34TH IAEE CONFERENCE 2011, STOCKHOLM

ANALYSING EFFICIENCY OF ELECTRIC

DISTRIBUTION UTILITIES IN INDIA: A
DATA ENVELOPMENT ANALYSIS

Anoop Singh
Dilip Kumar Pandey
Dept. of Industrial and Management Engineering,
Indian Institute of Technology Kanpur
Kanpur - 208 016 (India)
OUTLINE
 Power Sector in India: Quest for Efficiency
 Challenges in Electricity Distribution segment

 Power Sector Reforms in India: Quest for

Efficiency
 Performance of Distribution companies

 Approach and data

 Input and Output Parameters

 Results

 Conclusions
POWER SECTOR IN INDIA: QUEST FOR
EFFICIENCY
 Poor operational efficiency of State Electricity Boards (SEBs)
 High Transmission and distribution losses
 Low plant load factor of generating plants
 Low system reliability (transformer failures, outages etc.)
 Deteriorating financial situation with mounting losses and increasing subsidy
burden on state governments
 Power shortage and lack of investment
 Skewed tariff structure with the same being subsidised for domestic and
agricultural consumers.
 High gap between average cost of supply and average recovery.
 High Aggregate Technical and Commercial (AT & C) Losses
 Unmetered consumption of electricity
 Limited incentives for generation or maintenance and expansion of
transmission and distribution networks
CHALLENGES IN ELECTRICITY
DISTRIBUTION SEGMENT
Distribution segment is a main reason for appalling and financial
ill-health of the power sector for the following reasons.
 High losses in distribution network.

 High commercial losses (non-metering, theft and pilferages).

 High LT to HT ratio.

 Lack of accountability at feeder level and distribution level.

 Poorly maintained distribution network and transformers

causes frequent outages.
 Failure to raise the bills and collect revenue for total quantum
of supply to consumers.
 Lack of investment in Distribution networks.

 Improvement in performance varies across states.

 Profit / Loss (Rs. Crore)

0
2,000

-8,000
-6,000
-4,000
-2,000

-10,000

So: PFC (2009)

-1,725
Bihar -1,005
-1320
Jharkhand -1,240
125
Orissa 125
345
West Bengal 345
404
Delhi 404
Without subsidy

-4,056
Haryana -1,419
-3,242
Punjab -640

Rajasthan-8,885-7,831
-8,122
Uttar Pradesh -6,540
-465
Uttaranchal -465
-7,628
Andhra Pradesh -3,013
-2,834
Subsidy Recd. Basis

Karnataka -1,383
217
Kerala 217

Tamil Nadu-8,964 -7382

State wise Profit / Loss (2008-09)

774
Chattisgarh 774
158
Goa 158
-975
Gujarat 126
FINANCIAL LOSSES IN POWER SECTOR

-4,068
Madhya Pradesh -3,124
-680
Maharashtra -680
 Unit Cost Component (Rs. / kWh)

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
CESCO
NESCO
SESCO

So: PFC (2008-09)

WESCO
WBSEDCL
BSES…
Other Exp.
O & M Cost
BSES…
NDPL
DHBVNL
UHBVNL
AVVNL
JDVVNL
JVVNL
DVVNL
MVVNL
Employee Cost

PaVVNL
PoVVNL
Admin & Gen Exp.

Ut PCL
APCPDCL
APEPDCL
APNPDCL
APSPDCL
Fuel Cost

BESCOM
Cost Structure (2008 - 09)
Depreciation

GESCOM
HESCOM
MESCOM
CHESCOM
DGVCL
MGVCL
COST STRUCTURE OF ELECTRICITY

PGVCL
UGVCL
MP…
Interest Cost

MP…
Power Purchase

MP…
MSEDCL
SUPPLY
 Collection Efficiency (%)

0
20
60
80

40
100
120
82.01
62.26
63.97
77.25

So: PFC (2008, 09)

80.76

DVVN
73.79
82.83
83.66

2003-04
76.36
93.97
88.00

MVVN
69.49
94.39
92.44
86.63
2004-05

93.86
95.61

PaVVN
97.5
76.36
58.39
75.58
50.61
99.38

PoVVN
2005-06

66.18

Regions
89.08
100.53
91.74
87.67
96.63
2006-07

89.83
84.91
87.61
93.08
Collection Efficiency for Discoms

92.86
LEAKAGE OF REVENUE STREAM

Utt. PCL Northern 91.87

100.30
2007-08

94.15
94.52
95.84
95.42
97.32
94.83
89.43
93.62
2008-09

94.39
93.76
Southern All India

92.73
POWER SECTOR REFORMS IN INDIA
 1991 - Opening of power sector for IPPs.
 Unbundling & Privatization of Orissa Electricity
Board and setting up State Electricity Board.
 Unbundling SEBs in Haryana & AP, and setting
up state electricity regulatory Commission.
 1998 - Electricity Reform act and establishment
of CERC and SERCs.
 2002 - Privatization of DVB (Delhi).

 2003 - Electricity Act 2003.

 Delicensing of generation
 Open Access and Market Development

 Restructure APDRP
APPROACH AND DATA
 We apply Data Envelopment Analysis (DEA) incorporating
operational and financial paramters to compare efficiecny of
distribution companies across states.
 Previous work (Thakur et al., 2005) at SEB level.

 Data Sources:
 CEA
 PFC
 Electricity Regulatory Commissions
 Electric Distribution Companies

 27 electric distribution companies (Discoms) from 2002-03 and

2005-06.
 Operational Performance

Average AT & C losses (in Percentages) Average number of outages per feeder

Average outages duration (in Minutes) per feeder DTs failed (in Percentage)
Comparison of AT & C losses across Discoms
Contd…
 REVIEW OF LITERATURE
Authors Countries Number of DMUs & Input used Output used
Years
Edvardsen & Forsund Netherlands, Denmark, 122, 1997 Replacement value of capital, energy delivered, number of
(2003) Sweden, Norway, OPEX, Energy loss customers
Finland
Cherchye & Post (2001) Netherlands 18, 2000 OPEX energy delivered, peak demand
at HV, peak demand at LV,
network length, small
customers, large customers,
number of transformers
Korhonen & Syrjänen Norway 106, 2000 Input - OPEX; Environmental Value of energy delivered, 3-
(2003) factors - number of customers, year average interruption time
network length, average snow
depth, forest cover
London Economics / Australia, England & 219, 1982 – 1997 OPEX, transformer capacity, Electricity sold, number of
IPART (1999) Wales, USA, New (different periods network size customers, peak demand
Zealand across countries)
Pahwa et a. (2002) USA 50, 1997 OPEX, CAPEX, network Units delivered, number of
length, distribution losses, customers, distribution peak
number of distribution demand
transformers
Hirschhausen et al. Germany 307, 2001 Labour, Grid size, (peak load Units sold, (turnover), number
(2005) and losses) of customers, inverse density
index
Giannakis et al. (2005) UK 14, 1991-92 to 1998- OPEX, TOTEX, security of energy delivered, number of
99 supply, reliability of supply customers, network length
INPUT AND OUTPUT PARAMETERS
Data for 3I/1O model

Input Parameter Output Parameter

Unit Input (MUs)

OPEX (in Rs. Crore = 10 Unit Realized (MUs)
million)
Total No. of DTs
Data for 4I/1O model

Input Parameter Output Parameter

Unit Input (MUs)

OPEX (in Rs. Crore) Unit Realized (MUs)
Total No. of DTs
Duration of Outages
RESULTS: EFFICIENCY OF DISCOMS
ACROSS STATES (3I_1O)
Efficiency Score Efficiency Score Efficiency Score
S. No. Discoms
3I_O_CRS 3I_O_VRS 3I_I_VRS
DELHI
1 BRPL 54.80 – 66.03 54.85 – 66.05 54.93 – 66.13
2 BYPL 39.03 – 57.48 39.17 – 57.58 43.36 – 57.73
3 NDPL 53.48 – 73.63 53.64 – 73.75 53.87 – 68.04
MAHARSHTRA
4 REL 87.74 ~ 90.05 87.83 ~ 90.13 87.87 ~ 90.15
5 BEST 87.61 ~ 92.23 87.9 – 92.15 87.96 ~ 92.55
6 TPC 99.65 – 100 100 100
GUJARAT
7 TPSEC 91.13 ~ 100 95.18 ~ 100 96.39 ~ 100
8 UGVCL 74.15 – 90.03 74.67 – 91.54 74.17 – 90.03
9 MGVCL 81.22 – 82.77 81.3 – 82.85 81.34 – 82.88
10 DGVCL 95.49 – 100 95.64 – 100 95.59 – 100
ORISSA
11 CESCO 50.09 – 51.87 50.25 – 52.02 50.49 – 52.24
12 NESCO 53.68 – 59.19 53.84 – 59.31 54.01 – 59.43
13 WESCO 57.13 ~ 63.16 57.23 ~ 63.36 57.34 ~ 63.35
14 SOUTHCO 50.74 ~ 55.54 51.26 ~ 56.11 51.84 ~ 56.63
CONTD…
Efficiency Score Efficiency Score Efficiency Score
S. No. Discoms
3I_O_CRS 3I_O_VRS 3I_I_VRS
MADHYA PRADESH
15 MPPKVVCL 51.19 – 67.89 51.20 – 68.47 51.25 – 67.91
ANDHRA PRADESH
16 APNPDCL 77.73 – 84.88 77.76 – 84.90 77.79 – 84.92
17 APEPDCL 85.86 ~ 92.45 85.93 ~ 92.49 85.95 ~ 92.50
18 APCPDCL 74.83 ~ 90.27 84.49 ~ 100 77.74 ~ 100
19 APSPDCL 75.84 ~ 88.65 75.84 ~ 88.66 75.87 ~ 88.67
KARNATAKA
20 MESCOM 77.48 ~ 84.21 77.90 ~ 84.72 78.02 ~ 84.84
21 BESCOM 64.94 - 70.09 68.42 ~ 75.78 64.94 ~ 70.09
22 HESCOM 53.51 ~ 70.01 53.63 ~ 70.11 53.83 ~ 70.21
23 GESCOM 49.28 ~ 60.37 49.33 ~ 60.44 49.44 ~ 60.53
WEST BENGAL
24 CESC 55.99 ~ 66.07 56.09 ~ 66.34 56.22 ~ 66.54
UTTAR PRADESH
25 NPCL 91.45 ~ 96.97 97.63 ~ 100 97.79 ~ 100
HARYANA
26 DHBVNL 57.4 ~ 63.7 57.41 ~ 63.71 57.49 ~ 63.75
27 UHBVNL 58.01 ~ 62.81 58.02 ~ 62.82 58.10 ~ 62.85
RESULTS: EFFICIENCY OF DISCOMS
ACROSS STATES (4I_1O)
Efficiency Score Efficiency Score
S. No. Discoms 4I_I_VRS 4I_I_VRS
DELHI
1 BRPL 54.8 - 66.03 54.93 - 66.13
2 BYPL 39.03 - 57.48 43.36 - 57.73
3 NDPL 53.48 - 73.63 53.87 - 73.84
MAHARSHTRA
4 REL 87.74 ~ 90.05 87.87 ~ 90.15
5 BEST 87.61 ~ 92.23 89.57 ~ 100
6 TPC 99.65 ~ 100 100
GUJARAT
7 TPSEC 91.13 ~ 100 94.15 ~ 100
8 UGVCL 74.15 - 90.03 74.17 - 90.03
9 MGVCL 82.77 <- 95.13 82.88 <- 96.45
10 DGVCL 95.49 - 100 95.59 - 100
ORISSA
11 CESCO 50.09 - 51.87 50.49 - 52.24
12 NESCO 53.68 - 59.85 54.01 - 60.33
13 WESCO 58.42 ~ 78.98 58.71 ~ 81.45
14 SOUTHCO 50.74 ~ 55.54 51.84 ~ 56.63
CONTD…

Efficiency Score Efficiency Score

S. No. Discoms 4I_I_VRS 4I_I_VRS
MADHYA PRADESH
15 MPPKVVCL 51.19 - 69.23 51.25 - 72.49
ANDHRA PRADESH
16 APNPDCL 77.73 - 84.88 77.79 - 84.92
17 APEPDCL 85.86 ~ 92.45 85.95 ~ 92.5
KARNATAKA
18 MESCOM 77.48 <~ 84.21 78.05 <~ 84.84
19 BESCOM 64.94 <~ 70.09 64.94 <~ 70.09
20 HESCOM 53.51 <~ 70.01 53.83 <~ 70.21
WEST BENGAL
21 CESC 55.99 <- 66.07 56.3 <- 66.54
UTTAR PRADESH
22 NPCL 91.45 - 96.97 97.79 ~ 100
CONCLUSIONS
 There is improvement in performance of discoms
across most states albeit slow in some states.
 Old private distribution licensees lead the
efficiency charts
 New Privatised companies in Orissa and Delhi
continue to underperform during the period of
analysis.
 The output (input) targets can be used for
benchmarking to set performance targets by
state electricity regulatory commissions (SERCs).
 Further work should investigate impact of
reforms (using an appropriate indicator).
THANK YOU

QUESTIONS?