Power supply companies in Mangalore, Vadodara and Tirupati stem distribution losses to impressive levels
Electricity supply companies in Mangalore, Vadodara and Tirupati stem
distribution losses to impressive levels and add muscle to revenues.
A view of Mangalore city
In balmy Mangalore, one afternoon in May 2006, S. Sumanth, Managing Director, Mangalore Electricity Supply Company, or Mescom, was startled by a report placed before him. Numbers showed high levels of losses - 36 per cent of electricity carried - at three distribution feeders, as high voltage circuits are called. Nearly one-third, or 149, of the 463 feeders in Mangalore had losses of 20 per cent and more.
Five years later, the Mescom head reviews less jaw-dropping data. The state utility, once in the sights of NTPC for a takeover, has managed to stem distribution losses to 11.88 per cent in 2010/11. And the ones with over 20 per cent losses are down to 88, in spite of the total number of feeders increasing to 586; in other words, one in six. The performance places Mescom among the best performing distribution utilities in the country.
Electricity supply companies usually report 30 per cent plus losses here. For instance, West Bengal State Electricity Distribution Company ran a distribution loss of 42.2 per cent and a Central Electricity Supply utility of Orissa 38.1 per cent in the July-September period of last year.
To understand why Sumanth and his peers fuss so much over distribution losses, do the math. For an electricity supply company selling 5,000 million units a year each at Rs 5, a percentage point reduction in losses will help it realise Rs 25 crore in additional revenues. "I am happy by what our team has achieved. We are now aiming to bring losses further down to a single digit,'' says Sumanth, who since early June has taken over as Managing Director of Karnataka Vidyuth Kharkane, a state-owned maker of distribution transformers.
A few other distribution companies have reported success like Mescom. Two of them, Vadodara's Madhya Gujarat Vij Company and the Tirupati-based Andhra Pradesh Southern Power Distribution Company closed the year 2010/11 with distribution losses of 11.42 per cent and 12.75 per cent, respectively.
What makes the loss reduction at the three utilities noteworthy as well as challenging is that more than half their consumers are rural and scattered over a large are a. A bane of state electricity boards of yore and distributors in more recent years, electricity supply losses are of two kinds: distribution losses and the so-called aggregate technical and commercial, or AT&C, losses. While the first is largely technical, the latter depends on how well the utility goes about its collections for billed power and how regularly the government releases subsidy on billings for certain categories of consumers like farmers.
Business Today set out to understand how the three utilities in Karnataka, Gujarat and Andhra Pradesh have managed to keep losses at such enviable levels. "We strengthened our distribution infrastructure both by conventional methods and use of modern devices,'' says Sumanth. The losses, to simplify electrical engineering principles, increase at lower voltages. So all the utilities set up high-voltage distribution systems where the distance between the feeder and consumption points was large. They also followed other conventional methods like strengthening as well as using appropriate conductors, load re-balancing, and installing tamper-proof meters.
In addition, while Madhya Gujarat Vij Company has gone in for automatic power factor controllers in rural areas, Mescom uses large numbers of autoreclosers and sectionalisers in its expansive network. Together, autoreclosers and sectionalisers, made by the likes of ABB and Schneider Electric, isolate the section affected by a fault while saving the rest of the network from supply disruptions.
"Mescom is the largest customer for ABB India for feeder automation products which include autoreclosers and sectionalisers,'' says Pitamber Shivnani, Division Manager, Power Products, ABB India. Haryana and Himachal Pradesh distribution utilities too use these products, he adds. Before such equipment was installed, even a minor fault such as the branch of a tree falling on a cable would result in supply disruptions and result in loss of revenue.
At Madhya Gujarat Vij Company, Managing Director Amrit N. Khatri has set stiff targets. Replacing about 250 km of cable that brought down losses already by 1.47 percentage points, "Our next goal is to bring technical losses further down to a single digit and five per cent in the city area of Baroda [the old name of Vadodara],'' says Khatri, who has been at the helm since September 2010. Not only do on-time payments by government institutions in Gujarat keep its cash registers healthy, the utility even earns a small profit - one paise a unit - given it has a higher share of industrial consumers.
In Andhra Pradesh, the Tirupati distributor has gone largely for conventional methods to cut losses. "We have set up new sub-stations at load centres, and wherever the feeders were overloaded, we have increased the size of conductors,'' says S. Viswanatham, Director (Operations) at Andhra Pradesh Southern Power Distribution Company.
In contrast to the Mangalore, Vadodara and Tirupati companies, a report by Mumbai brokerage IIFL Institutional Equities notes the average AT&C losses in India are at 28 per cent, and Madhya Pradesh ranks the highest among major states. It earns revenues on just 39 per cent of the energy pumped into its distribution networks. In fact, Minister of State for Power K. C. Venugopal recently offered to arrange a knowledge-sharing interaction with experts from South Korea, which has four per cent AT&C losses. In other developed countries, distribution losses stand between four and eight per cent.
Indian electricity distributors, evidently, have a long way to go. Most of the 90-odd state power transmission and distribution utilities are chronically sick. Private participation could be one fix. Cities such as Ahmedabad, Delhi, Kolkata and Mumbai, for instance, have electricity distribution run by Torrent, Reliance Energy, CESC and Tata Power.
Privatisation of loss-making utilities make take a while coming but there are towns such as Bhiwandi in Maharashtra and Agra in Uttar Pradesh where electricity supply companies have engaged private franchises with distribution and collection responsibilities. "More and more towns will go to franchises during the 12th Plan period (2012 to 2017) and the process of privatisation of distribution circles will begin during the 13th Plan period,'' predicts Rakesh Kumar Goyal, Director, Tetra Tech, a consultancy firm.
With the threat of privatisation looming and state governments getting more thrifty with underwriting losses at electricity distributors, the latter have little option but to go by the new-age reality: every unit saved is worth two generated.
Five years later, the Mescom head reviews less jaw-dropping data. The state utility, once in the sights of NTPC for a takeover, has managed to stem distribution losses to 11.88 per cent in 2010/11. And the ones with over 20 per cent losses are down to 88, in spite of the total number of feeders increasing to 586; in other words, one in six. The performance places Mescom among the best performing distribution utilities in the country.
Electricity supply companies usually report 30 per cent plus losses here. For instance, West Bengal State Electricity Distribution Company ran a distribution loss of 42.2 per cent and a Central Electricity Supply utility of Orissa 38.1 per cent in the July-September period of last year.
To understand why Sumanth and his peers fuss so much over distribution losses, do the math. For an electricity supply company selling 5,000 million units a year each at Rs 5, a percentage point reduction in losses will help it realise Rs 25 crore in additional revenues. "I am happy by what our team has achieved. We are now aiming to bring losses further down to a single digit,'' says Sumanth, who since early June has taken over as Managing Director of Karnataka Vidyuth Kharkane, a state-owned maker of distribution transformers.
A few other distribution companies have reported success like Mescom. Two of them, Vadodara's Madhya Gujarat Vij Company and the Tirupati-based Andhra Pradesh Southern Power Distribution Company closed the year 2010/11 with distribution losses of 11.42 per cent and 12.75 per cent, respectively.
What makes the loss reduction at the three utilities noteworthy as well as challenging is that more than half their consumers are rural and scattered over a large are a. A bane of state electricity boards of yore and distributors in more recent years, electricity supply losses are of two kinds: distribution losses and the so-called aggregate technical and commercial, or AT&C, losses. While the first is largely technical, the latter depends on how well the utility goes about its collections for billed power and how regularly the government releases subsidy on billings for certain categories of consumers like farmers.
Business Today set out to understand how the three utilities in Karnataka, Gujarat and Andhra Pradesh have managed to keep losses at such enviable levels. "We strengthened our distribution infrastructure both by conventional methods and use of modern devices,'' says Sumanth. The losses, to simplify electrical engineering principles, increase at lower voltages. So all the utilities set up high-voltage distribution systems where the distance between the feeder and consumption points was large. They also followed other conventional methods like strengthening as well as using appropriate conductors, load re-balancing, and installing tamper-proof meters.
In addition, while Madhya Gujarat Vij Company has gone in for automatic power factor controllers in rural areas, Mescom uses large numbers of autoreclosers and sectionalisers in its expansive network. Together, autoreclosers and sectionalisers, made by the likes of ABB and Schneider Electric, isolate the section affected by a fault while saving the rest of the network from supply disruptions.
"Mescom is the largest customer for ABB India for feeder automation products which include autoreclosers and sectionalisers,'' says Pitamber Shivnani, Division Manager, Power Products, ABB India. Haryana and Himachal Pradesh distribution utilities too use these products, he adds. Before such equipment was installed, even a minor fault such as the branch of a tree falling on a cable would result in supply disruptions and result in loss of revenue.
At Madhya Gujarat Vij Company, Managing Director Amrit N. Khatri has set stiff targets. Replacing about 250 km of cable that brought down losses already by 1.47 percentage points, "Our next goal is to bring technical losses further down to a single digit and five per cent in the city area of Baroda [the old name of Vadodara],'' says Khatri, who has been at the helm since September 2010. Not only do on-time payments by government institutions in Gujarat keep its cash registers healthy, the utility even earns a small profit - one paise a unit - given it has a higher share of industrial consumers.
In Andhra Pradesh, the Tirupati distributor has gone largely for conventional methods to cut losses. "We have set up new sub-stations at load centres, and wherever the feeders were overloaded, we have increased the size of conductors,'' says S. Viswanatham, Director (Operations) at Andhra Pradesh Southern Power Distribution Company.
In contrast to the Mangalore, Vadodara and Tirupati companies, a report by Mumbai brokerage IIFL Institutional Equities notes the average AT&C losses in India are at 28 per cent, and Madhya Pradesh ranks the highest among major states. It earns revenues on just 39 per cent of the energy pumped into its distribution networks. In fact, Minister of State for Power K. C. Venugopal recently offered to arrange a knowledge-sharing interaction with experts from South Korea, which has four per cent AT&C losses. In other developed countries, distribution losses stand between four and eight per cent.
A Mescom engineer using a thermal imaging camera to check temperature of the distribution system in Mangalore.
Privatisation of loss-making utilities make take a while coming but there are towns such as Bhiwandi in Maharashtra and Agra in Uttar Pradesh where electricity supply companies have engaged private franchises with distribution and collection responsibilities. "More and more towns will go to franchises during the 12th Plan period (2012 to 2017) and the process of privatisation of distribution circles will begin during the 13th Plan period,'' predicts Rakesh Kumar Goyal, Director, Tetra Tech, a consultancy firm.
With the threat of privatisation looming and state governments getting more thrifty with underwriting losses at electricity distributors, the latter have little option but to go by the new-age reality: every unit saved is worth two generated.
