Distribution Franchisee: Challenges in owning

Legacy Network and Data for Business Viability and

Transformation

SATISH KULKARNI
CIO, ESSEL UTILITIES

Agenda
Essel Group in Utilities

Distribution Franchise Current structure

Our Vision of the Business
Challenges : our experience
Our solution Roadmap
Q&A

Essel Utilities
Integrated utility company in India;
Acquired power and water distribution projects for major cities;
Essel Utilities is an enterprise of the Essel Group, Indias leading media and
entertainment conglomerate
Group turnover of $ 2.5 bn (FY 2011) ;
Market capitalization of over $ 5.2 bn of groups listed companies.

We envisage creating value

Top line revenue of $ 300 mn;
Over one million consumer base by FY 2013-14.

Project Areas
Power Distribution
Nagpur (Maharashtra);
Sagar (MP);
Ujjain (MP);
Gwalior (MP);
Muzaffarpur (Bihar).

Water Distribution
Aurangabad (Maharashtra).

Integrated Utility

Services
Power;
Water;
Gas;
Solid waste.

Shared
Infrastructure

Value Added
Services

Customer
Services;

Leveraging
Customer
Connect;

Billing &
Collection;
IT Systems.

Value added
services through
other Business
Integrations.

Leveraging Customer Connect Reduce Costs Improve Profitability

Distribution Franchisee
Increased traction

Distribution Franchisees Awarded

DISCOMs key challenge

A. Bhiwandi: Awarded to Torrent Power in 2006. Total

volume 2,400 MUs with losses of 58%

Reduce Aggregate Technical &

Commercial Losses

B. Nagpur: Awarded to Spanco Limited in 2010. Total

current volume at 1,300 MUs with losses of 30%.
Acquired by Essel Utilities in 2012
C. Aurangabad: Awarded to GTL in 2010. Total current
volume at 1,250 MUs with losses of 42%
D. Agra & Kanpur: Awarded to Torrent Power in 2010.
Total current volume at 4,650 MUs with losses of 45%

Initiatives by SEBs for

efficient operations

E. Jalgaon: Awarded to Crompton Greaves in 2011. Total

current volume at 667 MUs with losses of 30%
F. Gwalior, Sagar and Ujjain: Essel Group has been
awarded. Losses at ~40% - 45%

Public Private Partnership

R-APDRP

G. Jamsedhpur: Awarded to Tata Power in 2012.

H. Ranchi: Awarded to CESC in 2012

Distribution
Franchisee

I.

Upcoming opportunities in Distribution Franchisee

. Muzaffarpur Awarded to Essel,

J. Bhagalpur Awarded to SPML

Maharashtra

Ulhasnagar, Malegaon, Kalwa, Mumbra & Shil

Bihar

Gaya, Patna

Madhya Pradesh

Bhind, Datia, Satna, Guna, Dewas, Shahjpur, Narshinghpur, Indore, Bhopal, Jabalpur

Uttarakhand

Roorkee, Rudrapur, Haridwar, Dehradun

Uttar Pradesh

Bareily, Gorakhpur, Allahbad, Meerut, Varanasi, Aligarh, Ghaziabad

Jharkhand

Deoghar, Hazaribagh, Dhanbad

Haryana

Gurgaon, Panipath, Faridabad, Ballabgarh

Rajasthan

Kota, Bikaner, Bharatput, Udaipur

Others

Hubli (Karnataka); Hyderabad Old (Andhra Pradesh); Jammu (J&K)

Several States expected to accelerate privatization of distribution entities providing credible base for
long term portfolio growth

Key drivers of returns

Loss
Reduction
Execution

Economies
of Scale
Growth

Reduction in AT&C loss achieved directly adds to the bottom line

Capex optimization and technological improvements

Process re-engineering to minimize leakages and achieve synergistic

system integration

IT deployment and automation of key processes leads to improved

efficiencies

Centralisation of key processes to realize low incremental operating

costs

Ability to procure power at relatively competitive rates from 3rd party

vendors

Linked to growth in per capita consumption as well as number of

consumers

Competitive advantage in bidding for other utilities in the same city or

in other cities of same state

Power Sector Policy &

Reforms
National Tariff
Policy - 2006

National Electricity
Policy - 2005

Electricity Act 2003

Competitive Procurement & Transmission of

Power
Efficient operations
Promote Multi Year Tariff framework
Loss reduction
Progressive reduction of Cross Subsidy

Accessibility to power
Spinning Reserves
Quality Power
Per capita electricity from 612 to 1000 by 2012
Commercial viability
Restructuring of distribution utilities
Adequate financing support to utility
Transparency and Accountability
Private sector participation to reduce losses

Liberal power development framework

Competitive Environment
Private Investment
Multiple licensing of distribution
Stringent theft control
Trading distinct activity permitted with licensing

Distribution Franchisee

State & Joint Electricity

Regulatory Commission

Accelerated Power Distribution & Reform Program

Central Electricity Regulatory

Commission

Our Approach
Pre Takeover

Asset Survey

Asset Survey

Commercial
Due Diligence

Customer
Connect

Customer
Need Analysis

Network
Improvement

Consumer
Profiling

Consumer
Need
Assessment

Working on
improving
consumer
connect

Immediate
O&M Needs

Loss
Reduction

Network
Securitization

AB Cable /
Metering

Asset
Condition
Assessment

Commercial
Losses
Profiling

Community
Leadership
connect

Call Center,
Customer
Service
Centers

Reduced
FOC/NPC

Network
Analysis

Collection
Baskets

Public
Relationship
Initiatives

Collection
Efficiency

Circle Control

Focus on
Enhanced
Vigilance
Periodic
Inspections

Challenges
Customer Database
Database is legacy in nature

Documentation on the legacy system is scarcely available

No structured mechanism of information sharing in DFA
Integration Issues with utility system
Support for the business process changes needed at ground zero level
Learn by experience fact of the day

Asset Database
Asset Survey provides limited visibility
As build details are not available
Most of the Assets not supported by AMC /Warranties
No reliable maintenance history records

R-APDRP Agreements : DF agreements issues

Essels execution strategy

Stage - I

Widescale IT deployment to improve data

collection and system integration

Implementation of process level automation

to improve efficacy and overall system
reliability

AMR Automated Meter Reading

Bill printing and bill delivery

On-site assessment of hooking and power theft cases

Implementing Arial Bunch Cabling as permanent solution to
hooking

Immediate loss
reduction

Automation initiatives:

Plugging apparent holes in implementation and access to first level loss

reduction hooking, collection, meters, aged infrastructure

Meter infrastructure enhancement (electro-mechanical to

digital) and replacement

Proactive vigilance to prevent recurrence of thefts

Streamline collection strategy

GIS based Consumer

& bucketing

Dunning policy based

collection Periodic rule
interventions such as
Outbound calling for
reminders

indexing

IT deployment
and process reengineering

based
SMS,
payment

Enhancing consumer experience

centralized 24x7 call centers

FTR First Trial Response policy

Queue management system to streamline

complaint assessment and provide hassle
free service

Stage - II

Shift from Old Conventional Utility based structure

to Integrated Smart Utility structure

Create platform for

achieving economies of
scale through
development of plug-andplay smart utility model

Stage - III

Centralization of common services to

achieve cost sustainability

Incorporation of best-practices through

Outsourcing

Establishing economies of scale with

ability to integrate other utilities into
system through development of plugand-play structure

R&D center establishment to focus on

continual technology up-gradation

Utility Business Drivers : IT Plan

Growth

Commercial
Input Costs Control
T&D Loss Reduction
Collection Efficiency

Exponential Business Growth

Business Sustenance

Integrated
Utility

OPEX Control
Optimize Asset Usage
Project Management
Operational

Multi Services Utility Business

B2B Integration with Group

Cross Business

Critical Business Factors for DF IT

Architecture
Multi State , Multi Service Operations
State wise Regulatory Regime
Statutory rules different
Operational need differ viz Holiday , Reporting, Tariffs, O&M Needs as per
demography

Quick Role out , parallel implementation tracks

Shared Corporate Services

Finance ,HR, Procurement, IT

B2B Service Integration

Single Business View through Analytics

Manageability, Flexibility , User Adoption

Our IT Strategy

SUSTAINANCE

BEST
INDUSTRY
TALENT

IT
STRATEGY

RAPID BUT
STAGGED
DEPLOYMENT

ALIGNED
TO
BUSINESS

INDUSTRY
STANDARDS

BEST
OF
BREED
STRICT
SECURITY
POLICY

Our IT strategy is mainly driven to compliment the dynamic business needs and sustenance

Application Implementation Roadmap

BUSINESS
SUSTAINANCE

DT METERS

PROCESS BLUEPRINT

CUSTOMER CARE

SCADA

BUSINESS
ANALYTICS

CUSTOMER METERS

PORTAL

BILLING

ENTERPRISE
INTEGRATION

FIELD AUTOMATION

EXISTING AMR

METERING
IMPROVEMENTS

SMART METERING

GROUP METERING

DEMAND MANAGEMENT

QUICK FIX CUST. SERVICE

APP.

METER DATA
MANAGEMENT

ASSET
MANAGEMENT

ERP

B2B INTEGRATION

QUICK FIX CRM

NETWORK STUDY

GIS

GIS

GIS

LEGACY BILLING

AMR PHASE-1

AMR PHASE-1/2

AMR PHASE-2

AMR PHASE-2

Quick Fix

Business Essential

Enterprise

Analytics

Metering Service Provider (MSP)- Concept

Leased
Concept Similar to Deregulated Market

Supply

Single Window Metering Responsibility a

Metering OPEX Model

Maintenan
ce

Installation

Utilize Vendors Expertise

Rapid Control over Commercial Losses
Leverage AMI/AMR to reduce O&M cost over large area by
getting outages information
Technology Risk Management

Operations

Efficient Utilization of the Meter Information

MSP will be a Single Window Metering Responsibility Center for DF

Meter Services Provider (MSP)- Responsibilities

Supply Lease

Installation

Operation

Maintenance

All types of Meters and AMR on RF Mesh

Related Equipment
Meter Testing Equipment
Meter Inventory Storage
Maintain Adequate Stock for Meters and other Equipment
Participate in Installation Planning/ Targets / SLA Setting
Meet Mass Meter Installations Targets as per SLA
Provide MIS and SLA Reports
Take Corrective Actions
Setup an Metering Operation Center (MOC)
Meter Read Schedules, Ensure Daily Meter Reads Success
Receive Meter Related Complaints
Analyze Reading Issues, Faulty Meters , Mobilize Maintenance Crew
Inventory Management, SLAs, MIS and Dashboards

Maintenance Crews Mobilization

Receive Maintenance Work Orders
Attend Metering Work Orders as per SLAs
Address all Field Related Issues

Zero Commercial Loss

Framework
Forum of Electricity Regulator report on loss reduction strategy

Recommendation
Third party verification of energy audit results for different areas/localities
could be used to impose area/locality specific surcharge for greater AT&C loss
levels and this in turn could generate local consensus for effective action for
better governance
Commercial loss surcharge equivalent to losses of group of consumers is
recoverable

Maharashtra Case Study

MERC vide Tariff order in JAN 2002

Introduced a process for Loss Charge on the consumers

Based on average realization from consumer category
Intention is to create awareness in consumers
Intention is to differentiate between circles based on loss levels
In Jan 2003 , charges exempted for 11 circles where losses are below target
loss level
T&D Loss charges concept has brought in some awareness
The charge withdrawn from 2003

Maharashtra Case Study :

Learning
Loss Charge is viable and can be incorporated by regulatory order

Loss Charge can be leveraged for the losses which are grater than the
losses factored in the tariff
Need to establish Energy Accounting in smaller consumer group
Transparent Mechanism for Result Verification
Visibility created at group level enables better control
Effort need to be sustained by use of appropriate technology
Group Metering project ROI can be through loss charge mechanism

Metering Initiatives
System Metering

0.5 Class Meters for Feeders & DTRs

Interval data recording for all key parameters
Communicable Meters
Use for Asset Operational Analysis

Group Metering

Metering for group of consumers

20 to 25 Consumers in a group
Communicable Meters with Active & Reactive Energy recording capability
Detection of abnormal usage pattern

Social Responsibility Model

Social Network Portal which will provide
Transparency regarding AT&C Losses calculations
Loss Surcharge Calculations
Can be viewed by all stake holders
Regulators
Consumers
DISCOM

Serves as platform to bring in reduction of AT&C loss through local

consensus for effective action & better governance

Q&A