Author: pmanifold@admin

The guidelines for second batch under Phase I of Jawaharlal Nehru National Solar Mission (JNNSM) were announced recently by Ministry of New and Renewable Eneergy (MNRE) . The excerpts of the guidelines are captured in our previous blog.

To give strong impetus in promoting domestic manufacturing, the developers are expected to procure their project components from domestic manufacturers. For Solar Photo-voltaic (PV) projects using Crystalline technology, to be selected in second batch during FY 2011-12, it is mandatory for all the projects to use cells and modules manufactured in India. However, Thin film and Concentrated PV (CPV) has no such domestic limitations.

In view of the above, the list of major Indian players in Solar Cell and Module manufacturing along with Technologies are mentioned below:-

Sr. No.	Company Name	Solar Cells	Solar Modules	Crystalline Silicon	Thin Film
1	Moser Baer PV Pvt. Ltd.	Yes	Yes	Polysilicon	Amorphous-Silicon
2	Titan Energy Systems Ltd.	–	Yes	Monosilicon & Polysilicon	Amorphous-Silicon & Copper Indium Gallium Selenide
3	Maharishi Solar Technology Pvt. Ltd.	Yes	Yes	Polysilicon	–
4	Tata BP Solar	Yes	Yes	Monosilicon & Polysilicon	–
5	Solar Semiconductors	Yes	Yes	Monosilicon & Polysilicon	–
6	Central Electronics Ltd.	Yes	Yes	Monosilicon	–
7	BHEL	Yes	Yes	Monosilicon	–
8	Lanco Solar Pvt. Ltd.	Yes	Yes	Monosilicon & Polysilicon	–
9	Signet Solar	–	Yes	–	Amorphous-Silicon
10	Webel Solar	Yes	Yes	Monosilicon	–
11	Indosolar	Yes	–	Monosilicon & Polysilicon	–
12	PLG Power Ltd.	Yes	Yes	Polysilicon	–

The above list may not be a complete and comprehensive list, but it gives an overall and fair representation of players involved in manufacturing of solar cells and modules.

• What is to be seen if the domestic content constraint on Crystalline technology and its relative higher costs compared to Thin film will force new projects to go with Thin film technology
• Also there will be competition amongst Crystalline panel manufacturing players to get share of batch-2 projects and this could drive new market dynamics

pManifold as part of its Solar practice offer services to properly reveal and pen down the technology, cost and performance trade-offs. (See pManifold services in Solar for more details)

MNRE has recently released the list of all grid operating solar PV projects in India (latest updated as on July 2011. See the detailed list here and also below).

The Project Developers for these cumulative 45.5MW capacity plants were:

1. Sri Power Generation (India) Pvt. Ltd.
2. Reliance Industries Ltd.
3. North Delhi Power Ltd.
4. Lanco Infratech Limited
5. Sun Edison
6. Azure Power Private Ltd.
7. C & S Electric Limited
8. Karnataka Power Corporation Limited
9. Karnataka Power Corporation Limited
10. Maharashtra State Power Generation Co. Ltd.
11. Tata Power Company
12. Dr. Babasaheb Ambedkar Sahkari Sakhar Karkhana Ltd.
13. Raajratna Energy Holdings Private Limited
14. Azure Power Private Limited
15. Reliance Industries Limited, Solar Group
16. ACME Tele Power Ltd.
17. Sapphire Industrial Infrastructures Private Limited
18. B & G Solar Private Limited
19. R L Clean power Pvt. Ltd.
20. West Bengal Green Energy Development Corporation Limited

With increasing Solar EPC and manufacturing experience building in Indian players, MNRE has also published a performance report on 6 grid connected power plants in India. The report parameterize some performance parameters like:

• Technology
• Actual Generation (in kWhs) – total, month wise
• % Capacity Utilization Factor- CUF (Average over period of operation, Maximum, Minimum)

Some key observations made:

• Avg CUF or Plant Load Factor (PLF) across the year is in range of 15-19%
• Peak CUF occurs in March to May and range from 20.21% to 23.63%
• Grid synchronization takes 2-4 months initial settling period with CUF going down to less than 10%

The report is first good step in monitoring performance and stakeholder engagement. However a big leap in monitoring solar plants performance and integrating the analytics to design appropriate solutions has to still happen.

Post by Rahul Bagdia @ pManifold

A comparative view of top level findings is shown here, developed using the location specific reports of Shajapur, Ujjain & Dewas available here along with 6 other districts in Madhya Pradesh (MP).

See our earlier blog:

• Comparative findings in Gwalior, Datia & Bhind
• Comparative findings in Sagar, Satna & Narsinghpur

The analysis shows that in the above 3 districts, a substantial percentage of dissatisfaction in

Customers is coming due to 2 factors, namely ‘Communication’ & ‘Price’.

The overall Satisfaction score on being computed(on scale of 0-100 with 100 being all respondents ‘very satisfied’):

	Communication	Price
Shajapur	33.68	30.76
Ujjain	27.09	32.77
Dewas	24.50	20.90

The main reasons for higher dissatisfaction across the 3 districts as indicated by the customers are due to following:

• Less ‘Awareness’ from Utility regarding the attributes ‘Energy Efficiency’ & ‘Consumer Rights’
• Less communication for ‘Advance notice about disruption’
• ‘Power Tariff & its variations’ is High

‘Shajapur’ district has higher percentage of customers agreeing towards ‘Privatization’ of Power Distribution compared to ‘Ujjain’ & ‘Dewas’

On being asked if “Service levels will improve

if a private company manages electricity

distribution”, the responses of different

districts were as follows:

• Shajapur – 44%
• Ujjain – 39%
• Dewas – 31%

Across different categories of consumers, over 50% respondents from ‘Commercial’ customers in ‘Dewas’ and ‘Shajapur’ districts agree that ‘service levels will improve if a private company manages

power distribution’.

Approximately 20% respondents from all the 3 districts ‘Neither Agree nor Disagree’ with ‘Privatization of Power Distribution. Also, ‘Agri’ customers have considerably lower expectations (<40%) in ‘Dewas’ & ‘Ujjain’ districts with ‘Privatization’.

This is the summary of results from the top level analysis, developed using the ‘Consolidated Report’ of all the 9 districts in Madhya Pradesh (MP).

Across all 9 districts, expectations of customers based on certain factors like Customer Service, Power Quality & Reliability and Price are significantly leading to high Dissatisfaction among all categories of customers i.e. Residential, Commercial, Industrial & Agri. Following attributes of above factors need prior attention as suggested by customers:

• Unplanned / Planned Outages
• Local Electricity Infrastructure
• Resolution Billing Complaints
• Resolution Meter Complaints
• Service Response Time
• Value for money
• Fairness of Price

Customers Agreement Levels of ‘Distribution Privatization’ through franchisee model in all the 9 districts

• 83% respondents from ‘Bhind’ district agree with positive impact of ‘Distribution Privatization’ followed by 51% respondents from ‘Gwalior’.
• Only 28% respondents from ‘Sagar’ district agree with positive impact of ‘Distribution Privatization’, which is the lowest of all the districts.

Customers have high expectations from utility to improve the current system & make them fully satisfied

• Over 55% respondents from all the 9 districts agree that lot needs to be done to improve the current utility system and make them fully satisfied with ‘Bhind’ district has expectation with 91% & ‘Datia’ district has lowest expectation with 56%.

See our earlier blogs for region wise details:

• Central Region – Comparative findings in Gwalior, Datia & Bhind
• East Region – Comparative findings in Sagar, Satna & Narsinghpur
• West Region – Comparative findings in Shajapur, Ujjain & Dewas

For individual detailed reports on each region, please get in touch with Rahul Bagdia, +91 956 109 4490, rahul.bagdia@pManifold.com.

DIRECTIVE

The Ministry of Power Govt. of India issued a directives for implementation in the all States of India, after seeking consultation with Ministry of Law and Justice and said that,

“Section 42(ii) read with the first and fifth proviso is a self-contained code with regard to consumers who required the supply of electricity of 1 MW and above and accordingly the State Electricity Regulatory Commissions cannot continue to regulate the tariff for supply of electricity to any consumer of 1 MW and above”.

“The provisions of section 42 need to be analyzed in relation to the duties of the distribution licensees and open access.  While sub-section (2) requires the State Commission to introduce open access within one year of the appointed date the fifth proviso makes it mandatory for the State Commission to provide open access to all consumers who require supply of electricity where the maximum power to be made available at any time exceeds 1 MW.  The fifth proviso was introduced by Act 57 of 2003 with effect from 27th January 2004”.

“The first issue is if open access is made obligatory whether the distribution licensees will continue to have the responsibility of universal service obligations with regard to consumers whose requirements are in excess of 1 MW.  An analysis of the various provisions (particularly section 49 of the Act) shows that if certain consumers want to have the benefit of the option to buy power from competing sources, then it is logical that DISCOMS do not have an obligation to compulsorily supply power to such consumers.  If such consumers want power from the DISCOM then  the terms and conditions of the supply would be determined in terms of section 49 of DISCOM also”.

“There is no conflict between the aforesaid conclusion and the provisions of section 42(3) of the Act which provides that a person requiring supply of electricity has to give notice in respect thereof.  If the consumer intends to use the network of the DISCOMS, he has to give notice and upon such notice to DISCOM (it) is duty bound to provide non-discriminatory open access to its network.  Section 42(3) cannot be construed to mean that giving of a notice is a pre-condition for the implementation of open access”.

The directives issued by MoP shall have great impact on power sector particularly Electricity consumers, generators, traders and power market.  There are positive as well as negative sides which are to be looked into minutely.  The Commission will have a great responsibility to implement the suggestions of MoP by making suitable Regulation as well as to protect consumers against some negative points which are elaborated below.

POSITIVE POINTS

1. Consumers of 1 MW and above are deemed OA consumers and shall have choice of purchase of power from cheaper sources including Discom.
2. The tariff of such consumers shall not be regulated by Commission and the heavy burden of cross subsidies shall not be loaded to such consumers.
3. Such open access consumers shall not be required to pay cross subsidy surcharge because the tariff of such consumer shall not be decided by the Commission, such consumer shall not be consumers of Discom, the power requirement of such consumers shall not be a part of ARR of Discom.
4. According to National Tariff Policy the cross subsidy surcharge is linked with tariff for the category of consumer,  decided by the Commission who are going out of net of Discom because of open access hence Discom is to be compensated by cross subsidy surcharge but there shall be no such requirement in the changed scenario hence such consumers will not have to pay CSS on the power wheeled through open access.
5. Discom / Transmission Licensee shall be benefited by collecting wheeling & transmission charges as an additional income over and above the income from retail sale of power to the consumers below 1 MW.
6. Power purchase quantum of Discom shall reduce and shall be limited only equivalent to supplying power to the consumers below 1 MW and Commission shall decide the tariff only for consumers below 1 MW hence ARR of Discom shall be substantially reduced.
7. Sufficient power shall be available to Discom from Genco plants at cheaper rate to supply power to consumers below 1 MW and total load shedding shall be withdrawn to such consumers.  Expenditure account of Discoms shall reduce because of reduced employees strength and reduced working capital requirements hence tariff for consumers below 1 MW shall reduce.
8. Power generators and traders, who are unable to supply power due to denial of open access and being put to financial loss,  will have increased demand for power to supply to consumers of above 1 MW and shall be benefited due to increased in rates of power.
9. Demand of power from power exchanges shall increase.

NEGATIVE POINTS

1. All the Consumers above 1 MW will have to find their own supplier for power.
2. Rates of power in market shall increase due to increased demand.
3. Power source to supply power to all consumers above 1 MW in the state may be limited since the large producers of power have already entered in to PPA with different bulk purchasers.  Hence the small consumers may not get power to their requirements from open market or power producers and will have to approach MSEDCL who may refuse to supply power due to non availability or may charged exorbitant rates since the tariff shall not be regulated.
4. All consumers above 1 MW will have to install ABT meters which will be an additional expenditure.  Further till now the specifications of ABT meter has not been framed.  The Discom & Transco have different specifications of ABT meter and open access consumers are suffering due to this discrimination in the specifications.
5. Availability of ABT meters is limited hence cost of meters shall shoot-up due to heavy demand.  There is only one supplier approved by Transco who is taking undue advantage of monopoly.
6. The consumers opting power from power market shall have to find another source also who can supply infirm power and such power can be supplied only by Discoms who may charge high price of power since it is not Regulated by Commission.
7. SLDC and NLDC are not equipped to handle such large O.A. consumers.

SUGGESTIONS FOR PROTECTING CONSUMERS FROM ABOVE REFERRED ODDS

Commission should frame Regulations for implementing the directives after due public opinion which should include following:

1. The provision of O.A. for all consumers above 1 MW is to be introduced in phased manner as below:
   • 1st phase – All EHV consumers and all the consumers above 5 MW of power including all  consumers above 1 MW who want to opt O.A
   • 2nd phase –  All consumers above 3 MW of power.
   • 3rd  phase –  All consumers of 1 MW and above.
2. Decide infirm power tariff / stand by demand for O.A. consumers who opt the same from Discom.
3. Separate retail sale and wire business of Discom and Transco.
4. Make amendments in pending Draft O.A. Regulation and call fresh comments from consumers and stake holders.
5. Decide common specifications of ABT meters for Discom & Transco.
6. Make provisions to strengthen SLDC and issue guidelines for working of SLDC.

Invited post from Mr. R.B.Goenka
(Mr. R.B.Goenka is Consumer Representative @ MSEDCL and associated with Vidarbha Industries Association)

Disclaimer: Above are independent opinion of external expert and should not be associated with pManifold or any of its team members. pManifold deem this new Open Access directive very important and will continue bringing different stakeholder’s perspectives. The issue deals with consumer choices, electricity infra sharing & management, tariff calculations, power trading, industrial economics etc.

Our recent blog ‘Key comparison of revised RFPs for Jharkhand Distribution Franchisees’ covered the baseline comparison between old and revised RFPs for 3 forthcoming Power Distribution Franchisees in Jharkhand – Ranchi, Dhanbad and Jamshedpur.

JSEB has given minimum benchmark input price curve for all the regions, mandating bidders to bid higher than given price curve for all 15 years. The bidders in pre-bid meeting has earlier requested to have no benchmarks, to allow them innovating on financial structuring. (See our blog Jharkhand Distribution Franchisee first pre-bid meeting)

See below table with useful bid analytics

Some top level observations:

1. Steep growth rate of around 10% in initial first 2 years, with max. in first year; followed by receding growth rate to 2% by 5 years; almost stable and slow receding of around 1% until 10 years, and then another stagnant increase of less than 0.5% and below until 15 years.
2. Ranchi has lowest start point around Rs. 2/kWh, with Jamshedpur highest at Rs. 2.5/kWh
3. Ranchi again has lowest end point around Rs. 2.75/kWh, with Dhanbad highest at around Rs. 3.2/kWh. Amongst 3 DF regions, Dhanbad ranks lowest in geographical area, highest in consumer density and highest in AT&C losses. This probably be the reason for its highest end point pricing, because otherwise it ranks lowest in most other metrics of pManifold’s DF attractiveness matrix.
4. The ratio of max. to min. rates for each curve is higher than 0.7.
   • The highest ratio is for Jamshedpur, resulting into lowest delta of Rs. 0.540 between the max and min rates of price curve.
   • The lowest ratio is for Dhanbad, resulting into highest delta of Rs. 0.938 between the max and min rates of price
5. The Levelised Input Price (LIP) calculated at discount rate of 11% is highest for Dhanbad at Rs. 2.876/kWh, followed by Jamshedpur, with lowest for Ranchi at Rs. 2.487/kWh. (Difference of around 40 paise).
6. Average Billing Rate (ABR) of Ranchi is lowest at Rs. 3.050/kWh, revealing greater improvement opportunity for that DF. Dhanbad has highest ABR of Rs. 3.540/kWh, which is sort of contrasting with its highest AT&C losses, lowest revenue billing & collections, and also lower collection efficiencies (see Jhanrkhand’s DF attractiveness Matrix for details)
7. Ratio of ABR to LIP is highest 1.231 for Dhanbad, 1.226 for Ranchi and lowest 1.176 for Jamshedpur. (This ratio is static indication of profit margin for bidders, with close to 1.00 value is indication of lower margins and higher risks for DF operator)

pManifold’s DF bid advisory services further augment our client’s bidding strategy through consolidation of on-site (network and customer) intelligence and other secondary research on electricity value chain for the region and its customer’s demographics (socio, economic, political, cultural). Also our Discom Advisory services provides support in preparation of baseline data for new coming DF regions, and integrated financial modeling of Distribution Licensee and Distribution Franchisee to study various trade-offs to design robust DF model and contract for true win-win of Discom and DF.

This is a consolidation of our previous blogs, focussed more to help the current bidders for Madhya Pradesh DF bids.
 Bidders Perspective

•  Baseline:  Key comparison of revised RFPs for MP Distribution Franchisee
• Selection: Distribution Franchisee Attractiveness – Comparison for Madhya Pradesh’s9 districts
• Customer mix: Customer segmentation and analytics of revised MP Distribution Franchisee bids
• Input price: Bid analytics for MP Distribution Franchisee
• Viability: Urban & Rural customer segmentation in revised Distribution Franchisee bids at MP

Utility and Regulators perspective

• Baseline accuracy & trust: Third Pre-bid Conference take-away from Madhya Pradesh Distribution Franchisee Bids
•  Customer Satisfaction is key: Pre-Bid conference take-away from Madhya Pradesh Distribution Franchisee bids
• Utility gains:  Real gains for Utility and End-Consumers from Distribution Franchisee business
•  Large theft: Local Insights on Gwalior City – Field interview with utility ground staff
• Capacity Building: R-APDRP: Missing understanding on usability of technology by utility people

Customer perspective

• Quality of service: Why Customer’s Satisfaction & Preferences are important for Electricity Utilities?
• On-site Due-dilligence: Leveraging Customer Perspective for a stronger Onsite, Local Due-Diligence in Pre-Bid phase
• Resistance to privatization: Three key comparative findings from Customer Survey Results of Gwalior, Datia& Bhind
•  Expectations from Utility:  Comparative findings from Customer Satisfaction Survey of Sagar, Satna& Narsinghpurdistricts of MP
•  Price & Communications: Key Comparative findings from Customer Satisfaction Survey of Shajapur, Ujjain & Dewasdistricts of MP

Distribution Model perspective

• Lack of good baseline data & reporting leads to irrational Power Franchisee bidding
• Change Management: Challenges with scaling Power DF Model
•  Performance Monitoring: Key Performance Indicators (KPIs) for Distribution Utility
• Rural Franchisee innovation: Rural Franchisees – Could they become pilot ground to raise next level of Distribution services?
• Analytics: Impact that could come from Utility Measurements, Analytics and Monitoring

        Also pManifold organised a workshop Utility Monitoring and Power Distribution Franchisee: Enhancing SEB’s Performance 

Also we have detailed local intelligence reports on customer opinion, preferences and satisfaction for distribution utilities for the 3 towns of Gwalior, Ujjain and Sagar. The results are presented using intuitive GIS maps at town level to give localization of 28+ power and service quality attributes. This will allow bidders to get increased ROI from their on-site technical due-diligence by pointing location specific key areas of concerns for power delivery services and also better estimate/validate the required capex and opex. Each site comprehensive report is priced at Rs. 25K only. A consolidated 3 towns top level comparison report is also available at the same price. (See report sample)

Post by: Rahul Bagdia @ pManifold

Recently, BSEB has released revised RFPs for Power Distribution Franchisee for 4 districts in Bihar – PESU, Muzaffarpur, Gaya and Bhagalpur.

pManifold’s DF Attractiveness Matrix, provides a quick comparative study on key decision parameters for Bihar 4 DFs with reference to other states DFs like for Nagpur, Agra, Gwalior and Jamshedpur. (click on the image to see enlarged view)

 Some of the key excerpts are highlighted below:

• • The current DF scope is at District Level for all the areas. Adjoining areas (approx within 15-20 km) are also in scope of DF.
• • Geographical Area (Sq.Km.) is not mentioned in the RFP. However, a rough map (not to scale) is provided in RFP for indicative purpose.
• • Patna city and its adjoining areas comes under PESU, which has the highest consumer base compared to other areas/regions. Others are in the range of consumer base of 1.15 lakhs.
• • Connected Load (in KWs) is highest in PESU area, followed by Agra, Jamshedpur and Nagpur in that order. Connected Load for Muzaffarpur and Bhagalpur is provided only at urban (i.e. town) level and not at district level.
• • Electricity Sales (LUs) is highest in PESU area, followed by Jamshedpur and Agra in that order
• • Collection Efficiency is second highest for PESU area, after Nagpur, while it is comparatively low for other towns (i.e Gaya, Muzaffarpur and Bhagalpur in that order) creating good opportunity there for improving commercial losses from effective DF operations.
• • Distribution losses is highest for Gaya, followed by Bhagalpur, Gwalior in that order. PESU area has least Distribution losses in Bihar regions.
• • AT&C losses is highest for Gaya, followed by Gwalior. In Bihar, AT&C losses from high to low rank from Gaya, Bhagalpur, PESU and Muzaffarpur.
• • Average Billing Rate (ABR) is among the highest for all the areas in Bihar (Avg. Rs. 5.58/kWh), which is highest when compared to others like Gwalior, Nagpur, etc. (This raises some concerns on the reliability of the shared ABR rates)
  • BSEB has specified minimum Benchmark Input Price’s for bidders. The minimum benchmark price is for Gaya, followed by Bhagalpur, and highest for PESU area.

Clearly, across all regions, PESU area will likely attract more bidders because of its volume. The other 3 regions will attract small and new players to develop their base in fast emerging DF landscape in India. The baseline shared in RFP is still not very strong, and will attract many questions during the pre-bid meeting, that is planned for 16th Nov, 2012. Emerging Bihar calls again and this time for success of its first DF model, which will hopefully see increased participation.

Reference: BSEB RFP http://tenders.bih.nic.in/tenderdocs/TD-01-21-10-2012.pdf

Mr. Amulya Charan, Chief Mentor, Power Trading and Advocacy at Tata Power has 22+ years of experience in the Indian Power Sector, spanning Generation, Transmission, Distribution and Trading. With senior Mgmt. roles at NTPC, Power Grid, Tata Power Ltd., he was ex- MD at Tata Power Trading Company Ltd for four years. Mr. Charan shared following views in recent meet with pManifold..

Q1) What are the Key Issues with our Discoms?

• SEB Financial Health – another sub-prime crisis in the making
  • The cash losses of SEBs have increased 40x FY05-09 to a colossal Rs 284 bn and AT&C losses continue to scare at 28% (All India)
  • These losses along with theft of electricity and insufficient increase in tariffs have been the reason for staggering financial losses and curtailing their ability to service their customers
  • The investment by discoms in upgrading the distribution infra is much lower than required due to unavailability or limited availability of cash
• High Debt exposure of lenders to the Power Sector
  • Outstanding debt of state power utilities have grown to a staggering Rs 6 lakh crore or 6% of the GDP. Roughly a third of these are loans taken to fund past losses which cannot be serviced through tariff hikes and, hence, are being considered for a benign restructuring by the Centre. Unless big reforms are undertaken to stem losses and spur revenue streams, these liabilities would grow further to Rs 7.3 lakh crore by March 2013. This looks like a reasonable estimate, given that annual losses (after receipt of subsidy) of discoms in the country were Rs 42,415 crore in 2009-10, up 18% over the previous year.
• Weak Power Tariff Structure and Revision
  • Around 14 states raised tariffs for FY13 ranging from 2% to 37% and are already very high for certain categories such as industrial and commercial users.
  • In India, the industrial and commercial consumers pay a relatively higher tariff and cross-subsidise the lower end of domestic consumers and agricultural consumers who pay a much lower tariff and also account for mitigating the high AT&C losses partially.
  • In countries like US, France, New Zealand, Germany etc, the industrial tariffs are lower than domestic tariffs.
  • Indian Industries have been put at a competitive disadvantage due to the high cost of power and the need for redundant investment in backup generation infrastructure to mitigate the impact of frequent load shedding.
  • Subsidy from state governments was estimated at 18.94 per cent (Rs 29,665 crore) of the total revenue of state utilities in 2008-09. Although subsidies booked have grown at 30 per cent a year, cash received stood at only 14 per cent. Government Subsidies are often not paid in a timely manner.
• Unacceptably high AT&C Losses
  • The difficulty in tapping  latent demand from households in rural/semi-urban regions across India are poor distribution infra and high AT&C losses in that region. Hence, 8% growth in demand for power over FY13-17 is an optimistic scenario considering the practical impediments of poor distribution infra and the reduction in AT&C losses and improvement in financials of discom will be gradual.
  • The T&D losses in India are substantially greater than in other emerging market countries, highlighting the drag exerted by the power sector on India’s economic prospects. Compared to a number of emerging markets, India’s power sector is substantially more inefficient. For example, the proportion of power output that is lost in India is five times greater than in China. Globally, the losses are between 6-12% whereas in India they range between 30-40% demonstrating an opportunity for drastically improvement.

Q2) What inefficiencies in current Load Shedding mechanisms and how more accountability can be brought?

• At present distribution companies adopt to indiscriminate short term load shedding citing power shortage as the reason, when plenty of power is available to be dispatched. There have been instances in last year where more than 15 GW of power generation was available in the market to be dispatched at a price lower than INR 3/KWH and still several discoms resorted to load shedding. Industries try to tide over this shortage by investing into captive diesel power generation, which costs to the industries over INR 12/KWH, thus putting Indian Industries at a competitive disadvantage globally, and at the same time increases diesel subsidy burden on the government.
• Ideally SERC should enforce load shedding protocol putting a limit to the extent of load shedding by the discoms. Also scheduled load shedding and unscheduled load shedding should be monitored and treated differently, where there should be penalties on unscheduled load shedding.
• There is a crying need for peaking power to tackle the issue of load shedding during the peak hours. A regulation to encourage peaking power generation in India is already drafted by CERC, and it should be pushed for immediate implementation.

Q3) How do you see the impact of Open Access to Power Distribution landscape in India?

• If the DISCOMs are unable to supply quality power to consumers then there should be a mechanism by which consumers may have access to alternative sources of reliable power.
• The same can be achieved by separation of physical infrastructure and services – i.e. separation of the wires & supply businesses. This would enable competition between service providers for both wholesale and retail customers thus increasing efficiency and quality of service. Distribution is in the realm of 29 state governments. Thus, moves related to open access, free power to farmers, privatization of distribution networks, tariff increases et al fall in the area of state-level politics and are, thus, less likely to move either speedily or in an orchestrated manner. Presently, Open access is a step in this direction but it faces a few major issues.
• Issues being faced in Open Access:
  • Apprehension in the minds of Distribution Utilities about losing high revenue cross subsidizing consumers.
  • States invoking emergency provisions under the Electricity Act, 2003 to prohibit such transactions, quoting acute power deficiency
  • DISCOMs are unwilling to provide backup power to consumers opting for open access
  • CIL refusing to sign FSAs with generator which do not sign long term PPAs with DISCOMs
• Following steps may be taken to remove impediments in Open Access:
  • Establishment of Merchant Power Generation capacity should be encouraged
  • Regulatory and technical barriers for open access need to be reduced for greater assurance to customers
  • Augmentation of Transmission Network
  • Reduction in cross subsidy charges
  • Retail tariff of DISCOMs should reflect the cost of supply by regular tariff revision.

Q4) Shortage of Fuel is one sighted reason for peaking Electricity demand gap. How do you see it?

• The demand for coal is expected rise to 980.50 million tonnes by 2017. The domestic availability of coal has been pegged at 795 million tonnes. This demand-supply gap of around 200 million tonnes is expected to be made up substantially by imports by 2016-17.
• A significant amount of capacity is stranded owing to the non-availability of gas. Rising demand and falling domestic production has pushed the share of imported gas to 40 per cent of the current consumption in India.
• On the logistics front, serious issues remain on the efficiency and capacity of railways and ports to handle 200 metric tonnes of imported coal. Liquefied natural gas, or LNG, terminals to receive imported gas require augmentation as well as pipelines across the country.

Q5) How do you see the role of our Regulators? What needs to be changed?

• The role of the regulator in India is envisioned as a distinct role with minimal political influence. However, in practice it is seen that there is a significant lag between cost of fuel and tariff realizations due to political pressure to keep tariffs low. The SERCs need to be given further autonomy by the states including separation of finances and availability of funds.
• State Electricity Regulatory Commissions (SERCs) must ensure appropriate frequency of revision of customer tariffs (proposed quarterly such that there is no significant lag between cost of fuel and tariff realizations)
• SERCs need to provide a roadmap for removing cross-subsidies as part of ongoing tariff rationalization

Q6): How you propose to bring correction to our Power Distribution utilities performance in India?

• Bailout/restructuring of the Discoms that is being discussed, it is suggested that Government of India should ensures that the financial institutions which have outstanding debt to the Discoms should be allowed to become equity holders as part of the restructuring plan. This would then ensure an independent check on the future performance of these discoms.
• SERCs must ensure submission of Multi-Year Tariff petition and a comprehensive power procurement plan by discoms based on their demand assessments (suitably verified by external agencies)
• Cross subsidy should be eliminated and the consumer segments needing subsidization be given subsidy by way of direct cash transfer by the Government
• AT&C losses should be brought down by the use of technology and investment is adequate distribution infrastructure and metering systems
• A clear segregation of Aggregate Technical and Commercial losses needs to be furnished by each discom to the concerned SERC demonstrating improvement in efficiency by pursuing metering of all loads including agricultural and prevention of theft by curtailment of supply
• SERCs must issue Load Shedding Protocol for discoms and enforce the Universal Service Obligation – discoms need to provide information on planned, actual load shedding and rationale for load shedding daily
• State Load Dispatch Centers (SLDCs) must track and report all open access applications made, placing all applications in the public domain and update the status including the objections against any application; it must also set a deadline for approving or disapproving each application and record the same on its website – this needs to be enforced by the SERCs
• Government must take immediate steps to introduce competition in distribution by making a supportive framework for viability of discoms, enabling lasting private sector involvement and also by promoting open access route to enable consumers select their supplier in parallel to the privatization efforts
• State Regulators must introduce transparency in their own operations, and must continuously monitor, evaluate and publish the performance of the State discoms on both Technical and Commercial parameters including regular monitoring of Finances and Audit of Accounts
• Regulator must strive for creating an incentive structure for performance improvements in distribution and there is a need for periodic performance evaluation and regulatory impact assessments for ERCs.

The above views are respondent’s personal views, and not to be associated with his company in any other ways.

Bihar State Electricity Board (BSEB), after a long gap of nearly 2 years has come back, issuing revised Request for Proposal (RFP) for appointment of Distribution Franchisee for following areas/regions:

• PESU Area
• Muzaffarpur town and adjoining areas
• Gaya town and adjoining areas
• Bhagalpur town and adjoining areas

At last, BSEB got a final go ahead from the High Court to re-initiate its privatization initiative for Power supply, which went into long litigation detour with earlier entrusted Essar Power group. Having not received formal acceptance from Essar to its issued LOI in-time, BSEB has cancelled the bid, and issued fresh tender on Oct 22, 2012.

The model is 15 years Input Based DF, with below compared heterogeneity in Network, Consumers and Revenue. Key parameters like Consumer Base, Connected Load (MW), Unit Sales (MUs), Revenue Billed (Rs. Cr.) and Revenue Collected (Rs. Cr.) for all the areas/regions are compared across consumer categories (broadly Residential, Commercial, Industrial (LT & HT), Irrigation).

Other important parameters like Losses, Average Billing, Collection Efficiency are shown below. Few excerpts from the same are as follows:

• • Input Units is highest for PESU, followed by Muzaffarpur, Gaya and Bhagalpur
• • Transmission & Distribution (T&D) losses is highest for Gaya, followed by Bhagalpur, Muzaffarpur and PESU

• • Collection Efficiency is least for Bhagalpur and highest for PESU

• Calculated AT&C losses is highest for Gaya, followed by Bhagalpur, PESU and Muzaffarpur.

Important Dates:

• A pre-bid meeting is scheduled on 16th Nov, 2012.
• Last date of submission of Technical bid – 17th Dec, 2012.

We wish good turnout and rationale bidding for these new coming DF opportunities. pManifold services include for DF turnkey bid advisory including Partner Identification, Technical Due-Diligence, Financial Bid Modeling and Bid Preparation. For more details, contact at rahul.bagdia@pmanifold.com or kunjan.bagdia@pmanifold.com

RFP can be downloaded from the following link: http://tenders.bih.nic.in/tenderdocs/TD-01-21-10-2012.pdf