role of a franchisee All Obligation and Rights of a Distribution Licensee Generation Distribution Transmission

  18. 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 • E.g. authorization under Section 126, 135,152 of Electricity Act 2003

  19. Responsibilities of DF • Purchase of power • 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

  20. 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 • Attending consumer grievances

  21. Responsibilities of Licensee • Supply of energy • As per the pre-determined schedule of supply on a non discriminatory basis subject to power availability • Payment to DF upon expiry / termination • For assets created during the agreement term at depreciated value. • For closing inventory • Arrears for last one month

  22. 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 • Assets in stores as opening inventory • Deputation of willing employees to DF • Deputation rules/ deputation package of DF will be applicable.

  23. CommercialTerms Payment by DF Charges for input energy as quoted by franchisee Arrears collected Security Deposit for new connections Electricity Duty etc L I C E N S E E 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

  24. Bhiwandi Franchise experience

  25. 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 with DISCOM on 20th December, 2006 • Operations taken over from 26th January, 07

  26. Bhiwandi

  27. 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

  28. Key Challenges Internal • Human Resource • Manpower • Integration • Administrative Setup • Offices • T&D loss reduction • Technical loss • Commercial loss • Reliability of system • Safety External • Power Availability • Load Shedding • Transmission Capacity • Customer Confidence • Customer Service • Becoming a part of Bhiwandi

  29. Overcoming the Challenge Problem: HR Challenge Issue: 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

  30. Bhiwandi Team Logo

  31. Sharing Goals and Targets

  32. Communicating Commitment

  33. 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

  34. Pre-takeover Proposed 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 • Reconfiguration of EHV Lines • Additional power transformers • New EHV Substation • Switchyard extension for 22KV feeders • 250 MVA Transformation capacity added so far

  35. Overcoming the Challenge Problem: Frequent Power Failures Issue: 2 to 3 DTs failing everyday Frequent conductor breakdown Lack of adequate maintenance leading to deterioration of network Long restoration time in case of faults Overloaded System Measures: Failed DT replaced within 24 hours 24 x 7 control room to ensure faster restoration All DTs revamped

  36. 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

  37. 22 KV feeders Distribution Transformers and FSPs Distribution System

  38. Shunt Capacitors

  39. 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

  40. Metering

  41. Ujjwal Bhiwandi Abhiyan 98000 connections since launch of UBA in Sept 07

  42. 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 locationswhere 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

  43. LT Network Revamping

  44. Safety

  45. 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

  46. 24 x 7 Call Center

  47. Customer Care Centers

  48. Outage Management

  49. Overcoming the Challenge Problem: Creating Customer Confidence Issue: Public was instigated againsta 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

  50. Direct Interaction with Customers

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