1. Challenges in Distribution
19th India Power Forum
Changing Role of Power Sector in Achieving Higher GDP Growth
23rd November 2016
Challenges in Distribution
Gopal Saxena
Director- BSES Discoms, Delhi

2. Discussion points Financial Turnaround & Regulatory Role
UDAY – Present Status
Loss reduction & Network Upgradation
Integrating Renewable in Distribution Systems

3. a) Financial Turnaround & Regulatory Role…
Regulated
Business
Fixed RoE
Margin pressure
Difficult to
raise funds
Poor balance sheet
Unpredictable revenue
Requirement
Budgetary Discipline
Increased private participation
Reasonable ‘actual’ Returns
Low Cost Debt instruments
Dedicated Common Distribution Infrastructure Fund
Financial Losses
Rs 63,355 Crs (annual)
Rs 4,00,000 Crs (cuml.)
Negative Net worth
Rs 1,16,845 Crs
Total Loan Outstanding
Rs 6,73,057 Crs
FRP Schemes
Outlay/ Disbursement [Rs Crs]
UDAY : 25,880
IPDS :32,612
RAPDRP : 51,577
NEF (int subsidy) : 8,466
DDUGJY : 44,033
FRP (Yr 2012) : 56,908
RGGVY :43,882
Distribution, still financially unviable business in many states...
*PFC report for FY15 3

4. a) Financial Turnaround & Regulatory Role…
Inaccessibility … ~300 million people w/o electricity (22% of India)
Unavailability … 11 % Peak Shortage (Incl breakdowns / outages/network constraints etc)
Un-affordability ... SEBs surviving on Govt aid / Subsidy
Overcoming Challenges:
Discrimination – Private Vs SEBs
Strong disconnect – SERC Vs CERC & Intra SERC
Uneven reforms trajectory for different States.
Financial Mess
Non Cost Reflective Tariffs
No ‘Cost to Serve’ model – skewed tariffs
“RA” creation with no firm amortization plan.
Overlooking/denying/deferring ATE Judgments.
Cross-subsidy continues to increase
Regulatory OBJECTIVES:
Steer Competition
Bring Accountability & Transparency
Ensure Commercial Viability
Drive Accessibility of power
Quality & Affordability
Elevate Renewable Energy
Minimise micromanagement of the Discom’s ARRs ;
& work towards bringing Sectoral Efficiency 4

5. b) UDAY Update.... (FY17- Oct’16)
16 States have Signed for UDAY
Tariff Order issued by respective SERCs /16 States.
Lowered ACS Vs Avg Realisation Cost gap …………………… /16 States
AT&C Loss reduction………………………………………………  13/16 States.
% Compliance / Commitment Level as of FY17(H1) for UDAY
30-45% : Haryana, Gujarat, Bihar, Punjab and Rajasthan
15% -30% : Uttar Pradesh, Bihar, Jharkhand
15% & less : Jammu & Kashmir
Tariff Order Comparison (UDAY Vs Actual) S#
State
Tariff Increase
as per UDAY
Actual Tariff
Hike in FY17
Delta 1
Bihar
10.00%
0.00%
-10% 2
Punjab
5.00%
-0.69%
-6% 3
Andhra Pradesh
3.60%
0.63%
-3% 4
Uttar Pradesh
5.75% 4%
-2%
Highest loss making states
with least / Nil tariff hikes
Falling “Actual Tariff Hikes”
as envisaged adding to
discom’s financial plight
Sector showing signs of revival ?

6. c) Loss Reduction & Network Upgradation
Source
State
Energy Input
AT&C
Last Tariff Order BU %
PFC
Maharashtra
106
12%
19.80%
Yr 2016
Tamil Nadu 85 9%
24.80%
Yr 2014
Uttar Pradesh 81
33.80%
Gujarat 71 8%
16.10%
Rajasthan 63 7%
29.30%
Yr 2015
Karnataka 57 6%
18.70%
Top 6 States
466
51%
19.50%
All India
910
100%
24.60%
 138
CEA
All India Electricity
1,048
Delta
Generation FY 15 (BU)
(PFC Vs CEA)
13%
POINTS TO PONDER
Huge unaccounted Energy gap from Gencos & Discoms level
BU (Rs ~60K Crs)
For 60K crs accounted :
top 6 State Contribute 51%
Brining down losses of top 6 states level, required additional billing 21 BU /~ 9,500 Crs.
Are Current Losses
the “Actual” Losses ?
51%
Before The Electricity Act 2003, few key privatisations done, namely :
Delhi (Only successful PPP Model) / Orissa (First PPP Model but unsuccessful)
Post enactment of the Electricity Act 2003, no Privatisation has taken place
Franchisee arrangements marred with High benchmark pricing, lobbying of the non-core players & capable of being implemented in small scale
Future Of Distribution is PPP Model built on transparency /good governance
....current model is riddled with disputes (Financial/Operational/Legal/Regulatory)

7. c) Loss Reduction & Network Upgradation
I N N O V A T I O N LT
HT - HVDS
# SMART GRID #
# Solar Rooftop#
ONLY Revenue Generation Source of the entire Power Chain
Legacy assets with hardly any innovation
Last mile with least innovation
Regulated Business / Lack of cost reflective price across states
Legacy infrastructure needs to be upgraded urgently
Capacity HR level
Raising the per capita power consumption (from ~1,000kWh – 2,000kWH by 2024)G-T-D Investment Requirement Rs 30 Lac Crs; Matching Distribution Investment: 8 Lac Crs
* Conventional Network At Rs 10 Cr / MW
(5 Cr Generation capacity, 3 Cr transmission, and 3 Cr distribution CapEx - smart meters, etc.)
Solar Rs 6-8 Cr /MW
AMRUT : Atal Mission for Rejuvenation & Urban Transformation

8. Harnessing marginal of the market potential…
d) Integrating Renewable in Distribution Systems
Renewable Energy …
Source : MNRE;
Small Hydro
Wind Power
Bio
Power
Solar Power
Total Capacity (MW)
4,323
28,083
4,997
8,513
45,917
Installed Capacity
- Solar, Wind, Small Hydro, Biomass etc.
As on Oct’16
POTENTIAL
Solar
Roof Top (GW)
Wind
(GW)
Harnessing marginal of the market potential…

9. Integrating Renewable....
Solar & Wind power projects with innovative designs for minimum land utilisation.
Upcoming Smart Cities to be powered by Green Energy
Sunshine Sector
Rooftop solar panels
Solar panels covering canals
Hybrid farms :
both solar & wind plants
RE plant near pithead plants to reduce transmission cost
Solar Powered Agri Pumps
On The RADAR

10. Thank You