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Analysing Efficiency of Electric Distribution Utilities in India: a Data Envelopment Analysis

34 th 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.

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Analysing Efficiency of Electric Distribution Utilities in India: a Data Envelopment Analysis

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  1. 34thIAEE 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)

  2. 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

  3. 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

  4. 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.

  5. Financial Losses in power sector

  6. Cost Structure of electricity supply

  7. Leakage of revenue stream

  8. 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

  9. 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.

  10. Operational Performance Average AT & C losses (in Percentages) Average number of outages per feeder DTs failed (in Percentage) Average outages duration (in Minutes) per feeder

  11. Comparison of AT & C losses across Discoms

  12. Contd…

  13. Review of Literature

  14. Input and Output Parameters Data for 3I/1O model Data for 4I/1O model

  15. Results: efficiency of Discoms across states (3I_1O)

  16. Contd…

  17. Results: efficiency of Discoms across states (4I_1O)

  18. Contd…

  19. 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).

  20. Thank youQuestions?

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