Figure 1: Categorywise Consumption.
of Ajmer Utility Figure 2: Per Unit Revenue across DifferentCategories
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Section II of this paper reviews the official policy and practice
gives recommendations.wrks
with respect to distribution losses in Rajasthan. Section III
presents the main findings of the study, followed by an analysis
in Section IV that contrasts official policy and practice with
ground realities, as revealed through the Prayas study. Section V
Official Policy and Practice in Rajasthan
The reform process in Rajasthanhas followed the pattern seen
in the rest of the country. The monolithic Rajasthan State Elec-
tricity Board was divided into five constituent companies in 1999
- three for distribution and one each for generation and trans-
mission. The distribution utilities divide the state along an east-
west axis. The Ajmer utility, where the study was carried out,
covers the central regions extending from parts of Shekhawati
and Marwar in the north to Mewar in the south. The reform
process has been guided by the World Bank, which has sanctioned
a loan,andthe AcceleratedPower DistributionReform Programme
of the government of India.
The consumption profile of AVVNL can be seen in Figure 1.
Agriculturecomprised one-third of the total consumption at 32.7
per cent in the year 2003-04. Cross subsidy has been an essential
component of electricity tariff setting in India, with high rates
for domestic and industrial usage subsidising agriculture con-
sumption. This becomes apparent in the case of AVVNL and
when we compare revenue realisation per unit from the three
main categories discussed earlier. This is shown in Figure 2.
Distribution losses are probably the most critical indicator of
performancein the distribution business and recognised as such
by the utilities and the erstwhile state board that preceded the
utilities. The level of losses has acquired added importance with
the initiation of the regulatory process in the state. The Rajasthan
Electricity Regulatory Commission (RERC) monitors loss levels
and prescribes specific targets to be achieved before deciding
electricity tariffs. Distribution losses as reported are currently
hovering around 40 per cent. The Ajmer utility has reported 44
per cent losses in its current tariff petition to RERC. It needs
to be kept in mind that this is an overall figure and there can
be significant variation across different categories.
The onset of the reform process has been accompanied by a
renewed focus on high distribution losses. It is another matter
that the losses have in fact increased during the process. One
Economicand PoliticalWeekly February12, 2005
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reason cited by proponents of the reform agenda is that the
increase took place because of accurate reporting of losses in
a transparent manner. The distribution_utilities have taken the
following steps to check high distribution losses.
Installation of meters: One problem that electric utilities all over
India suffer from is the lack of authentic data on distribution
losses at different stages. The only reliable data available with
utilities is the total units of electricity pumped into the system
and the amount of cash deposited in the bank. Lack of adequate
metering has been cited as a contributing factor to high losses.
It has been shown that distribution utilities have used the flat
rate3category to mask distribution losses [Dixit and Sant 1997].
The onset of the reform process has been accompanied by
corrective action in this sphere. The RERC has passed orders
asking for conversion of all flat rate consumers to meter category.
Meters have been installed at all the 11 kV feeders which is the
lowest unit of supply and the level at which distribution losses
can be calculated.
Release of connections to all applicants in the agriculture category
during nextfouryears: There exists a huge backlog of agriculture
connections. The waitlist for agriculture connections exceeds a
decade in the area studied. In some subdivisions, farmers who
applied for an agriculture connection in 1989 were still to be
granted connection. This provides an incentive to farmers to tap
the lines illegally. The new state government thattook over power
in the year 2003 has sought to address the issue of the huge
backlog of electricity connections. It has promised to clear the
backlog over the period of the next four years.
Initiation offeeder rehabilitation programme to make the system
theft proof: The distribution utilities are in the process of un-
dertaking a massive Feeder Rehabilitation Programme (FRP).
The programme seeks to upgrade the 11 kV feeders and make
the system theft proof by installing smaller capacity transformers
right at the doorstep of the consumer (what is referred to as LT
less system) and laying three phase overhead cables that are
difficult to tap illegally.
Strengthening vigilance: Electricity utilities have set up vigilance
wings to control theft. Slowly this wing has been strengthened.
To give an example, there is one executive engineer from vigilance
in the operational area of Pratapgarhdivision, which has one
Executive Engineer for regular operation and maintenancework.
The new Electricity Act also strengthensthe punitive powers for
electricity theft. Special courts are being set up and the utility
engineerswill now have police powers to initiateaction in the court.
645
 Figure 3: Energy Balance for Two Feeders
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111
MajorFindingsof the Study
Keeping in mind the hypothesisthat distributionlosses are
caused by the interplayof a variety of factors - technical,
commercial,social, institutionaland political- the study was
set up to.explorethese variousaspects.The main components
were:
- Calculationof baselinelosses for the Pratapgarh RECsubdi-
vision.
- Detailedmappingof two 11 kV feedersfollowed by network
analysis.
- Agriculture demandsidemanagementstudyof a samplenumber
of pumpsets to test their efficiencies.
- Socialmobilisationandformationof consumercommitteesto
enlist consumerparticipationin the runningof the utility.
- Organisation developmentworkwithemployeesto gaugetheir
reactionto a new initiativeand ensuretheir cooperationin it.
Pratapgarh REC is a primarilyruralsubdivision.Thereare a
total of 7844 consumerswith a connectedload of 15018 kW.
A majorityof consumersfall underthe domesticandagriculture
categories.In the agriculturecategory,the majorityare meter
connections.Thesubdivisionhastwodistinctareas- a hillytribal
areaand a plain non-tribalagriculturallydevelopedarea.The
latterarea accountsfor most of the electricityconsumption.
Exhaustivemappingof two 11 kV feederswas carriedout to
understand all aspectsof thesystem.Theinspectionreportbrings
out the need for urgentmaintenanceof the system. It lists out
a series of defects in the electric lines and distributiontrans-
formers.Forexample,22 percent of the high tensionpoles and
27 percent of low tensionpoles thatwere surveyedwere found
to be tilted.Similarly,74 percentof thedistributiontransformers
were ieakingoil.
Thesubdivisionshowsveryhighdistribution losses.Thebaseline
for the subdivisionhas beenpeggedat 74.8 percent for the year
2003-04. However,if sales to high tension and mediumcon-
nectionsof the waterworksarediscounted,4this figuregoes up
to 82.4 per cent. Similarly,the cash collectionper unit of elec-
tricityinput(CC/EI)is Rs 1.09. However,if supplyto the high
tensionandmediumconnectionsof thewaterworksis discounted,
this falls down to Rs 0.62 per unit. During the process of
calculatingthe baselineit was realisedthatalmostone-thirdof
the 11 kV metersinstalledwere not workingat any one point
of time.
646
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The network analysis carried out for two 1 IkV feeders clears
he picture further by segregating technical losses. It indicates
hat commercial losses constitute the major proportion of distri-
bution losses. Taking together these two feeders, only 16 per cent
of the input energy is billed. Of the remaining, 14 per cent can
be accounted for by the technical losses occurring in the system.
Thus 70 per cent of the total energy remains unaccounted for
In terms of broad categorisation, this unaccounted energy can
be accounted for by defective/stopped meters, wrong meter
reading, bypassing of meters by consumers, and illegal hooking.
Analysis of consumption patterns indicates that agriculture
connection owners have mostly bypassed the meters. Illegal
hooking in both the domestic and agriculture categories is ram-
pant and probably constitutes the largest proportion of unac-
counted energy. In many villages, illegal agriculture taps out-
number legal connections by a ratio of three to one. A similar
state exists in the domestic category also.
The project initiated a process of discussion with the two major
stakeholders in distribution - consumers and employees - with
a view to assess their readiness for change in the current status,
and willingness to participate in an initiative that seeks to bring
about this change. The general mass of consumers expressed
support and willingness to undertake social vigilance if the key
problem of the huge backlog of electricity connections in the
agriculturecategory is sortedout. However, the politically powerful
lobby of rich farmers that has vested interests in the continuation
of the current status opposed the project. This section of farmer
sees the project as one leading to curbs in unrestricted access
to a public good and also in the unhindered distribution of
patronage. This opposition has to be accommodated in any
initiative that seeks to bring about change.
IV
ReasonsforExtremely
HighLevelsof Theft
It is clear that theft comprises the major part of distri-
bution losses in the area studied. What has led to the current
free for all situation? Old utility employees and observers of
the sector say that the extent of theft has spiralled in recent
years. Till two decades back, electricity theft in the area
studied was unheard of. There are a number of reasons for the
increasing incidence of theft. Some have roots in utility man-
agement and some in the wider socio-political environment in
the country.
In a scenario where illegal connections outnumber legal con-
nection holders, it is a natural tendency for legal connection
holders also to join the free riders. The theft of electricity has
been fuelled by an increasing demand for electric power as.ground
water tables recede and the intensity of lift irrigation picks up.
Rising tariffs have also contributed to this situation. Collusion
and encouragement by utility employees played a role in the initial
stages. The overall socio-political environment that allows wide-
spread corering of public goods by a privileged minority pro-
vides the social and political legitimacy for this type of behaviour.
Backlog of electricity connections: There exists a huge backlog
of agriculture connections, which has its roots in the subsidised
tariff for electricity in agriculture. Supply of electricity to agri-
culture is highly subsidised. To illustrate, the agriculture tariff
is only 90 paise per unit in Rajasthan against the purchase price
of Rs 2.13 at whichdistributionutilitiesbuyelectricityfromthe
Economicand Political Weekly Febrary 12, 2005