Power sector reforms in India – the journey thus far in the distribution sector


By Sundar Rao

India’s journey of power sector reforms began in the early nineties when it was realised that reforms are the best option to overcome the poor financial state and inefficient performance of state-run utilities. The first reform phase addressed was in power generation, liberalising private sector participation and facilitating investments including foreign ones. This was followed in the second phase by structural and governance reforms in the late nineties. During this phase, two important developments were the unbundling of utilities into GENCO, TRANSCO and DISCOM and establishment of independent regulatory commissions. The third phase of reforms saw the passing of the Electricity Act in 2003, a very critical milestone that had brought “open access” to the transmission and distribution networks, thus paving the way for power marketing. Latest amendments in 2007 to the Electricity Act 2003 further gave fillip to this effort.

Though the pace of reforms was encouraging in the generation and transmission segments, distribution lagged behind, resulting in mounting technical and commercial losses to the utilities (DISCOMs) and dissatisfied consumers. Some of the challenges facing the distribution sector include: high Aggregate Technical and Commercial (AT&C) losses with a national average of around 34%; high theft (annual loss to the tune of around US$4 billion); populist government polices of giving highly subsidised or free power to certain consumer groups; wide gap between billing and collections; network reliability and power quality. To overcome these challenges and bring in world class infrastructure coupled with best practices and performance, the Government of India had embarked on a programme known as the Accelerated Power Distribution Reforms Programme (APDRP), initiated during 2002. In tune with the highly ambitious goals, APDRP attained a flag ship status in the entire distribution reforms during the 10th fiveyear plan of the country with committed funds and pioneering technological initiatives.

This programme has both investment and incentive components provided by the central government. Investment assistance was around 25% and incentive equivalent to 50% of the actual cash loss reduction by SEBs/utilities, is provided as grant. Total funds sanctioned under this scheme were around US$3.5 billion, of which the APDRP component was around US$1.75 billion. Various schemes undertaken under APDRP are for renovation and modernisation of substations, transmission lines & distribution transformers, augmentation of feeders & transformers, feeder and consumer meters, high voltage distribution system (HVDS), consumer indexing, SCADA, computerised billing etc. Out of these various schemes, metering of feeders, DTs and consumers had taken a prime place in APDRP, and the thrust was to achieve 100% metering on feeders and consumers. During this period metering technologies have also undergone a sea change and many leading Indian meter manufacturers have started offering innovative products with state of the art features like half-hourly reads, time of the day/use, multi tariff, load survey, AMR communication interface with open domain protocols like Modbus, IEC 62056 etc.

The idea behind metering of feeders and DTs assumes critical importance for providing energy accounting and energy audit at the bulk levels of energy exchange so that when used with consumer meter data, energy accounting at bulk level and retail level can be accurately established, facilitating accurate calculation of losses at various stages of the network from a substation to a retail consumer. Energy audit applications provide accurate data about leakages (technical as well as theft) and wastages which can be an effective tool in plugging the gaps. Further, metering DTs (Distribution Transformers) helps in tracking the loading pattern of transformers thereby reducing the outages, apart from providing useful information on consumer consumption patterns for DSM. Another innovative scheme that attracted great attention is the HVDS (high voltage distribution system) which is primarily designed to reduce technical and losses due to theft, by improving HT/LT ratio and running a HV 11 KV line and terminating with a small size distribution transformer that serves five to 10 consumers maximum. One of the significant achievements of APDRP was the progress made in feeder & consumer metering covering 98% feeders and 88% consumers (over a consumer base of 140 million by 2007).

During May 2007, it was decided to restructure the APDRP (later christened as R-APDRP) during the 11th five-year plan (2007-12) with emphasis on actual, demonstrable performance in terms of loss reduction. The sole objective of R-APDRP is to bring down the current AT&C losses of 34% to a level of 15% in the next five years, by deploying extensive metering, IT and automation systems, R-APDRP has two parts: Part A will cover projects for establishment of baseline data through Consumer Indexing, Asset Mapping, GIS, Automatic Meter Reading on DT & feeders and high value industrial consumer for energy accounting/auditing applications & billing and customer care systems such as CIS, IVRS based call centres, OMS, and SCADA/DMS systems for real time network management in cities and big towns. Budget estimated for Part A is around US$2 billion. Part B will cover system improvement, strengthening and augmentation etc., with an estimated budget of US$ 8 billion.

While APDRP has created a market platform for state of the art metering technologies with function rich features and AMR capabilities; R-APDRP has raised the bar further in the deployment of technologies and solutions; paving the way for leading players in IT and communications technologies to come to the forefront along with domain players like Metering; AMR /AMI & SCADA solutions providers to accomplish critical goals of R-APDRP in not only reducing the losses to 15%; but also providing a reliable and future proof platform for the distribution sector that envisages conducting of business in a profitable and cost-effective manner and ensuring customer/consumer satisfaction through reliable and efficient performance.