India's utility sector: The tiger roars
Devi Paulsen (COO, Spintelligent) and Sundar Rao Jammi (Regional Contributor: South East Asia, Metering International) recently met with metering and customer management professionals in India to document trends and developments in the country’s energy industry.
India is home to 1.1 billion people, roughly one-sixth of the world’s population, and has the world’s twelfth largest economy – and one of the fastest growing too, with GDP of 8% per annum. Recognising that inadequate infrastructure and government ownership of many enterprises in core sectors has constrained rapid economic growth and industrialisation, successive Indian Federal Governments have initiated several measures over the past 15 years to liberalise and reform various sectors of the economy by facilitating private sector participation.
India’s power industry has been under public ownership and management since the country’s independence in 1947. Historically India’s State Electricity Boards (SEBs) have been in poor health, with estimated losses of about 1.5% of GDP. In the last six years, however, major reforms have been introduced in the power sector to support projected growth of around 12%. Key initiatives include the passing of the 2003 Electricity Act and introduction of the Accelerated Power Development Reforms Programme (APDRP) in 2001 with the aim of introducing competition, protecting consumer interests and providing power for all by 2012.
The APDRP was introduced to restore the commercial viability of the power utilities sector, with the ultimate goal of attracting external investment. The focus is on the reduction of aggregate technical and commercial (AT&C) losses, improvement in quality and reliability of power, and better consumer satisfaction.
Some of the APDRP initiatives that have been undertaken are energy meter rollout to ensure a 100% metered rate to all users of electricity – the meters to be electronic and tamperproof; energy audits and accounting at all levels; and energy meters on feeders. IT solutions such as computerisation of billing and power flow management at critical points to ensure accountability at all levels have also been introduced.
The Electricity Act of 2003 was passed to remedy many of the problems plaguing India’s power sector. The Act called for the unbundling of the SEBs’ assets into generation, transmission, and distribution companies, and the eventual privatisation of these assets. Nearly 46% of the country’s electricity distribution is now handled by private distribution companies (DISCOMS).
Utilities across India have embarked on rigorous campaigns to replace all electromagnetic meters with electronic meters. This includes the replacement of defective meters and the introduction of metering to traditionally non-metered customers.
According to Arvind Jadhav, Joint Secretary to the Government of India’s Ministry of Power, US$500 million was spent countrywide on the procurement of new meters in 2004-2005. “Local manufacturers cannot keep up with the demand,” he said, with the result that some meters are being imported, mostly from China.
The total consumer base is estimated to be 130 million, growing at a rate of 5 to 10% annually. There is a strong move to install meters at all customer levels (residential, rural, agricultural and industrial), with a forecasted installation potential of an additional 120 to 130 million meters over the next five years.
METERING FULL STEAM AHEAD AT APCPDCL
With its headquarters in Hyderabad, the Andhra Pradesh Central Power Distribution Company Limited (APCPDCL) encompasses an area of seven districts, servicing 57.4 million consumers. With a rate of 30,000 new connections per month, a number of initiatives for improving the quality of supply have been necessary.
APCPDCL has launched a campaign to move electricity meters from the homes of customers in the ‘old’ city area to nearby poles or other public places, to monitor line losses and limit meter tampering. This move gives meter readers easier access to the equipment, and makes it easier to disconnect a customer who has not paid his bill.
Investment in new metering assets represents 6-7% of APCPDCL’s annual budget. In compliance with the Act, all domestic and agricultural electricity connections are in the process of being metered.
With a view to resolving issues such as faulty meter readings, which have led to frequent customer complaints, as well as to curb the temptation on the part of meter readers to under-read the meters of certain customers, a spot billing system was introduced in the twin cities of Hyderabad and Secunderabad in 2001. This was the first implementation of electronic billing in the region.
Meter readers are equipped with handheld devices coupled to a mini printer. Once the meter reading is entered into the device, consumption is calculated automatically and a bill is printed and handed over to the consumer immediately. The device has a payback return period of about three months, and has been so successful that it has been introduced throughout the state.
APCPDCL has established a separate, 24 hour customer care centre pilot project to service clients. It functions as a single-window facility where consumers can pay their electricity bills and/or register their day-to-day grievances. The utility plans to launch similar customer care centres in 24 more areas shortly, and ultimately in all districts that it services. Customers can also pay all their utility bills online, using an online portal called E-Seva. The state has been installing new meters and replacing defective meters since 2000. There has been an improvement in billing and revenue collection, and the tariff orders passed by the regulatory commissions reflect a trend towards tariff rationalisation. Anti-theft legislation allows for jail terms for those convicted of stealing electricity.
Stakeholders agree that these reforms have resulted in improvement in these and other operational levels – so much so that Andhra Pradesh was rated the best performing state in the power sector in 2005-06.
BESCOM: BEST PRACTICES IN BANGALORE
In 2002 the Karnataka Power Transmission Company Limited unbundled into one transmission company and four distribution companies (BESCOM, HESCOM, GESCOM AND MESCOM).
Headquartered in India’s garden city, the Bangalore Electricity Supply Company (BESCOM) is responsible for the distribution of electricity in six districts in the state, servicing 50 million customers. It has undertaken several initiatives to improve overall business processes and efficiencies, the main focus being to improve customer service and quality of supply by using IT and other technologies.
Every Monday is observed as a Customer Grievance Redress Day, and all BESCOM officers are made available to the public. Customers can even approach the managing director himself with their complaints!
Monthly ‘Jana Samparka Sbhas’ are organised by each division; these are forums for the public and utility staff to have open dialogue and resolve any issues. The utility also offers a 24 hour customer call centre and a customer grievance counter (known as a Soujanya counter) which focuses on billing and revenue queries. Customers are also able to read their bills and make payments online, at the Soujanya counters or directly at any bank.
Both the call centre and customer counter are linked into an interactive voice response system (IVRS) which allows customers to access billing information, lodge complaints or queries, lodge self meter reads and request bills on demand, and send emergency information such as power outages. The utility has also pledged to connect new electricity customers within 24 hours, if all paperwork is supplied correctly.
All meter readers have been provided with uniforms and identity cards, to make it easier for customers to identify them, and BESCOM has undertaken ongoing training efforts to ensure that meter readers understand and implement their customer service charter.
One of the more progressive technologies implemented by the utility is their mobile messaging system (MMS), a platform that allows customers to get billing information and lodge complaints using their cellular (mobile) phones. According to Gonal Bhimappa, Managing Director of BESCOM, the utility wants to be able to give their customers choice; although MMS is not much used at present, they predict wide-scale adoption of this technology in the future.
A remote real-time automatic meter reading pilot project is underway in the state. The idea is to roll it out to 10,000 customer sites, with the aim of connecting existing meters with data communication ports for obtaining billing, tamper and load survey data at a central data management centre (DMC). The data transfer between the existing meters and the DMC is achieved using a combination of GSM technology and RF modems. This project will focus on high-value customers, to enhance customer service and reliable data collection.
DELIGHTING CUSTOMERS AT NEW DELHI POWER
New Delhi Power Limited distributes electricity in the northern areas of Delhi and is a joint venture between Tata Power and the Government of New Delhi Territory. The company was formed in 2002 as a result of the privatisation of electricity distribution in Delhi. Tata Power Company Limited acquired a 51% stake in NDPL and took control of the management. The company has a registered consumer base of 900,000 and a peak load of about 1100 MW. Since privatisation in the state, the aggregate technical and commercial losses in the service areas have shown a record decline from 53% to 28%. This can be attributed to the utility taking steps to rebuild and refurbish the entire distribution network, IT-focused customer care initiatives, installation of electronic meters, tough IVRS.
NDPL has earned the reputation of being the only power utility in the country that has followed an innovative marketingled approach to delight its customers.
The utility was one of the first in India to provide transparent billing, branded as SUGAM. Details of all customers’ consumption, billing and payments are available online at the NDPL web site and can be viewed in real time. The initiative also provides for a host of new bill payment facilities. There is a programme to reward customers who pay their electricity bills regularly, with discount offers from reputable brands and outlets, and a scheme known as URJA allows people living in NDPL areas to give electricity coupons as a gift.
NDPL is the first power utility in India to introduce prepaid metering. A pilot project is underway, and NDPL is organising road shows to make people aware of the new system.
NDPL is the only utility in the country to be certified by ISO 9001:2000, ISO 14001: 2004 and OHSAS 180001:1999 from accreditation body DNV. In 2004 and 2005 NDPL was awarded the Intelligent Enterprise Award for exemplary use of IT in its operations by the Indian Express Group.
ELECTRICITY METERS – THE NUMBERS
According to the Indian Electrical and Electronics Manufacturers Association (IEEMA) there are about 30 known meter manufacturers in India, and their focus is shifting to the production of electronic meters. Table 2 depicts the estimated production of meters over the past three years, together with the estimated number of imported meters.
The Indian metering industry is facing serious challenges because of the growing number of manufacturers entering the market who offer products at very low prices. The main concern is their inability to provide adequate back-up and support.
THE WAY FORWARD India faces a number of challenges. Many consumers believe that the electronic meters are showing higher readings than the actual consumption, and being able to manage this to the satisfaction of advocacy groups is an ongoing task.
A recent High Court judgement, however, has ruled in favour of utilities. The court found the petitioner had not been able to show that the electronic meter was not as per ISI specifications. The meter had been tested three times, and was found to be correct; the court ruled that past consumption cannot be used to determine the correctness of the electronic meter, and refused to allow the petitioner to reinstall his electromechanical meter.
Many meter vendors believe that SEBs nationally need to adopt uniform pre-qualification criteria and specifications for their electronic meter installations. They also want the cumbersome tender processing procedures to be changed, and to see transparency in the selection, assessment and testing of sample meters. More attention should be given to the longevity of meters installed, particularly in terms of quality rather than low prices. The IEEMA proposes the implementation of third party vendor rating programmes which identify the reliable manufacturers. Utilities would then be confident about paying market-related prices for their meters, allowing the companies to invest in R&D and become globally competitive.
India’s utility reform drive appears to have started well, although there is a lot of ground still to cover. This is probably inevitable, given the regulatory complexities, the vast areas and the numbers of customers to service. What is important is that consumers across the country have begun to notice and appreciate the improved quality of supply and services, while the distribution companies are seeing a return on their investment in improved metering and billing technologies.