In J&K sate, Power Development Department (JKPDD) is the sole deemed licensee for supply of electricity. The department purchases power from various sources which include Central Public Sector Undertakings and J&K Power Development Corporation. This power is sold to the consumers at a tariff which is fixed by autonomous agency, J&K State Electricity Regulatory Commission (JKSERC). While transmitting and distributing this power, JKPDD incurs huge losses to the extent of 72% which are one of the highest in the country. For 100 units of energy pumped into the system, the department bills hardly 38 units to the consumers; the remaining 62 units are lost as T&D losses which includes theft and wastage of energy. Out of these 38 units, revenue is realized for 28 units only, the remaining 10 units remain unrealized and pile up as arrears against the consumers which mostly includes government installations. The aggregate technical and commercial losses (AT&C) are therefore of the order of 72%.   
The T&D losses of about 15% are considered to be normal due to technical reasons which are caused by some loss of power in the lines and transformers. In the present scenario a loss level of 25% for J&K could be considered as acceptable owing to scattered load and dilapidated condition of the HT and LT network. The remaining 47% is either due to theft (37%) or due to non realization of billed energy (10%). It has been found that for every 1% reduction in T&D losses, JKPDD can save Rs. 25 Cr. per anum. But the trend over last one decade is not encouraging. In spite of establishing of SERC and metering of about 50% consumer installations, the losses are on rise.
The experience in various state distribution utilities has proved that brining in private players into distribution business reduces T&D losses considerably. Of late JKPDD has also taken some positive steps towards establishing distribution franchisees in the state after getting encouraging results from outsourcing of works as Lump Sum Turn Key Projects (LSTK) at Transmission and Distribution Level especially with regard to economy, quality and adherence to Electricity Rules by the contractors, who are getting works inspected and certified by the Inspection Agency of JKPDD before energizing such works. The department arranged distribution franchisee training at Kashmir Govt. Polytechnic in the month of July, 2011 with the assistance of Central Institute of Rural Electrification (CIRE), Hyderabad for unemployed Degree and Diploma Electrical Engineers. Similar training has been arranged in Govt. Polytechnic, Jammu in the 2nd week of October, 2011. The prospective franchisees were invited to the training through advertisement in local newspapers. I was one of the trainee franchisees at KGP, Srinagar.
We were told by the experts from CIRE, that presently there are around 26000 franchisees in operation in the country. These franchisees are involved in meter reading, bill preparation, bill distribution, revenue collection, releasing of new connections, preparation of list of defaulters etc. etc. In some rare cases like Torent Power in Bhiwandi, Maharastra, the franchisees have taken up complete distribution business including purchase of power from the licensee utility and its sale to the consumers, Operation and Maintenance of distribution system  and investment for improvement to the system. The success stories all over the country were revealed to us through power point presentations. Like in Bhiwandi, with an annual input energy requirement of around 2500 MUs and AT&C loss over 60% with 7-8 hours of load shedding, AT&C losses have been brought down to around 19% in two years. Steep reduction in AT&C also resulted in quality and reliable power supply to consumers there by achieving high consumer satisfaction.
Broadly speaking there are two main models of distribution franchisees. These are Revenue Franchisee and Input Based Franchisee. The ‘Revenue Franchisee’ may be ‘Collection Based’ or ‘Input Based’. The ‘collection based revenue franchisee’ is assigned responsibility of billing, revenue collection, complaint redress, facilitating release of new connections and feedback to utility on status of distribution
Such franchisee is given target by the utility for revenue collection every month and the franchisee is given margins which is a percentage of collections and penalty is levied if targets are not achieved and incentives if the targets are exceeded.
Input based revenue franchisee is similar to collection based revenue franchisee except that the target setting of such franchisee is based on the energy supplied by the utility at 11kV feeder or distribution transformer. The input energy into the area covered by the franchisee is measured by the utility while the target for revenue collection is set based on the collections made as percentage of the input energy supplied to the consumers beyond the point of metering by the utility.
The second model i.e., pure Input Based Franchisee is a Public Private Partnership (PPP model) where ownership of assets remains with Discom and franchisee manages the franchised area with adequate freedom. Licensee supplies power to franchisee at predetermined price. Franchisee retains pre-defined portion of the revenue as ‘charge’. Tariff applicable in franchisee area will be the same as that applicable in the respective licensee area. This model may or may not include Operation and Maintenance activities.  Such franchisee is engaged for longer period of say 15 to 20 years. The franchisee invests in his area for which he is compensated at depreciated value on conclusion of the contract. This model is considered to be the best model. However, such model can be applied in those areas where the base line data regarding losses and other parameters has been established and audited.
Above models are further simplified if required, so as to suit to the local conditions. For example in J&K computerized billing system of revenue and cash deposition in J&K Bank is well established and efficient. PDD may not like to give these responsibilities to franchisees. Instead the department may outsource meter reading and bill distribution which may be upgraded to Input Based Model after a year or two as and when base line data is established. The responsibilities to be assigned initially to franchisees may also include informing the utility about defaulters, meter tampering, slow and stick meters etc. etc. 
Establishing franchisees in distribution can not only help PDD to reduce its T&D losses but it has also a great potential to generate employment opportunities for unemployed Degree and Diploma Electrical Engineers in the state. It will also mitigate the manpower shortage presently faced by the department. Power Development Department has taken a great initiative by arranging training for the prospective distribution franchisees of the state. We hope that further steps will be taken immediately by the concerned authorities for assigning various distribution segments to these trained distribution franchisees in a very near future.     
 
Syed Parvez Safvi is President Self Help Group of Engineers Association

Lastupdate on : Thu, 27 Oct 2011 21:30:00 Makkah time
Lastupdate on : Thu, 27 Oct 2011 18:30:00 GMT
Lastupdate on : Fri, 28 Oct 2011 00:00:00 IST