Management of Cost in Power Sector for
Sustainability of The Electricity Distribution
in the Country
Santosh Kumar Sahu
Director (Finance), OHPC Ltd.
Realized Electricity as a commodity
Saw the Happiness among the villagers
while accessibility of Electricity
Dreaming for Electricity Business
to be an franchisee
Theme of Dreams (Win Win situation fo a Franchisee,
Supplier, Transmiter & Generator)
Electricity distribution in India are still making losses, even after:(i)
Enactment of Electricity Act 2003 ( E. Act 2003)
(ii) Several Amendment(s) of Electricity Act 2003,
(iii) Declaration of National Tariff Plan and National Tariff Policy,
(vi) Un-Bundling of State Electricity Board(s),
(v) Independency in Load Dispatch Centre - NLDC, RLDCs,
(vi) Establishment of Independent Regulators in Centre and
State (CERC/SERC),
(vii) Establishment of Grievance Redress Forum like, GRF,
OMBUDSMAN and ATE (Appellate Tribunal for Electricity)
(viii) Establishment of Enforcement Mechanism through Energy
Police Station and imposition of penalty under the E Act-2003
(ix) Privatization of Discoms
(x) Establishment of Ultra Mega Power Plant(s) (UMPP)
Theme of Dreams
De-Monopoly of Generation / Induction of IPPs
(xii) Procurement of Power through Competitive Bidding
(xiii) Introduction of Franchise in Electricity Distribution
(xv) Reduction in rate of Interest on loan
(xvi) Provision of Incentives to the stake holders including
(xvii) Energy Audit/ Feeders Management in Distribution
(xviii)Implementation of Govt. Schemes with Capital Grant and
Interest Subsidy
(xix) Implementation of different Energy Conservation Scheme(s)
and Building Code
(xx) Implementation of Recommendation(s) of different Expert(s)
What can be done by an CMA to put
Electricity Distribution Sector on a
fiscally sustainable path and bring
investment in distribution, given the
intense of political pressure to supply
power cheaply and access of
Electricity to all ?
Approach for Generation to reduce the cost of power
which is 70-80% for distribution utility :(A) THERMAL POWER
Impact of COAL as a primary FUEL in Thermal
 Re-Visiting of Long Term Coal Linkage policy
 Allotment of Coal Blocks/ Mines through Auction/ Bidding
 Allotment of Coal Blocks through Reverse- Bidding Process
 Action Plan and mid term review of the Action Plan for
Achieving Planned Targets from Captive Mines
 Plan to reduce Cost of Imported Fuel Price
 Establishment of Independent or Third Party International
Laboratory for evaluation of Calorific value of Imported Coal
for determination of the Price of Coal.
 Evacuation of Power instead of Coal to
save the Cost of transportation.
Re-visiting the Land Acquisition issues
Improving R&R Policy with Long term Dividend Sharing
Simplification of Environment Clearance
for Power Projects to reduce the Cost
Merry Go round of Railway Transportation
Combined and Shared Railway Corridor
for transportation of Coal Plan
Selection of Ash Pond in appropriate place to save future continuous
claim from Farmers
Water Storage and re-cycling plant
Mega / Ultra Mega Power Project
Increase of Existing Installed Capacity
and change of technology.
Capacity Building in of BoP (Balance of Project) Qualifiers
Reduction of Time for Annual Plant Maintenance through
Professional Outsourcing Agency
Annual Supply Contract for Spare parts
Adequate and Appropriate Insurance
for the project for un-foreseen
 Reservoir Management in Multiple Project
 Treatment of Catchments Area for reduction of silt
 Spinning Reserve to maintain the Frequency level and Grid Stability
 Time Management in Annual Maintenance through Professional
 Maximising generation in peak
period / peak season
 100% Machine availability of
Machine during Rainy season with
Back up spares
 Adequate Plant insurance
 Selecting Right Site with higher CUF for Solar
 Development of Mega Solar Park with Evacuation
 Selecting the Right Technology, Module and
Cell and other Equipment like Inverter,
Transformer etc.
 Use of Balance unused land of existing Factories, Dam Sites,
Institutions, Railway, Airport etc
 Manufacturing of Mega PV Modules for use of floating Solar
Panel in the Reservoir.
 Capacity Building of Professional Maintenance Contractor
 Use of Roof Top for Solar
 Regulation for Net Metering arrangement in
Roof Top Solar
PV System Architecture
Relatively simple to install, operate and maintain.
 Most popular and globally accepted configuration.
 No availability when grid is down, safety for grid
Photovoltaic Panel
(Approx. 1 - 5kWP)
Meter 2: Solar Electricity
Meter 1: Conventional
Electricity Consumption
Approach in Transmission which is about 10%-15% cost to the
Distribution Utility
Policy for Compensation of land used for
Evacuation of Power like R&R
Balancing of Generation & Evacuation Capacity
Capacity Building of Qualified 765/400 KV Executors
Re-visiting the Deviation Settlement Mechanism which has restricted
the generators to inject power or Distribution Companies to draw
R&M with capacity addition of Generating & Transmitting
Capacity Building for sufficient Higher Capacity Transformer
Manufacturing in the Country
Up-Gradation 400KV line to 765KV /1200 KV
Installation of Ultra High Voltage (UHV) Transmission lines
Use of Compact Tower/ Bi-Pole
Development of 1200 KV AC System
Evacuation of NER Power or Bi-lateal Trade
to Adjacent Country
Re-visit for fixation of Inter regional
Transmission Point of Charges (PoC)
Approach in Developing Power Market
The factors affecting markets as follows:
Flexibility in Deviation Settlement Mechanism.
Correct Delivery Point of Power
Policy for Power Banking
Simplification of Open Access
Model Bilateral Trade/ agreement.
Approach For Franchisee in Distribution
 Franchisee of 33/11 KV Primary Distribution / Sub-Station level
 Franchisee for 33 and 11 KV Feeders Level
 Franchisee for Distribution Transformer level
 Fixation of Bulk Tariff rate for Franchisee at different level with
different Voltage level
 Franchisee for Wire Business
 Franchisee for Maintenance
Approach in Distribution to Reduce the Cost
Input based Franchisee in Rural Area at different level
Outsourcing of Operation & Maintenance at 33/11KV Sub-station
BOOT Model franchisee for Semi Urban Area
Mid Term Visit for change in CERC Norms for computation of
Generation, Transmission Tariff in regard to (i) Reduction of % on
Return on Equity or introduction of Return on Capital Employed
instead of ROE (ii) Change of O&M Norm (iii) reduction on rate of
interest on working capital loan
Extension of the Integrated Power Development Snt S
Scheme (IPDS) to Franchisee
Extension of IPDS to Each Panchayat level
Stopping of manufacturing of Candescent Bulb
Radio Frequency based metering in all Single phase
AMR in all 3 phase Consumers
Encouragement of Online payment with more
Installation of Capacitor Banks for improvement of Voltage
Bifurcation and re-routing of feeder
Erection of appropriate Distribution transformers
Strengthening of conductors across all voltage levels.
Best practices to reduce Cost in Distribution : High voltage Distribution
System (HVDS).
 Network reconfiguration.
 Network re-conductring.
 Segregation of feeders with agricultural loads and supplying them
with HVDS is proposed in all the Distribution regions.
 Reconfiguration, Re-conduct ring of network and Optimal location
of DTs
 The reconfiguration of the distribution network to be done by
Identifying over loaded feeders, and distribution transformers. The
feeders are bifurcated, to form new feeders thereby to reduce the
losses. The loads on the DTs are reduced by proposing additional
Regulation for Lending Agencies
for fixation of margin like trading
of Power being 70% of Capital is
invested by them in the project.
Relaxation in Allowing Generation, Transmission & Wire Business to
avail External Commercial Borrowing and FDI
Arrangement of Inter Ministry meeting for liberalization of Hedging
in case of Foreign Borrowings or Foreign Contracts
Allowing cheaper FIG (Financial Institution Guarantee) instead of
Bank Guarantee (BG)
New Approach for Carriage and Content Business
Distribution Reform
 Transferring of the existing financial losses of distribution
company to a Special Purpose Vehicle (SPV) before
reform to carriage and content business.
 Reorganization of regulatory asset by the regulator .
 Fixing the life line rate for Below Poverty Line consumer.
 Capacity Building in Franchisee.
 Tamper proof IT implementation.
Future Multiple Distribution Business
Slogan of the day
"A CMA having Vision, Dedication, Imagination
can create Win-Win- Situation to reduce the Cost of
the Organization and Save Billion"
" CMA can also reduce the Tension of the Nation”
Finally the CMA win over the dreams

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