One of the major concerns of the power sector is the reduction of losses in the distribution. It was felt that for improvement in the power sector, it was necessary to reform the distribution link in the whole chain of the sector, which was mainly responsible to bring the revenue into the sector. The various issues involved in the management of distribution losses can be classified under the categories of governance, commercial and technical issues. For effective control of AT&C losses, the States and state power utilities are required to initiate action on all the three fronts simultaneously.

Accelerated Power Development Programme

To bring about improvement in the distribution sector 'Accelerated Power Development Programme (APDP)' was introduced in 2000-01. The primary aim of the scheme was reduction in aggregate technical and commercial (AT&C) losses through strengthening and renovation of the ailing sub-transmission and distribution network.

The scheme was renamed as the 'Accelerated Power Development Reform Programme (APDRP)' in 2003 to usher reforms in the sector. An incentive scheme for cash loss reduction and reform conditions were introduced for becoming eligible under the scheme. The focus was to look at the distribution sector in a holistic manner and then improve performance in all segments. The main objectives of the APDRP were improving financial viability of the State Electricity Boards, reduction of AT&C losses, improving customer satisfaction, increasing reliability of power supply, improving quality of supply, adopting systems approach with MIS, and bringing transparency through computerization.

571 projects worth Rs. 14,583.07 crore were taken up by the State Power Utilities under APDRP. The Government also provided assistance of Rs 7,777.19 crore to the states for completing the above projects. Ten states (Andhra Pradesh, Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, West Bengal and Tripura) showed reduction of cash loss amounting to Rs. 5809.89 crore. Rs. 2904.95 crore was released to these states as incentive under the programme for achieving the cash loss reduction.

The implementation of the APDRP combined with the other initiatives of the States showed the improvement in AT&C loss at National level which reduced from 38.86% in 2001-02 to 29.24% during 2007-08. AT&C Losses have been reported below 20 percent in 215 APDRP towns in the country of which 163 towns have brought AT&C losses below 15 percent. Feeder metering improved from 81% during '00-01 to 98%. Consumer metering improved from 78% during '00-01 to 88%. 15 States have unbundled and corporatised. 25 States constituted SERCs and 23 SERCs issued Tariff Orders.

It has been experienced during the implementation of the Accelerated Power Development and Reforms Programme (APDRP) that wherever policy makers and top management were aligned to sound commercial practices they could reduce AT&C losses and move towards commercial viability with the help of technical interventions. Many of the utilities did not take up the projects, required to bring about accountability in the system. The off-take on IT enablement of distribution sector to enable energy audit & accounting was rather poor in X Plan APDRP, wherein 25% grant was provided by the Government against project cost and 50% for cash loss reduction.

Following a review, the scheme was re-launched as 'Restructured Accelerated Power Development Reform Programme (RAPDRP)' on 31.07.2008 with the focus on actual, demonstrable performance in terms of loss reduction. Establishment of reliable and automated systems for sustained collection of accurate base line data, and the adoption of Information Technology in the areas of energy accounting have been made necessary pre-conditions before sanctioning any projects for strengthening & up-gradation of sub-transmission and distribution networks in urban areas. The primary difference between the two schemes was that now the disbursement of Central Government funds to the states was linked to the demonstration of reduction in losses meaning that the funding was basically linked to outcomes.

Projects under the scheme will be taken up in two parts. Part-A is the projects for establishment of baseline data and IT applications for energy accounting / auditing & IT based consumer service centers and Part-B is regular distribution strengthening projects.

For Part A, the Centre is doing complete hand-holding of the State utilities, giving them a list of IT consultants and even the agencies that can do the execution. The IT enablement of a SEB will be entirely funded by the Central government.

1344 projects at the cost of Rs 4859.61 crore have been approved for twenty two states (Andhra Pradesh, Assam, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh, J&K, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttrakhand, Uttar Pradesh and West Bengal) under Part-A of the scheme.

Under Part-B of the R-APDRP, funds are available for system up-gradation also. The extent of grants under Part-B would depend upon the extent of reduction of losses, which will be verified by an independent agency. Part B will be funded to the extend of 25% loan by the Government and on successful completion of project and reduction of losses below 15%, 50% of total loan will be converted into grant from the Government.

The successful IT enablement of a state power utility will make it an integral part of the energy audit and accounting systems. This will enable utilities to clearly account for all energy flows, enabling them to learn where losses are taking place. Also, it will help in quantifying the type of losses that are taking place. Currently, it has become a practice to put losses due to theft or otherwise into the un-metered segment, which is almost like a residual account and for which nobody is accountable. With information technology, every feeder and every transformer can be metered, enabling one to compile exact figures for every unit transmitted and distributed through a particular point.

Consumer Benefits

From a consumer's point of view, such IT enablement may lead to tariff reduction as it would bring into the ambit those consumers who are currently not paying for the electricity or are paying less than what is actually due from them. Politically also, it will enable the administration to ensure that its interventions accrue to the people who need them.

Yet another advantage of making IT a part of the system in all power utilities is that as technology evolves, the utilities can easily leapfrog to them. For example, a power utility can then introduce smart grids, which is the next big thing in the distribution segment and which can enable two-way communication with the consumers, remote load control, load profiling, and even integrate generation at the consumer's end into the grid. Once the basic system is in place, a utility can do any number of add-ons. In fact, the R-APDRP specifications make it mandatory that the system should be such that it can be further scaled up and upgraded.