Unconventional look at losses in India’s distribution sector: incorrect metering

Compos Mentis, over the next couple of issues, will take an unconventional look at losses in India’s distribution sector.

This edition will examine the meters deployed by distribution companies and how incorrect metering is a major cause of their losses.

Why India’s metering industry is to blame for big losses in power distribution

It is a matter of common knowledge that all the government owned and operated electricity distribution companies in India (Discoms) have been running up big losses, year on year, for the last many years.

A canned history of India’s metering industry first…

In the 1960s, when Ferraris disc meters were the only technology available, good quality meters were used in India. Many were a continuing legacy from British India but a fledgling local industry had also developed. Supported mostly by technology from the UK, Europe and Japan, it had a small capacity but quality and reliability levels were high. Gradually things began to deteriorate as new local copies started to proliferate. By 1980, the reliability of local production had dropped to such a low level that a government report recorded that 80% of the meters were running outside specifications (on the slow side) within two years of installation. The only people buying good quality and high reliability meters were a few private sector distribution companies. By the mid-80s a number of the quality manufacturers were shutting down shop (the small private sector demand could not support them all), poor quality manufacturers now ruled the roost and quality continued to fall.

The early 90s saw the introduction of solidstate meters in India. Once again these products were supported by technology from the UK and Europe. Initially confined to the polyphase and high value segments, good quality meters started to dominate the market and the poor quality Ferraris disc meters started to lose out. Also around this time, meter demand from private sector players started to rise. History repeats itself! By 2005 a number of local copies had showed up. Quality and reliability dropped once again. Some manufacturers adopted a two-quality strategy; a better quality design sold to the private players and a second, poorer quality, for the government sector. Many more however, had only one quality – the poor quality meter. The situation today is once again where it was in the early 80s – the average life of a solid-state meter is around four years, a very large proportion die within two, slow and dead meters are the norm in the installed base.

With dead or slow running meters, it is no surprise that discoms make heavy losses.

Why do Discoms buy poor quality? Why does the metering industry supply poor quality products?

Discoms are bound by public-sector procurement process. Two central principles form the foundation for these processes: firstly, the buyer specifying exactly what they want and secondly, open competition between suppliers to determine the price. There are major problems with both. No Indian Discom spends any effort on R&D. They all depend on the R&D efforts of their suppliers to keep pace with technology. Thus, the technical knowledge needed by the Discom can only be derived from suppliers – the very same people who have a vested interest in gaining from the procurement process. The easiest way to specify meters is to specify conformance to standards. Metering standards are performance standards for the instrument – no standard covers in-circuit reliability. In the mind of the buying Discom, coached as it is by suppliers, ignoring reliability in its specification is an easy escape.

With price as the second determinant, the cheapest bid wins the day. It is hardly a surprise that manufacturers who spend nothing on building quality and reliability in their designs and production processes tend to be the cheapest. Having won the contract at the lowest price, the selected supplier goes about maximising his profits by sourcing the cheapest components, often from the grey market and fulfilling the contract. Little surprise that a majority of the product supplied is dead within two years.

Even though many purchase contracts have five-year warranty terms, Discoms’ internal processes are rarely able to enforce such warranties. The vicious reliability circle therefore continues unabated.

Can this situation be improved? How?

Public-sector procurement processes do not preclude an assessment based on the cost of ownership of the asset purchase. They do not preclude an assessment of a supplier’s history or processes from being taken into consideration. These factors can and should be part of the overall procurement assessment.

We now have an IEC standard (IEC 62059-31) covering reliability. That must be adopted. Predicting in-circuit life and rolling it into the tender evaluation will make a big difference. Having adopted this standard, Discoms must back it up by a rigorous monitoring of the supplied product’s in-circuit life.

Finally, electricity regulators, the custodians of consumers’ interests, must also take an active role in ensuring the consumer’s meters are accurate and fair. They should institute a programme of performance assessment of the metering fleet of each Discom and have the authority to order the removal of a whole batch of meters with suspect reliability.

Steps such as the above will make the meter into an asset for the Discom – today it is a consumable!

ABOUT THE AUTHOR: Compos Mentis is Latin for “a sound mind.” This is the chosen pseudonym of a prominent European expert with more than 20 years of direct experience in metering, AMI and smart grid applications worldwide. The cloak of anonymity allows him to insightfully ”pop the balloons” of conventional utility industry thinking. If you would like to comment on this Viewpoint, please write to the author at cm@smart-energy.com