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8/10/2019 Issues in Electricity Distribution
http://slidepdf.com/reader/full/issues-in-electricity-distribution 1/7
Issues in Electricity Distribution
Some Fundamentals
• T&D Losses: difference between the energy available and the energy supplied
as recorded! to the consumers"• T&D Loss#Technical Loss$%onTechnical Loss
• Technical LossLoss occurring due to physical characteristics of the power
systempower lines' transformers' substation e(uipments! )ccur mainly in the
transmission*distribution lines and the transformers!
• %onTechnical LossLoss occurring due to wrong measurement of energy
supplied to consumers"+easonstheft and faulty meters!
• T&D Loss#Total EnergyTotal Load#Total EnergyDirect Load$,onsumer
Supply!
• -ercentage T&D Loss#.// 0 T&D Loss*Total Energy!
• Till such time as all agricultural and domestic supplies are fully metered andenergy audit is in place' T&D losses are a derived figure*inappropriate
measure"
• Till the time metering is completed' the level of losses is being assessed in
terms of 1ggregate Technical and ,ommercial Losses"
• 1T&, Loss is the difference between units input into the system and the units
for which the payment is collected*realised"
• 1T&,#Energy InputEnergy +ealised!*Energy Input
• Energy +ealised is the number of units for which money is collected from the
consumers"
• 1s per ,E1 T&D Loss in India is of the order of 2.3"• 1s per -F, 1T&, Loss in India in 4//5/6 is of the order of 22"763"
• 1T&, Loss is in the range of 7/5/3 in many states"8har9hand653'
anipur;43 and Si99im;<3!
• 1T&, Losses1hmedabad and Surat...43'%oida -ower ,o": ./"7=3'
>SES aharashtra:.."243' %orth Delhi -ower ,o: 46"543
• 1vailability >ased Tariff and its impact:1>T refers to the new tariff structure
which separates the fi0ed and variable costs of power generation" Fi0ed
,harge ,apacity ,harge!#)perating and aintenance ,ost$Income
Ta0$Interest$+epayment of Loan$Depreciation$+eturn on e(uity ?nder
1>T a generation company would receive this component depending on thedeclared availability of its plant and irrespective of actual generation"!@ariable
,ost*Energy ,harge#Fuel ,ost Depends upon schedule of generation as
given by load dispatch centre' based on load re(uirement"! Segregation of
fi0ed and variable charges enables generation based on incremental cost of
generation' bringing down the overall generation cost"
• Aheeling ,harge: The tariff payable as per the tariff orders provided by
various regulatory commissions"
• )pen 1ccess: +efers to a mechanism whereby generating company can sell
power to a buyer of its choice and a consumer can purchase power from seller
who gives him the best price anywhere within the country"
• ,ross Subsidy Surcharge: This is to be paid by open access consumers" This is
calculated as the difference between the consumer tariff and the cost of supply"
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,ost of Supply is calculated based on the weighted average of power purchase
costsfi0ed and variable! of the costliest 53 sourcese0cluding li(uid fuel
based sources! adBusted for average loss compensation at the relevant voltage
level and the distribution networ9 charges" Surcharge#TariffC,ost 0
.$Loss*.//! $ Distribution ,harge,ost#Aeighted average cost of power
purchase of the top 53 of poweras per the merit order generation! e0cludingthe li(uid fuel based generation and renewable generation' Distribution
,harge#Aheeling charge set for the distribution utility' L#System losses till
the voltage level at which power is withdrawn!
Distribution +eforms
• >ifurcation of Feeders: Due to fast e0pansion of towns the length of the
feeders has gone far beyond the standard limit which has been creating
problem of low voltage and high technical loss" This warrants bifurcation"
>ifurcation also enables the utility to segregate various types of load' which
helps utilities in restricting supply to particular types of consumers for certain
time period"
• Segregation of +ural Feeders from ?rban Feeders* agricultural feeders from
non agricultural feeders: This will help the utilities in effective energy
accounting and auditing and will help in fi0ing accountability"
• +evamping old' wea9 and overloaded networ9s along with feeder bifurcation
uality e(uipment matching load re(uirements and of much longer guarantee
periods are re(uired to be installed" The re(uired shunt capacitors need to be
installed to improve power factor and voltage"Due to inade(uate networ9
e0pansion commensurate with load growth' many power transformers'
distribution transformers' 229v lines and ..9v feeders are overloaded" ost of the distribution networ9s in India are (uite old which results in reduced
reliability' increased +& e0penses and poor (uality of supply"
• aintenance of substation and distribution networ9"
• 1doption of igh @oltage Distribution System@DS! to increase igh
Tensionlow tension ratio"
• Governance or administrative easures include constitution of SE+, and
timely filing of tariff petitions' preparation of long term plans for
strengthening and improvement of distribution systems along with associated
transmission system' training of employees' proper networ9 planning for
future e0pansion' provide sufficient budget annually for strengthening and
upgradation of electricity networ9"
• Theft ,ontrolElectricity 1mendment >ill' 4//5 aims to ma9e all offences
under the Electricity 1ct' 4//2 noncogniHable offence" 1 Scheme of
incentives and disincentives will help to motivate the employees of the utilities
in reducing the losses and also in controlling theft of electricity" Some State
Governments have also constituted special courts and special police stations to
deal with cases related to electricity theft" igh voltage distribution system has
been suggested in the %ational Electricity -olicy as an effective method for
prevention of theft as well as reduction of technical loss' improved voltage
profile and better consumer service" )ther measures include incentive for
informers and wor9shops and awareness programmes for officers of thedistrict administration' power utilities and general public"
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• etering: It was resolved in 4//. for the States to provide .//3 metering on
..9v feeders and to start energy accounting and auditing within ne0t si0
months at ..9v feeder level for fi0ing accountability at local level" 1ndhra
-radesh' 1ssam' Delhi' Goa' GuBarat' imachal -radesh' erala' iHoram'
?taranchal and Aest >engal have achieved consumer metering above =53"
1runachal -radesh' >ihar' 8har9hand' anipur and %galand still have lowfeeder metering" ost of the States have not yet ta9en up metering of
agricultural consumers" Following steps need to be ta9en : i! .//3 feeder
metering ii! .//3 metering of Distribution Transformers iii! .//3
consumer metering iv! -repaid metering for small consumers* single point
consumers*remote areas iv! GIS mapping of assets and consumer inde0ing v!
Energy accounting and auditing coupled with proper billing"
• Franchising: It is necessary that the system of franchisee is implemented in a
phased manner by the state government*utilities in order to bring down
commercial losses' improve collection efficiency and provide doorstep
services to the consumers" The assets will be owned by the state utilities and
the franchisee will be allowed to recover the investment through regulatory
mechanism" Franchisee will be re(uired to pay the electricity charges to the
utility at bul9 supply tariff after allowing for reasonable T&D loss in the
networ9" The franchisee would be responsible for distribution of electricity
within an identified contiguous area for a prescribed duration' carry out
minor*maBor repairs' issue of new connections etc" and for collecting revenue
directly from the consumers at a tariff decided by the regulator" Franchisees
need to be selected following a transparent process on the basis of clearly laid
down criteria" Aherever feasible' franchisees should be selected on the basis
of competitive bidding for the most favourable bul9 supply tariff for the
distribution licensee" Franchisees could be %G)s' ?sers 1ssociation',ooperatives' individual entrepreneurs or the -anchayat institutions"
Franchisees have to be developed and will need hand holding by the utility for
some time"+E, has launched a national programme for franchisees under
which a tas9 force on capacity building has been formed" The performance of
a franchisee will have to be closely monitored on various benchmar9
parameters li9e 1T&, losses' revenue collection' reliability of supply and
consumer services etc"
• Determination of ,ross Subsidy Surcharge and Aheeling ,harge: The forum
of regulators could e0pedite determination of cross subsidy surcharge and
wheeling charge in a rational manner as provided in the tariff policy The
States need to e0tend cooperation to SE+,s in bringing about reduction incross subsidies" The Tariff -olicy provides that the cross subsidies are to be
reduced to the range of $ 4/3 of the average cost of supply by year 4./..
and the SE+,s were re(uired to notify roadmap within si0 months for
achieving this" The policy also provides that wheeling charges should be
determined on the basis of same principles as laid down for transmission
charges so that open access consumers are not discriminated against in respect
of wheeling charges"
• Early implementation of intra state 1>T as envisaged in the Tariff -oicy
• +estructuring of -ower Distribution System through introduction of )pen
1ccess: -rivatisation of distribution system has shown mi0ed success"owever this only transfers State monopoly to private monopoly" )pen access
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in distribution has not materialised due to the inability of the consumers to
aggregate and approach the generator directly' due to high charges including
cross subsidy surcharge and wheeling charges and due to the highly
entrenched interests of the incumbent distribution entities etc" The electricity
1ct can be interpreted to mean a supplier of electricity who has no asset and
does not need any licence' but can buy electricity for resale" owever' whenread with the ,E+, regulations on trading' this interpretation no longer holds"
Section .4 of the Electricity 1ct provides that licence will be re(uired for
trading in electricity" >ut as per Section .2' the provisions of section .4 may
not be applicable to certain noncommercial organiHations li9e local authority'
panchayat institutions' usersJ association' cooperative societies' %G)s or
franchisees" owever' under ,E+, regulations JlicenceJ means licence granted
under section .7 of the Electricity 1ct to underta9e inter state trading in
electricity as an electricity trader" So some confusion e0ists" In order to foster
competition in distribution' we would need to create the category of licensed
Electricity Suppliers under the Electricity 1ct to come under the present
definition of JtraderJ by appropriate regulations under the 1ct" These supplierswould have no assets of their own but use the transmission and distribution
system of the present transmission service providers and distribution service
providers" The e0isting distribution licensees could be the default suppliers for
consumers who fail to register with any of the suppliers" In course of time this
function can also be phased out" +ates could be regulated through tariff caps
and fi0ed transmission and distribution charges" +ate caps will ensure that
retailers do not ma9e money out of the supply till such time as the prices are
ade(uately balanced through the forces of demand and supply" There could be
re(uirements that a minimum percentage of consumers are residential
consumers" Such electricity providers could be regulated through licensing
with the regulator' perhaps as a subclass of JtraderJ provided suitable
regulations are made" The entities who wish to register must be financially
capable of carrying out the business of electricity supply" owever' open
access would not assume any significant proportion unless sufficient (uantity
of electricity is available in the mar9et outside the long term --1s"
• Encouraging development of various products for different consumer groups:
Efforts should be made to develop different products with retailers coming up
with different pac9ages to cater to different populations"
• ,hange in the role of the regulatory authority: Tariff fi0ation should
increasingly be left to the mar9et and the regulatory authority should rather
monitor more closely the performance standards in the power sector"• ,reation of a vibrant -ower E0change: 1 vibrant power e0change could
ensure that the resultant price is an outcome of both supply and demand as it
would match the prices at which various suppliers are willing to supply" This
system would score over the system of competitive bidding where buyers
enter the mar9et separately and compare the prices bid by the electricity
suppliers"
• Improving the financial health of state utilities: ?tilities should put in place a
Financial Turnaround -lan duly approved by the regulator and the State
Government' which should include timely filing of 1nnual +evenue
+e(uirement1++! and Tariff -etition' adoption of ultiKear Tariff as
provided for in the %ational Tariff -olicy 4//6' and a scheme for timely
payment of electricity dues by Government Departments' local bodies and
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advance payment of subsidies from the State Government' in addition to
restructuring of their balance sheets as a onetime measure"
• ,reation of a central repository of data in electronic form: 1bsence of this
leads to delay in filing tariff petitions and responding to (ueries from
regulators"
1ccelerated -ower Development and +eform -rogramme1-D+-!
• In 4//.' Government introduced the 1ccelerated -ower Development
-rogramme1-D-! with the obBective of initiating a financial turnaround in
the performance of the State owned power sector" The programme was
formulated to finance specific proBects for upgradation of subtransmission and
distribution networ9 and +enovation and oderniHation of power proBects in
Thermal and ydro Sectors"
• In 4//4/2 the programme was rechristened as 1-D+- and the assistance
was lin9ed to reforms"Initially the programme covered 62 distribution circlesout of the 7// distribution circles in the country" Later the focus shifted to
densely electrified Hones i"e" urban and industrial areas" The programme now
aimed at strengthening and upgradation of the subtransmission and
distribution system in the country with the obBective of reducing 1T&, losses'
improving (uality of supply of power' increasing revenue collection and
improving customer satisfaction" The strategy envisaged technical'
commercial' financial and IT intervention' organiHation and restructuring
measures and incentive mechanism for reducing 1T&, and cash loss
reduction"
• ?nder this programme' SE>s are entitled to receive 5/3 of the losses reduced
by them in a year from the centre in the form of a grant" 1-D+- has both aninvestment component financing investment both via loan and grant in State
-ower Systems and an incentive component lin9ed to loss reduction"
• Status as of 8anuary' 4//;: 5;. proBects were sanctioned under the investment
component with an estimated outlay of +s".;/22"5< cr involving grant
component of +s"6775"<7 cr and loan component of +s"44;7"42 cr" The
Government has so far released +s"7666";= cr grant and the entire loan
component" ?nder the incentive component nine states have achieved cash
loss reduction of+s"5457"6/ cr and has become eligible for incentive of +s"
464;"2/ cr" The Government has so far released +s" .5<;".4 cr out of this
amount" 1T&, Losses have been brought below 4/ percent in 4.4 1-D+-
Towns and below .53 in .6= towns"
-roposal for +evised 1-D+-:
• inistry of -ower constituted a tas9 force under Shri -" 1braham to assess and
analyse the current efforts'suggestions made by various agencies and to
suggest restructuring of the programme to better achieve the obBectives of
1-D+-"
• The tas9 force suggested continuation of the scheme during the ..th -lan under
a new name J1ccelerated -ower Distribution +eform -rogrammeJ as a
,entrally Sponsored Scheme"
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• Focus of the programme shall be on establishment of base line data and
adoption of IT in areas of energy accounting and auditing and improvement in
consumer services through establishment of IT enabled ,onsumer Service
,entres"
• The programme will cover urban areas only' covering all district head(uarters
and towns with population of more than 5/'///" The funding will be proBectspecific" Important towns of Special ,ategory States having lesser population
will also be covered"
• Funding for strengthening of subtransmission and distribution networ9 will
be in form of loan through Financial Institutions" ?pto 5/3=/3 for special
category States! of the loan would be converted into grant on reducing 1T&,
losses to at least .53 through specified reform and performance
milestones"The target period will be determined after establishment of
validated baseline data" The baseline data and the reduction in 1T&, loss
will be verified by independent validating agencies appointed by the -ower
inistry"It is proposed to provide incentives to employees in proBect townswhere the agreed targets are achieved"
• ethods to be used for collecting base line dataconsumer inde0ing' GIS
mapping' remote metering of distribution transformers and feeders' automatic
data logging for all distribution transformers and feeders' IT applications'
establishment of consumer care centres etc"
• -art 1:The base line data would be independently verified alongwith the loss
levels for each distribution transformer"
• -art >:+enovation and oderniHation: substations'
transformers*transformer centres'reconducting of lines at ..9v level and
below' load balancing' S,1D1 etc"
• -art ,:@alidation of the base line data' -roBect advisors and anagement
Information System' proBect evaluation by third parties' capacity building'
consumer attitude survey' +ating e0ercise"
• -art D:Incentive programme for distribution utility employees"
• -art E:./th -lan incomplete proBects shall be completed during the ..th -lan"
The incentives shall be released against admissible claims from ./th -lan
period"
Eligibility ,riteria:
• 1ll Distribution ,ompanies with valid licence in accordance with Electricity1ct 4//2
• ,onditions to be achieved by States*DIST,)s within stipulated timeframe
which is company specific!
." 1doption of a Financial +estructuring -lan duly approved by the
+egulator and by the State Government
4" +estructuring of SE>*-ower Deptt"
2" Establishment of special courts and special police stations
7" Introduction of measures for better corporate governance
5" Introduction of competition in distribution
6" Introduction of measures for better accountability at town' substation
and transformer level
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;" Establishment of input based franchisees in towns with high 1T&,
loss"