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Ramesh Narayanan, Chief Executive Officer, BSES Yamuna Power Limited (BYPL)

19 May 2011

As the temperature rises, Delhiites have no choice other than to switch on their energy-intensive electric home appliances. Though Delhi's BSES Yamuna Power assures that its consumers will have a comfortable summer, concerns have been raised by BSES on the sustainability of their business. Against this backdrop, InfralineEnergy's Chhavi Tyagi spoke to Narayanan on the preparedness of the discom for the summer, handling AT&C losses and the issues revolving around the distribution sector.

Edited Excerpts

How prepared are you for the Delhi summers?
The operations and maintenance teams of the BSES Yamuna Power Limited (BYPL) conducted a preventive maintenance drive during the lean winter months. This entailed repair and maintenance work in 2,250 sub-stations and 50 EHV Grids. A special drive was undertaken to revamp 3,000 service pillars by retrofitting them with all required kits, eliminating loose terminals and painting them to give a face lift. With these measures already undertaken, our network is fully geared up for reliable power supply in the current season.
Are there going to be any shortages this season?
This year we went only for the banking arrangements with a few hydro energy-based states. We do not see any problem in the summer season if Delhi is able to get 350 MW of power from the central unallocated quota and 500 MW of power flowing from the Bawana power plant by June. Like last year, we are hopeful that Delhiites will have a trouble free summer.
What steps have you taken for the losses resulting from power theft? How successful have these initiatives been?

BYPL has created a record by reducing the AT&C losses from a mind boggling 61 percent to about 19 percent in the past nine years. Now, to reduce the AT&C losses further, there is a need to invest in certain technical intervention and upgrade loss prone outlived systems.

As a first step, BYPL has identified such assets and has submitted proposals to Delhi Electricity Regulatory Commission (DERC) asking for clearances so that execution could begin. These include replacement of bare conductors, replacement of loss and outage prone oil type circuit breakers (OCBs) with RMUs and fixing of meter boxes in all such meters that are prone to tampering by using electronic devices.

"In the current scenario, the policy only describes the process. We submit the aggregate revenue requirement (ARR), after that, it is to the total discretion of the regulator as to how he interprets the ARR and how he pulls out the magic tariff. There is no fixed formula. Define a formula, otherwise this sector cannot sustain. This is the biggest gap in the sector."

Further, we also proposed to install capacitors to compensate the ever increasing reactive load induced due to various energy efficient appliances like ACs, CFLs, T5, LED and electronic chokes.

Critics say that the SERCs have failed in their most important job of fixing the tariffs for discoms, what do you have to say on this?

Essentially, the SERCs require clear norms to ensure cost reflective tariff to sustain operations. Unfortunately, due to lack of such norms, there is a great deal of discretion available for various tariff makers who are vulnerable to pressure from stakeholders in the sector. To avoid such situations, it will be worthwhile to define or enact a fixed formula which should be applicable automatically by all tariff makers so that discretion and subjectivity are minimised. It is essential for sustenance of the sector. While norms set for generation and transmission projects automatically ensure realisation of cost to generation and transmission companies; for discoms, there are no such fixed norms. This leads to arbitrary and unnecessary financial strain on the distribution sector.

There are some issues which are just transient; others are long-term with the distribution sector as a whole. The distribution sector needs to set a formula for tariff making and only if somebody deviates from the formula, should there be a public hearing. This formula should factor in all the issues like the Wholesale Price Index, Consumer Price Index, power purchase cost variation, O&M cost, etc. It would help to run the business smoothly.

"Since the discoms inherited a dilapidated and outlived network, there are still elements in the system, which are prone to outages, though much of it is revamped. Such outages, sometimes, do cause disruption in the power supply and these factors are being addressed progressively to ensure a reliable supply to our consumers."

In the current scenario, the policy only describes the process. We submit the aggregate revenue requirement (ARR), after that, it is to the total discretion of the regulator as to how he interprets the ARR and how he pulls out the magic tariff. There is no fixed formula. Define a formula, otherwise this sector cannot sustain. This is the biggest gap in the sector.

In spite of power being available in the short-term market, many utilities still go for load shedding. What is BYPL's stand on it?
Power shedding cannot be a strategy for a power utility which is able to contain AT&C losses. BYPL has successfully contained AT&C losses. Therefore, it makes business sense to supply power to all its consumers reliably and recover the cost. However, since the discoms inherited a dilapidated and outlived network, there are still elements in the system, which are prone to outages, though much of it is being revamped progressively. Such outages, sometimes, do cause disruption in the power supply. These factors are being addressed to ensure a reliable supply to our consumers. However, capital constraints hinder elimination of all such deficiency in the system at once.
NDPL has entered into power generation business as well with its plans of setting up a power plant at Rithala, does BYPL have any such plans?
BSES has proposed an environment-friendly gas based combined cycle power plant in Tikri in West Delhi and in Ghazipur in East Delhi. We are awaiting response from the concerned departments.
Pune implemented a system of uninterrupted power supply. What are the hindrances in implementing a similar model in Delhi? How can uninterrupted and quality power supply be enhanced amidst public perception with regard to service delivery?

The Pune model envisages a reliability charge across all sections of consumers for ensuring uninterrupted power supply. This reliability charge ensures sourcing of expensive short-term power during peak requirements. Such a reliability charge can be a solution for Delhi as well. However, it will be worthwhile that a common norm be stipulated for all discoms uniformly in the country so that each utility and regulator does not have to invent unique solutions for their basic operations.

"Today, the discoms are not exploring all available business opportunities to help the sector take advantage of their huge asset and committed customer base. There is a need to look at these avenues with an open mind so that the efficiency gains of the discoms could percolate in other allied utility services."

Today, only the tariff making process for the distribution sector is defined in the Act. However, it would be a great help if a norm is defined which could ensure timely implementation and smooth cash flow for all discoms to operate viably.

Is it feasible to evolve a rational tariff structure in Delhi where all types of consumers will pay the same tariff?
A standard norm for power distribution business can ensure a rational tariff not only in Delhi but across the entire country.
What steps has BYPL taken and plans to take in near future to avail power at competitive cost?
BYPL has tied up adequate long-term power from a mix of thermal, hydel and nuclear stations at competitive rates based on the demand projection made by CEA in the 17th EPS and 2020 Master Plan of Delhi.
How is BYPL planning to tackle the regulatory uncertainty which, indeed, is among the toughest challenge?
We are of the firm belief that the regulatory uncertainty can be easily done away with if standard norms/ formula are defined for tariff making for the implementation of which no discretion may be allowed. The regulatory mechanism could look into all other aspects like safety, customer service, network development, DSM, or any other such measure for efficient and effective supply and use of energy in the sector.
What is your take to control cost in line with MYT targets?
The discoms are not exploring all available business opportunities to help the sector take advantage of their huge asset and committed customer base. There is a need to look at these avenues with an open mind so that the efficiency gains of the discoms could percolate in other allied utility services.

(InfralineEnergy thanks Ramesh Narayanan, CEO, BSES for sharing his valuable insights with our readers. The column 'In Conversation', is a platform to engage experts from various sectors to share their views on the different transformations happening in the Indian energy sector.)