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Praveer Sinha, Chief Executive Officer and Executive Director, Tata Power Delhi Distribution Limited (TPDDL

01 Jul 2014

Praveer Sinha, Chief Executive Officer and Executive Director of Tata Power Delhi Distribution Limited (TPDDL) speaks to Shakeb Ayaz about power crisis in Delhi, the need for multi sourcing from different power plants, multi transmission system, annual increases in consumption and demand and transparency of power tariff fixation by the regulator in Delhi. Excerpts.

What is your take on current power crisis in Delhi?

I can only speak about our area (north and north-west Delhi). In our area there is no crisis. We are supplying 100 per cent power to our consumers. There is no load shedding, there is no power cut. Only for one day there were issues -- on May 30, when thunderstorm and rains impacted supply through the transmission lines of Delhi Transco. Our distribution lines were also affected. At least 1,000 of power supply poles were uprooted due to trees falling on them. But within five hours we resumed power supply to all our main consumers like Delhi Jal Board, DMRC and government offices. Within five hours we restored 50 per cent of power. In 12 hours we restored 80 per cent of our power, while within 24 hours we started supplying power by nearly 100 per cent barring some villages in remote areas in Narela and Bawana, where the damage were maximum as poles had been uprooted in kilometers of area. Lines were down, and it took lot of time as first the trees had to be removed. After May 31, we have been steadily maintaining our supplies. In our areas there is no shortage despite the transmission lines like Rohini-Bawana line was not up and part restoration was done by June 10. The part restoration of Mandola-Gopalpur line was done on June 5. In spite of all these problems we supplied power with the aid of our network which is very robust.

Are there issues about shortage of supply of power to the distribution companies?

As far as we are concerned there is no shortage of power supply. We typically tie up for peak requirement during summer months and we also keep little margin to take care of any contingency. Typically in summer months, some power plants face technical snag and they are down, To take care of those contingency also we tie up for additional power to meet the emergency needs. We have been able to meet our peak requirement in summer and on June 19 we met out peak requirement of power, both in terms of energy and in terms of megawatt. Maximum supply was 1628 mw without any power cut in our area or without any load shedding. This is the highest that we have supplied in last 12 years. In terms of MU also we supplied 33.13 MUs compared to last year’s 30.3 MU. Again we have been able to cater to full requirement of power and this is in spite of the fact that still some main lines are down and repair work is going on. TPDDL has tied up sufficient power till FY18 and foresees no power shortage till then.

Are power companies procuring or buying power due to high tariffs?

TPDDL has made adequate long term power arrangements to meet the demand of its consumers. We typically have long term PPAs with power producing companies. If required, we also procure power through exchanges; bilateral contracts etc. to meet contingencies at the time of peak load. In addition, what we additionally do is banking, that in winter months we supply power to some of hilly states when their major source of power, rivers are frozen, and during summer months when rivers are in full flow they return the power to us. Thus with the help of banking arrangement we get large quantity of power during summer months and also during monsoon months when due to high humidity there is high consumption of power. So, we do efficient planning and ensure that there is no shortage of power. We also carry out lots of work on our networks during winter months and take care of maintenance activities. Both from our network perspective and power availability we ensure that there is no shortage in power supply or load shedding for our consumers.

Are you happy with the current power rates that your company gets from the consumers?

The rates are determined by the regulatory commission and they are dependent on cost of power purchase, capital related cost, financing cost and also the regulatory assets which have accumulated over a period of time. For us the regulatory asset that has accumulated is about `5,100 crore and we financed the same through loans. The tariff today reflects all the components; there is also a Regulatory Deficit Surcharge for amortizing the Regulatory Assets. Tariff needs to be cost reflective to take care of both repayments of principle and repayment of interest.

Are you happy the way power tariff is fixed with the help of DERC?

Sure, we have seen that in the last three or four years, the regulatory commission has come up with regular orders and has also taken cognizance of power purchase adjustments that take place. The generating company revises the power tariff on regular basis based on the cost of power, depending upon the cost of coal or other gas. To take care of that power purchase adjustment cost has been brought in to the tariff and though it does not fully reflect the deviations in power purchase, it mitigates the same to some extent and hopefully it would be reflective in coming years. The regulatory asset which is there, also needs to be addressed, same has been partly addressed in the present tariff. And whatever gap is there hopefully the regulatory commission will take care of that. The old process will move more cost reflective and we will get a tariff on which we can service our consumers.

There have been issues about fixing the power tariff. How far is the process transparent?

The process is transparent. The tariffs for generation and distribution companies are determined by the appropriate regulatory commissions as per the existing regulations. There is also the concept of public hearing wherein concerns of all stakeholders are given cognizance and reflected through the tariff fixation process. Tariff fixation is also done after undertaking prudence check which lends further transparency to the process.

There have been issues with NTPC, with the power behemoth threatening to cut supplies.

We do not have any issue with the NTPC. We are up to date with the power behemoth or any other power generator or transmission companies for payments.

Poor transmission system is now suddenly being blamed for shortage of power supply in national capital. For the last five to six years everything appeared to be fine.

Increase in consumption takes place every year, and even existing consumers add more electric equipment and gadgets in their houses, so consumption yearon- year basis keeps on multiplying. And in the last 10 years if we see the peak consumption was 3,000 mw which has now gone up to nearly 6,000 mw in 2014. We need to keep on adding more to the transmission and distribution system. Over a period of time new grid stations have been added like 220 kv or 400 kv. However the pace at which the growth is taking in consumption and the pace at which the growth in network is taking place did not keep pace, that is why we saw during the storm that there was a blip and the transmission companies could not meet the load requirement. But several projects are already under implementation. In our areas Delhi Transco has taken lots of projects. Some projects are running little behind schedule which will get completed. We also need to understand that in electricity transmission and distribution we work on a concept called n-1. Even if one line is down power could be supplied from other line. This we saw this summer when the Bawana Rohini line was down we were able to supply 450 mw of power. We could bring power from alternate sources and we brought power from Bawana-Shalimar Bagh line. We could bring power from Narela to Rohini. Numbers of alternate methods were used to meet the crisis. We were able to transport 200 mw and at some place even 100 mw using alternative methods. Typically in transmission and distribution we work on the concept of n-1 which helps mitigate the crisis.

What steps need to be taken so that such a situation does not arise again?

We need to go with multi approach, means the supply has to be multi sourced from different power plants. And there should be multi transmission system whereby even if one system collapses or two systems collapse we can have alternate ways in moving the power from one area to other area. I think rigorous planning is required to be undertaken by both the transmission companies and distribution companies. It should be done in a way that there is no blackout in an area. This is a continuous process we need to keep on updating the network to meet future challenges.

What kind of investment is your company planning to strengthen power infrastructure of the national capital?

Every year, we put about `300-350 crore for cutting down of AT&C losses, reliability improvement and meeting the future load growth. There is large scale investment. We do work on technology related areas. We are putting up smart meters and in next four years we will fix about three lakhs smart meters. In last 12 years we have put over `4,000 crore investment to strengthen the network, IT and automation works.

What is the total requirement of power in a calendar date in Delhi?

The peak power requirement in our area is 1600-1700 mw, we are meeting our target. For Delhi it is 6,000 mw or may be 6,100 mw depending upon temperature, humidity and network ability to supply the peak requirement. Last year it was 5,653 mw, prior to that the peak was 5,642 mw. Every year we are meeting the peak requirement.

There are issues of rise in cost of gas from $4.2 to $8.4? How much that will impact the cost of power?

With the variable cost of gas based power plants, as per our calculation, we expect that the average tariff of gas based plants will go up from `4 to `6. Then we have to add the transmission and distribution cost. It will become very difficult for distribution companies to afford that power. The plants would also find it difficult to get scheduled under merit order despatch principle.

If the price of gas rises, distribution companies might not like to buy expensive power, won’t that impact the sustainability of gas based power plants?

Absolutely, it will impact the power sector. The distribution companies may not schedule power from them. Only to meet their peak requirement or emergency requirement the power may be scheduled from them.

You mean to say, that distribution companies will shy away from entering long terms PPA (power purchase agreements) from them?

In future no distribution companies will try to ink PPAs with them, neither short term nor medium term or long term. There would be other sources of power which will be cheaper than gas-based power plants.

How can the transmission system be further improved? Is privatization the answer?

As per the Electricity Act the transmission has to be with the government. When it is inter-state the Power Grid Corporation is there. If it is within the state it is the state transmission companies that will look after transmission. The law itself prohibits outsiders from entering the segment until there are specific lines which have been built which can be done under PPP or JVs. Typically transmission has been kept out of 100 per cent private control, while they are allowed in generation and distribution. However there is a need to enhance the power density of Transmission Corridors enabling high mw transfer.

How does your company plan your expansion in the power sector and how do you see the response of consumers and market?

Basically under the present situation the company has mandate to carry out power distribution in the geographical area of North and North West part of Delhi for which it has got licence. We have the expertise and knowledge which we are leveraging to provide consultancy services to other companies in India and abroad. As far as taking distribution in other states, this compan y does not have the mandate to do so. It will be restricted to Delhi only. At least six to seven (it is 4-5%) per cent growth takes place every year, and we are geared up to meet that challenge.

As reform process takes place and grows up do you feel that more and more second tier cities would be brought under such kind of arrangement?

None of these cities have shown that inclination. The supply of electricity is a state subject and it is left on the states to take that call. There are issues linked to employees resistance and political unwillingness and thereby State Government will have to take a call on the model to be adopted, say whether 100 per cent private stake or publicprivate ventures or franchisee models. However ensuring commercial viability would be critical for the sustenance of the power sector.

How do you see the CAG audit of power companies in Delhi?

The CAG audit is going very smoothly, though the matter is still sub-judice and the court has to take a decision on the issue of jurisdiction of CAG to audit a public private company. But from our side we are cooperating with the audit team and the process is going on very smoothly.

Please throw light on the solar initiative your company has taken?

We have taken up the solar initiative to meet our peaking requirement of power, we are getting a study done for which we have got a grant of USD 450,000 from USTDA. This study is being done by E3, a US based company which will determine what kind of architecture and network is required for roof top solar and also what kind of policy direction or eco system that needs to be provided. Nearly 200 mw by 2020 of roof top solar could be used in our area to meet our peaking requirement of power in summer months in Delhi area. Along with demand response projects we expect to meet our peaking demand from roof top solar. TPDDL also has established distributed solar generation capacities over a range of 1 mw to 4 kW cumulating to a total capacity of 1.65 mw in its distribution network.