Power T&D: Can IT Power India?

A few days back Delhi CM Sheila Dikshit promised, "No power cuts in the
capital this summer". The promise was met with wide disbelief by a large section
of Delhi citizens. A similar promise was made by West Bengal Industries Minister
Nirupam Sen for Kolkata. Even before citizens could react to Sens Utopian
promise, load shedding has started in the city. The story repeats itself in
metros like Bengaluru and Chennai. Mumbai is a notable exception, but to keep
Indias financial capital relatively free from load shedding the whole state of
Maharashtra, including a large city like Pune, suffers. India might be dreaming
of becoming a powerful nation, but when it comes to providing power (of the
electricity kind) to its citizens, it is still hopelessly powerless.

While India has made impressive progress in the power sector since
independence, it has not been sufficient. In terms of generation, while new
capacity has been added, demand has far outstripped supply, leading to a
widening gap. The primary reason of the widening gap lies in the distribution
link in the value chain. The generation companies have not found it easy to
recover their dues from their biggest buyers, mainly the State Electricity
Boards (SEBs). SEBs suffer huge financial losses every year due to power theft
and ineffective practices of billing and collection. Apparently, the losses have
reached an alarming Rs 26,000 crore.

It is clear that the biggest fundamental issue hampering the viability of the
Indian power sector is the sheer volume or level of transmission and
distribution (T&D) losses that amount to 25%, a very high level by any standard.
To make matters worse, indirect calculations show T&D losses to be much
higher--in the range of 40-50%. In addition, the distribution system in India is
often characterized by inefficiency, low productivity, frequent interruption in
supply and poor voltage. Evidently, some fundamental changes are imperative in
the working of the power sector entities to realize the vision of "reliable,
affordable and quality power for all by 2012". The reform process is in progress
in several states under the overall guidance of the Ministry of Power.

According to research reports from McKinsey, Indias per capita power
consumption is set to double from the current 600 to 700 units in the coming few
years. The corresponding per capita average global consumption remains far ahead
at 2,600 kWh. The power demand that we are going to face by 2030 is going to be
about 800 GW of electricity as against the present installed capacity of 140 GW.
All these things indeed are huge challenges for a country looking to register
strong GDP growth and may be that is precisely why the government, for once, has
come up with an elaborate plan for the power transmission and distribution
sector in India.

IT Opportunities Landscape under R-APDRP

The IT ecosystem under R-APDRP

 

The plan, called restructured accelerated power development and reform
program (R-APDRP), has been allotted funds to the tune of Rs 51,577 crore. R-APDRP
is a flagship program of the Government of India. Power Finance Corporation has
been appointed as the nodal agency for the program. A large portion of this R-APDRP
program (close to 20%) will be utilized on leveraging IT to improve various
systems. The key focus of the IT initiatives are around integrated energy
billing and accounting system, management information system (MIS), and consumer
satisfaction.

The importance of two strategic projects from the overall revenue and profit
perspective in the power distribution sector cannot be denied. One is the
Integrated energy billing system for heavy commercial and industrial (C&I)
consumers and the other is the energy accounting systems. The objective of the
integrated billing system is to integrate meter reading, billing, payment and
collection for C&I consumers to eliminate tampering and manipulation, thus
improving revenue collection, as C&I consumers contribute to almost 70% revenue.
The objective of the energy accounting system is to calculate losses at 11/.4 kV
DT level, 11 kV feeder level and 33 kV feeder level.

Structured and well thought out MIS practices can help the utilities to move
ahead without too much of restructuring and investment of time and money. There
is a need for timely IT intervention to develop a robust MIS--for a more
focused, accountable and KPI-based monitoring mechanism. Consumer holds the key
to survival in the utility business. As the consumer is now more aware of the
global economics, it demands improved service levels, and the expectations are
high. The IT task force recommends a slew of IT initiatives which result in
improvement in reliability and quality of supply, increased productivity,
reduced technical and commercial losses and a fundamental change in the work
culture--to bring about consumer satisfaction. Well-meaning IT systems can
revolutionize the way the utilities conduct their business by reducing operating
costs, increasing operational efficiency and improving consumer service.

The IT opportunity landscape for the Indian power sector starts with
identifying the target market. A filtering mechanism has been devised to select
states best suited for harnessing IT opportunities in the utility sector. With
the above grading system in place, twenty-one states met the criteria out of
which six were shortlisted after applying the weighted average score. The
highest weights were assigned to ATC losses (40%) followed by per capita IT
spending (30%) and the state budget IT spent (30%) respectively. Once the states
are selected, the next exigent task is to shortlist discoms.

IT for Power Reforms

Enabling the core business operation at the transaction level using
information system would lay the foundation for sustainable reforms. This will
ensure world-class practices and controls at the operational level and would
enable substantial improvement in the overall health of the utilities. The
overall quality of data will improve and thereby an overall improvement in the
flow of information for decision support. IT would thus become the key enabler
in the initiatives under the reform process. IT would not only enable the
success of reforms process, it would also act as the catalyst by providing an
information infrastructure essential to the reform process and practices.

Ranking correlation survey

The ranking correlation survey is derived from a survey done by IDC in 2008. In the current scenario, most of the Discoms lie in Quadrant 1 and Quadrant 2. The Ministry of Power along with the R-APRDP program has laid down a plan to reduce the ATC loss level to 15%, which makes it a certaintly for discoms to boost IT spending in power sector in order to create a baseline for ascertaining the current AT&C losses and other irregularities. This will be reflected in the movement of states to position B and A in the next 3 and 5 years

 

With a view to use IT as a strategy to improve commercial and operational
performance in distribution and for its effective implementation, the MoP has
set up an IT Task Force for the power sector with a focus on distribution. The
IT Task Force endeavors to develop a synergy between IT and the Indian power
sector. The objective of this task force is to prepare a report defining the
role of IT in profitability improvement, improvement in quality of service, etc.

The task force suggests a 3-5 year IT implementation roadmap with both short
term and long-term IT initiatives. For short-term IT interventions, priority
should be given to the use of IT in commercial processes and in improving the
quality of supply in selected high revenue areas. The key objective of the IT
solution should be to minimize human interface in commercial processes to avoid
human errors and chances of wilful mistakes. Having started on the short
term-quick win areas, long-term areas would cover business processes. For
instance, billing would be expanded to cover all customer types and grown into a
comprehensive customer information system (CIS) and gradually the sophisticated
call center functionality would be added. Service connection and maintenance
processes would be systemized and integrated with this CIS. Asset and work
management, outage management and distribution automation would be implemented
in parallel. Material management and support processes (such as HR, finance,
accounts, etc) would be IT enabled in this phase. The task force felt that SEBs
should also have an effective Management Information System (MIS) for decision
support and improved decision making.

This report also deals with different funding models for IT implementation
that is a critical requirement to enable successful deployment of the
recommendations of the task force. For implementation of IT initiatives, SEBs
have to look at various business models. It would be difficult for an SEB to
implement these initiatives based on only a single project model. The task
force also recommends that SEBs /utilities should be facilitated in the process
of selection of solution providers through an accreditation policy at the
national level. A committee of experts in the field of technical, commercial,
finance and project management may be constituted in consultation with Nasscom
to accredit various agencies to take up implementation.

Situation on the Ground, and the Future

The operation of distribution business in the utility sector are
characterised by manual and cumbersome processes, inadequate controls,
insufficient commercial focus, limited transparency and lack of reliable
information. As a result, the operations are highly inefficient with substantial
revenue leakages and poor customer orientation. The use of IT has been low and
in pockets. The several standalone applications have limited ability to
effectively interface and integrate either with other applications or with
potential applications to be deployed in the future. Although the level of
deployment of IT varies significantly across the utilities, the key applications
have been in multilevel aggregation of data or large-scale data processing.
Though the state of IT adoption is low, there are a number of instances of IT
adoption. Major organizations, including SEBs, have considered IT and have made
some use of it.

The advanced IT applications can be built only after establishing a strong
foundation in the preceding phases. For instance, mobile field force solution
can be built only after establishing a system for management of field service
orders (and customer and service databases even earlier). E-business solutions
such as customer self-service and e-procurement require the CIS, SCM, etc, to be
in place. Hopefully, once all the advanced applications are put in place, the
promises of a Sheila Dikshit or a Nirupam Sen would not sound empty.

Rajneesh De

rajneeshd@cybermedia.co.in