POWER SECTOR REFORMS

REORGANISATION &
RESTRUCTURING OF SEBs

ISSUES, CONCERNS &

SOME SUGGESTIONS

BY
HIMACHAL POWER ENGINEERS’ ASSOCIATION

Date: 9th May, 2008 Venue: Shimla

1
 CONTENTS
• National Power Scenario
• Power Sector Reforms in India
• Agenda/resolutions (GOI Initiative)
• Features of Electricity Act 2003
• Is unbundling of SEBs mandatory?
• Unbundling a legal opinion
• Results Expected through unbundling/restructuring
• What has been the reality?
• Some suggestions

2
 NATIONAL POWER SCENARIO
Installed Capacity in 1947 1,300 MW
Installed Capacity as on 31.3.2008 1,36,000 MW
Demand Estimates(FY2012) 16th EPS*
Energy Demand(Billion Units) 750
Peak Demand 155,000
Installed Capacity required to 195,000
meet peak demand(MW)
Additional Capacity required(MW) 60,000
• Present energy shortages 8.2%
• Peak demand shortfall 13%
*Energy Power Survey by GOI
3
 Power Reforms in India
• With the advent of policy of liberation &
globalization, the power policy was also
amended in 1991 with the sector
opened up for private participation. In
the policy statements of early 1990’s, it
was projected that the foremost ailment
affecting the power sector is ‘Power
Shortage.” The slogan was power at
any cost is preferable to no power’.
4
POWER SECTOR REFORMS
Initiatives of Govt. of India
(As per resolutions passed in Chief Minister/ Power Minister’s
Conference on 3rd March 2001)
• Noted the challenges confronting the
Power sector.
• Agreed that there is an urgent need to
depoliticise power sector reforms and
speed up their implementation.

5
 AGENDA/RESOLUTIONS
passed in the CM’s conference on 3rd March 2001

• Maximizing Generation –Capacity

Addition of 1,00,000MW by 2012.
• Distribution reforms
– Energy audit of 11 kV feeders in the next six months
– Full metering by December 2001
– Commercial viability through any or all of the following
• Creating Profit Centers
• Handing over local distribution to Panchayats/local
bodies/Franchisees/ User Association
• Privatisation of Distribution
• Or any other means

6
 AGENDA/RESOLUTIONS
passed in the CM’s conference on 3rd March 2001

• Completing Electrification of all Villages and

Houses
– Rural electrification may be treated as basic minimum
service under PMGY.
– Rural electrification must be completed by the end of
10th plan i.e. by year 2007.
– Full coverage of the households may be targeted for
the end of the 11th plan i.e. by 2012
• Tariff Determination by regulatory commission
and Subsidies

7
 AGENDA/RESOLUTIONS
passed in the CM’s conference on 3rd March 2001

• Support for Govt. of India to States

– To achieve definite milestones
– Interest rate for PFC and REC would be
brought down.
– One time settlement for all past dues of
SEBs/Utilities to CPSUs

8
 Power Sector Reforms
Implementation-GOI Initiative

• In this context MoUs were signed by Govt.

of India with respected States.
• With Himachal Pradesh MoU was signed
on 31.03.2001

9
 Then came Electricity Act 2003

FEATURES OF
ELECTRICITY ACT 2003

10
 The Electricity Act, 2003

Important Events:
• Electricity Bill 2000 was placed in Lok Sabha on 30th
Aug, 2001 and was referred to Standing Committee on
Energy which submitted its report on 19th Dec., 2002.
• This bill was passed by Lok Sabha & Rajya Sabha on
9th April, 2003 & 5th May, 2003 respectively.
• Bill received President’s Assent on 26th May, 2003.
Contd……

11
 The Electricity Act, 2003

Important Events:
• This was notified in the Gazette of India on 2nd June,
2003
and finally
“In exercise of powers conferred, the Central
Government appointed the 10th day of June, 2003 as
the date on which the following of the said Bill came into
force as Electricity Act, 2003, namely: -
Sections 1 to 120 and Sections 122 to 185”

12
 Main features of Bill / Act
(Under Statements of Objects & Reasons)
Extracts from EA 2003
4. The main features of the bill are as follows:
1. Generation is being delicensed and captive generation is
being freely permitted. Hydro projects would, however,
need approval of the State Government and clearance from
the Central Electricity Authority which would go into the
issues of dam safety and optimal utilisation of water
resources .
2. There would be a Transmission Utility at the Central as well
as State level, which would be a Government company and
have the responsibility of ensuring that the transmission
network is developed in a planned and coordinated manner
to meet the requirements of the sector. The load dispatch
function could be kept with the Transmission Utility or
separated. In the case of separation the load dispatch
function would have to remain with a State Government
organisation/company. Contd….
13
 Main features of Bill / Act
(Under Statements of Objects & Reasons)

3. There is provision for private transmission licensees.

4. There would be open access in transmission from the
outset with provision for surcharge for taking care of current
level of cross subsidy with the surcharge being gradually
phased out.
5. Distribution licensees would be free to undertake
generation and generating companies would be free to take
up distribution licensees.
6. The State Electricity Regulatory Commissions may permit
open access in distribution in phases with surcharge for-
1. Current level of cross subsidy to be gradually phased out
along with cross subsidies;
2. Obligation to supply. .

Contd….
14
 Main features of Bill / Act
(Under Statements of Objects & Reasons)

7. For rural and remote areas stand alone systems for

generation and distribution would be permitted.
8. For rural areas decentralized management of distribution
through Panchayats, Users Associations, Cooperatives or
Franchisees would be permitted.
9. Trading as a distinct activity is being recognised with the
safeguard of the Regulatory Commissions being authorised
to fix ceilings on trading margins, if necessary.
10. Where there is direct commercial relationship between a
consumer and a generating company or a trader the price
of power would not be regulated and only the transmission
and wheeling charges with I surcharge would be regulated
..

Contd….
15
 Main features of Bill / Act
(Under Statements of Objects & Reasons)

11. There is provision for a transfer scheme by which

company/companies 'Can be created by the State
Governments from the State Electricity Boards. The State
Governments have the option of continuing with the State
Electricity Boards which under the new scheme of things
would be a distribution licensee and the State Transmission
Utility which would also be owning generation assets. The
service conditions of the employees would as a result of
restructuring not be inferior.
12. An Appellate Tribunal has been created for disposal of
appeals against the decision of the CERC and State
Electricity Regulatory Commissions so that there is speedy
disposal of such matters. The State Electricity Regulatory
Commission is a mandatory requirement.
13. Provisions relating to theft of electricity have a revenue
focus.
Contd….
16
 The Electricity Act, 2003
(No.36 of 2003)
“An Act to consolidate the laws relating to generation,
transmission, distribution, trading & use of electricity &
generally for taking measures conducive to development
of electricity industry, promoting competition therein,
protecting interest of consumers and supply of electricity
to all areas, rationalisation of electricity tariff, ensuring
transparent policies regarding subsidies, promotion of
efficient and environmentally benign policies, constitution
of Central Electricity Authority, Regulatory Commissions &
establishment of Appellate Tribunal and for matters
connected therewith or incidental thereto”
(Be it enacted by Parliament in fifty fourth year of republic
of India as follows…)
Contd….
17
 IS UNBUNDLING OF SEBs
MANDATORY AS PER ACT 2003?

• After the enactment of Electricity Act 2003, it

is being propagated by some interested
groups that it is now mandatory for the states
to separate generation, transmission and
distribution operations.
• What actually the legal provisions of the Act
2003 provides for – Let us ponder …

18
 IS UNBUNDLING OF SEBs
MANDATORY AS PER ACT 2003?
TRANSITIONAL PROVISIONS
• Section 172(a):-
“State Electricity Boards--- shall be deemed to be State
Transmission Utilities (STUs) and a licensee for a period of 1
year---.Provided that the state government may by notification
authorize the SEB to continue to function as STU and a
licensee for such period beyond the said period of one year as
mutually decided by the Central and State Governments”
LEGAL OPINION: The first proviso to Section 172(a) of the Electricity
Act, 2003 enables any SEB to continue as STU or licensee “for
such further period beyond the said period of one year”. The
quoted words do not restrict the duration or the period
upto which SEB may continue as STU and a licensee. Only
rider is that STUs shall not engage in the business of
trading after the specified period. [Section 30].

19
 IS UNBUNDLING OF SEBs
MANDATORY AS PER ACT 2003?

• Part-4(v) - Distribution licensees would be free to

undertake Generation & Generation companies
would be free to take up Distribution Licensees.
• Part-4(ix) – There is provision for a transfer scheme
by which company/companies can be created by the
State Government from SEBs. The state
Governments have the option to continuing with
SEBs which under the new scheme of things would
be a distribution licensee and the State Transmission
Utility, which also be owning generation assets.

20
 Section 131-REORGANISATION OF SEBs
• SECTION 131(2):
“Any property, interest in property, rights and liabilities
vested in the State Government under Sub-Section (1)
shall be re-vested by the State Government in a
Government company or in a company or companies, in
accordance with the transfer scheme so published”
LEGAL OPINION
Sub-sections (1) and (2) of Section 131 do not make it
mandatory for SEB to be disintegrated into the following
separate entities: State Transmission Utility; generating
company; transmission licensee; and distribution licensee.
If that would have been the intention then the above
quoted statutory provisions would expressly said so

21
 UNBUNDLING-LEGAL OPINION
• There appears to be a flexibility on the State Government to form one
or more companies and vest in them such business that are allowed
under the Act. This is confirmed by the decisions of the Parliamentary
Standing Committee on Energy as the said Report clarifies on the
stated objectives and intention behind the aforesaid Sub-sections (1)
and (2) of Section 131 of Act.
(the Supreme Court of India has taken the view that legislative history
within circumspect limits may be consulted by courts in resolving
ambiguities. REFER State of Mysore vs. R.V. Bidop, AIR 1973 SC
2555, Sub-Committee of Judicial Accountability vs. Union of India AIR
1992 SC 320, Sriram Chits and Investments (P) Ltd., vs. Union of
India AIR 1993 SC 2063)
 in R.S. Nayak vs. A.R. Antulay (1984) 2 SCC 183, a Constitution
bench of the Supreme Court held that the report of the committee
which preceded the enactment of a legislation, reports of joint
parliamentary committee and report of a commission set up for
collecting information leading to the legislation are permissible
external aids to construction of the Act. )
22
Standing Committee on Energy (2002) - Thirteenth Lok Sabha (Ministry of power) -
Thirty-first report - The Electricity Bill, 2001 (Presented to Lok Sabha on 19.12.2002
; Laid in Rajya Sabha on 19.12.2002 ; Lok Sabha Secretariat - dated December,
2002.
• “16.31 During oral evidence a representative of the Ministry of
Power deposed before the Committee as under: -
“There are enabling provisions in the Bill for a statutory transfer
scheme or schemes, through which one or more companies
can be created from the State Electricity Boards. So, the
Electricity Boards and the State Governments could utilise
these provisions for restructuring the State Electricity Boards
into one or more companies, if they wish to do so. If a State
Government wishes to continue with the State Electricity
Boards, it could also do so. There is flexibility, but in terms of
the legal framework. The State Electricity Board would be the
State Transmission Utility and the distribution licensee in the
area of the State. The States have been given full flexibility in
adopting reform model/path that they consider proper.
Unbundling of the Electricity Boards is not mandatory. The
States have a choice to do so or not to do so. These provisions
have fully taken care of the concerns that have been
expressed.” 23
 UNBUNDLING OF SEB –
LEGAL CONCLUSION
• Thus there is no legal obligation under Electricity
Act 2003 on any State Govt. to create separate
Generation, Transmission and Distribution
companies. SEB may continue in the bundled form
as ‘One Company’ carrying out the functions of
Generation, Transmission & Distribution in which
case the company would be the distribution
licensee & State Transmission Utility which would
also be owning generation assets. Further State
Govt. can also seek consent of GOI to continue as
SEB itself. However to carry out ‘Trading’
functions, a separate entity may be created
24
 Present Status of SEBs in country
HP

• In all there have been 21 SEBs & 8 EDs in the

PUNJAB

country
• Out of 21 SEBs, 13 SEBs stands
BIHAR unbundled
MEGHALYA

and 2 Nos. privatised. JHARKHAND

WEST BENGAL

• As per proviso under section 172(a), HPSEB

has been granted extension up to
31.05.08(though verbal)
• HPSEB is one of the 8 SEBs which are bundled
at the moment
TAMILNADU
KERALA
25
Contd….
States where SEBs have
been unbundled so far

• Orissa (Privatized) 1996

• Haryana 1999
• Andhra Pradesh 1999
• Karnataka 1999
• U.P. 2000
• Uttrakhand 2001
• Rajasthan 2001
Contd....
26
SEBs unbundled so far

• Delhi (Privatized) 2002

• M.P. 2002
• Assam 2004
• Gujarat 2004
• Maharashtra 2005
• West Bengal 2007
Contd....
27
 Reasons Extended for Unbundling of SEBs
• SEBs are commercially unviable so need
to be corporatised & privatised & should
be run as commercial ventures
• SEBs are monolithic and unmanageable.
• Enables reduction in T&D losses
• Unbundled entities would attract private
investment particularly in distribution
• Unbundling would generate competition
leading to higher efficiencies.
• Generation would be a profit making
segment which will attract huge
investment 28
 Results Expected

• Efficiency
• Economy
• Competition
• Transparency
• Better Consumer Services
• Better performance
29
 What is the reality today?
• 1st Assumption
 After Corporatisation, Companies
would work on commercial
principles and financial viability of
the sector would be ensured

30
 UNBUNDLING & COMMERCIAL VIABILITY
Profit/Loss without subsidy Subsidy paid by state govt.
(Rs. Cr.) (Rs. Cr.)
Unbundled Pre After Pre After
States restructuring restructuring restructuring restructuring
1996-97 2005-06 1996-97 2005-06

Haryana -635 -1688 641 1252

A.P. -939 -1241 850 1537
Karnataka -652 -1141 705.8 1140
Rajasthan -498 -1651 560.8 1629
U.P. -3378 -3951 1557 915

M.P. -464 -952 300.4 270

Assam -244 -1081 0 70

31
 Unbundling & Commercial Viability of the
sector- IIPA Report
HARYANA
• Amount of receivables has increased from Rs.
1119 Cr. to Rs. 2852 Cr. in five years after
unbundling & subsidy burden from Rs. 532 Cr. to
Rs. 1252 Cr.
• Financial position of DISCOMs has NOT improved
even after the full cost of service tariff has been
allowed by commission & full subsidy amount provided
by State Govt.
• Financial gap on subsidy received & revenue realized
basis has almost doubled from 16 P/U in 2002-03 to
25 P/U in 2004-05 for DHBVAL & from 17 P/U to 48
P/U for UHBVNL 32
 Unbundling & Commercial Viability of
the sector-- IIPA Report
In Rajasthan
• The accumulated losses from 1996-97 to 1999-
2000 were Rs 3,857 crore while in the post-
restructuring period, the losses in the first four
years were Rs 6,641 crore.
• Debt liability increased from Rs. 2015 Cr. to Rs.
4559 Cr. in four years after unbundling.
• Per unit deficit has increased from 31P/U in 1993-94
to 117P/U in 2004-05. The establishment cost has
increased after unbundling.
• The losses in 2000-01 which were Rs. 132 Cr. (after
cleaning up of balance sheets of the new companies)
has again increased to Rs. 1651 Cr. in 2005-06.
33
 Unbundling & Commercial Viability of
the sector-- IIPA Report
• KARNATAKA
Instead of being a net contributor to the State’s
treasury, the restructured companies continue to
depend heavily on Government subsidy. The
subsidy burden has increased from Rs. 705 Cr.
in 1996-97 to Rs.1140 Cr. in 2005-06.
The financial loss has increased from Rs. 652
Cr. in the pre-restructuring period to Rs. 1141
Cr. during 2005-06
Chairman of the State Regulatory Commission
has termed the restructuring of the KEB a
failure, since the new companies do not have
adequate autonomy and financial
independence.
34
 The other Adverse Effect
• Volume of traded power increased by nine
times in the last five years and cost of traded
power increased from Rs.2.25/unit to
Rs.8.54/unit
• U.I. Rate got jacked up from Rs.4.20/unit at
49Hz in 2002-03 to Rs.10.00/unit at 49Hz in
2007-08

35
 UI Rate

PERIOD Rate
• 01-01-2002 to 31-03-2004 04.20
• 01-04-2004 to 30-09-2004 06.00
• 01-10-2004 to 29-04-2007 05.70
• 30-04-2007 to 06-01-2008 07.45
• 07-01-2008 Onwards 10.00

36
 What is the reality?
2nd Assumption
• STATE ELECTRICITY BOARDS ARE
HUGE ORGANISATIONS AND THUS
INEFFICIENT
• UNBUNDLING WILL LEAD TO
BETTER MANAGEMENT

37
 Is HPSEB Un-manageable?

Company/State Geographical Area No. of Consumer Served

(Sq. KM) (In Lacs)

APSPDLL 81,073 49.85

APCPOLL 86,800 50.00
BESCOM 41,092 58.14
PGVCL 99,771 33.00
UGVCL 49,950 20.23

38
 ARE SMALL ORGANISATIONS MORE
EFFICIENT?
Installed Capacity
State/Company PLF (%)
(MW)
NTPC 27904 89
BIHAR SEB 540 2.56
UP GENCO 4092 54.04
RAJASTHAN GENCO 2573 90.62
HARYANA GENCO 2560 66
AP 8860 79.92
TAMIL NADU SEB 10098 72.24
PSEB 2120 79.88
HPSEB 467 100% Hydro
39
 ARE SMALL ORGANISATIONS MORE
EFFICIENT?
• On the distribution side, big SEB like Tamil Nadu SEB is
maintaining AT&C loss level between 16% to 18%, HPSEB is
having a loss level of 15.5%. On the other hand, one private
company (BSES Yamuna) in Delhi controlling a tiny pocket of
densely populated area is having AT&C loss of over 50% and
both the companies of Haryana are having loss level of more
than 40%. One company of Karnataka i.e GESCOM is having
AT&C loss of 52.73% and Southern Orissa Distribution
Company has loss level of 45.5%.
CONCLUSION
It is not the size of the organization but the manner in
which these are managed which make it efficient or
manageable. Even small companies are badly managed
whereas integrated SEBs like TNEB, HPSEB, PSEB are
performing far better than these companies.
40
 What is the reality?
3rd Asssumption
• UNBUNDLING ENABLES
REDUCTION OF DISTRIBUTION
LOSSES THUS LEADING TO
CHEAP POWER.

41
 T&D Losses in Unbundled SEBs
Unbundled Level of
Sr. No
States 1996-97 2000-01 2005-06 Remarks Losses

1 AP 33.09 36.63 23.96 improved Moderate

2 Delhi 49.64 44.27 45.4 Stagnant Very High

3 Haryana 32.77 39.82 32.11 Stagnant High

4 Karnataka 18.86 34.93 26.08 Deteriorated Moderate

5 M.P. 20.59 33.67 41.3 Deteriorated Very High

6 Rajasthan 25.88 29.76 44.68 Deteriorated Very High

7 U.P. 25.06 36.94 34.39 Deteriorated High

8 Assam 25.97 40.71 51.76 Deteriorated High

42
 T&D LOSSES IN SEBs
Bundled T&D Losses
State
1996-97 2000-01 2005-06 Remarks Level of
losses
Punjab 18.95 26.58 25.42 Stagnant Moderate
HP 31.70 25.00 15.29 Improved Low
Tamil Nadu 17.22 15.72 19.28 Stagnant Low
Kerala 21.37 17..76 22.48 Stagnant Moderate

43
 REDUCTION OF T&D LOSSES
 The overall T&D losses in most of the
unbundled companies are still very high
(above 40%) whereas bundled SEBs like
PSEB, Tamil Nadu and HPSEB, SEBs
are maintaining T&D losses below 24%,
20% and 15% respectively.
 At the time of restructuring of SEBs many
states declared higher than actual T&D
losses
 Metered sale is better indicator for loss
reduction analysis 44
 AT&C LOSS TRAJECTORY PROPOSED BY PRIVATE
COMPANIES IN DELHI
YEAR
COMPANY
2006-07 2007-08 2008-09 2009-10 2010-11
BSES AT&C
(YAMUNA) LOSS 39.03 36.03 33.03 30.03 27.03
BSES AT&C
(RAJDHANI) LOSS 29.92 27.92 25.52 23.92 21.92
AT&C
NDPL
LOSS 22.73 24.28 22.29 20.26 45
19
 HAS UNBUNDLING LOWERED THE
TARIFFS
TARIFF COMPARISON (paisa/unit)
Domestic Commercial Industrial
State 1999- 2005- % 1999- 2005- % 1999- 2005- %
2000 2006 Increase 2000 2006 Increase 2000 2006 Increase
AP 161.38 422.00 162.00 379.62 602.00 59.00 394.00 457.00 16.00
Haryana 248.44 414.00 67.00 399.60 458.00 14.50 411.00 447.00 9.00
Rajasthan 158.95 356.00 124.00 400.00 506.00 26.50 379.37 432.00 14.00
UP 158.15 295.00 86.50 431.00 470.00 9.04 412.00 412.00 0.00
Gujarat 210.00 401.00 91.00 384.00 454.00 18.30 391.00 443.00 13.30
Karnataka 201.00 396.00 97.00 572.00 621.00 8.57 410.00 458.00 11.70
Tamil Nadu 152.53 368.00 141.26 361.81 576.00 60.00 342.00 453.00 32.46
Tamil Nadu 152.53 368.00 141.26 361.81 576.00 60.00 342.00 453.00 32.46
MP 129.58 343.00 164.70 430.64 545.00 26.56 435.78 447.00 2.75
Maharashtra 180.43 388.00 115.00 448.00 482.00 7.58 353.00 380.00 7.64
Himachal 130.00 210.00 61.00 210.00 250.00 19.00 210.00 279.00 32.85

46
• Himachal Pradesh
continues with the
distinction of having the
lowest tariff in the
country.

47
 What really happened?
4th Assumption

• WILL GENERATE COMPETITIVE

ENVIRONMENT LEADING TO
HIGHER EFFICIENCIES

48
 General Performance of unbundled
utilities: IIPA report
• In case of Haryana
• AT&C losses in two Discoms are 38.26% &
42.59% because of poor collection
efficiency
• The number of interruptions has shown a
marked increase since 2001-02 for both
the DISCOMs
• The average duration of interruptions have
almost doubled.
• Failure rate of DTs continues to be high49
 General Performance of unbundled utilities:
Rajasthan IIPA report
• In the post-restructuring period, the number of
raids & penalty amount realised has
significantly come down year after year
• In the matter of prosecutions/compounding, the
figure has come down drastically after
restructuring
• The administrative control of the top
management has slackened with the greater
involvement of the Government in the day-to-
day management of the power companies.
• The establishment cost has gone up after
restructuring & performance of Discoms have
not improved in post restructuring period 50
 General Performance of unbundled utilities:
IIPA report
Rajasthan
• Lot of funds have been pumped in the system
but outcome does not seem to be
commensurate with the investment
• Specialisation which was developed in the past
is not evident now
• After restructuring, junior level officers are
posted as MDs of DISCOMs resulting in
increased Government influence in day to day
working 51
 General Performance of unbundled utilities:
Uttar Pradesh IIPA report
• No focused initiatives to improve transmission
infrastructure.
• No noticeable growth in the 11 kV and LT
network adversely impacted the quality of
supply and service to the consumers.
• Metering in DS:50%, 42% villages unelectrified,
19.84% rural households electrified
• Collection levels gone down even further during
post-reform period
52
 General Performance of unbundled utilities:
IIPA report
Uttar Pradesh
• Excessive Government interference in
organisational and operational matters has
often undermined least cost procurement, led to
unwise investment decisions, prevented tariffs
from being raised to an efficient level, and
promoted excessive staffing.
• Restructured entities re still headed by a
common Chairman & Director/Finance
• Situation is no better than of the erstwhile
UPSEB
53
 General Performance of unbundled utilities:
IIPA report
MADHYA PRADESH
• MPSEB is heavily dependent on subsidy support from the State
Government. The amount of subsidy was around Rs 794 crore
in 2004-05 (about 15 per cent of the revenue earned by the
DISCOMs from sale of power).
• The failure rate of DTs has increased by 4.75 % (from about
18.13 per cent in 2001-02 to 22.88 per cent in 2004-05).
• The percentage of metered domestic consumers has come
down from 84 per cent in 2000-01 to 81 per cent in 2004-05,
which is a disturbing trend.
• The collection efficiency in respect of agricultural and domestic
consumer categories has suffered after the restructuring. In the
case of agricultural consumers, the collection efficiency has
deteriorated progressively from 88 per cent in 2000-01 to as
low as 21 per cent in 2004-05. It is equally poor for the
domestic consumers and have come down from as high as 95
54
per cent in 2000-01 to 79 per cent in 2004-05.
 General Performance of unbundled utilities: IIPA
report
• Anti Theft Measures: For prevention of theft of electricity, State
Government enacted law in 2001. Several administrative measures,
undertaken by the companies to check power theft, include: strengthening of
the Vigilance Squads, replacing bare LT conductors by armoured cables/HT
lines, setting up of 92 special courts for speedy trial of electricity theft cases.
• However, enforcement measures for elimination of theft of electricity have
slowed down in the State. The number of FIRs lodged has come down with
1,607 FIRs in 2003-04 and 522 FIRs in 2004-05 and the recovery towards
the cases involved in theft declined from 78 to 75.8 per cent of the demand
raised.
• The percentage T&D losses from 1995-96 to 1998-99 were
shown to be in the range of 19 to 21 per cent before
restructuring. After restructuring, the losses were revised
to 31.94 per cent in 1999-2000 and 47.18 per cent in 2000-
01. The reduction in the loss levels after restructuring has
been slow and losses dropped only by less than 3 per cent
in four years (43.48 per cent in 2004-05).
• Metered sale has come down from 50.59% in 1996-97 to
38.23% in 2004-05 55
 General Performance of unbundled utilities: IIPA
Report
• MPPGCL has been able to improve the PLF from 46
to 66 per cent AND availability has increased from
the level of 75 per cent in 1995-96 to 87 per cent
during 2004-05.
• After reorganisation of the State, installed generating
capacity left in the State was about 2,940 MW. There
was only a marginal increase of about 50 MW hydro
capacity. However, with regard to the thermal
capacity, there has been no further addition since
2002-03.
• The State has been facing acute peak demand as
well as energy shortages. The peak power deficit
and energy shortages have been as high as 28 and
23 per cent respectively in April 2006. 56
 General Performance of unbundled utilities:
IIPA report
• GENCO had spent a very little amount on R&M
activities as compared to the amount approved by the
Commission under this head. The Commission, in its
tariff order dated 10 December 2004, had allowed Rs
140.31 crore under R&M of generating stations, but
the GENCO failed to utilise the approved amount.
• For 2005-06, the Commission had approved Rs
131.91 crore under this head. But the repeated failure
to utilise the funds approved for the much-needed
R&M activities is baffling when it is urgently needed to
increase generation and improve the PLF.
57
 General Performance of unbundled
utilities: IIPA Report
ASSAM
• ASEB was restructured in Sept. 2003. State Regulatory
Commission was constituted in 2001 & has issued four tariff
orders.
• Asian Development Bank provided a soft loan of US $250
Million out of US $ 150 Million were for revamping & rest for
strengthening of T & D system.
• Commercial loss (without subsidy) increased from Rs. 244
Crore in 1995-96 to Rs. 656 Crore in 2003-04 & further to
Rs. 1081 Crore in 2004-05.
• T & D loss
Year 1995-96 2000-01 2003-04 2004-05
T&D Loss 24.18 40.71 39.31 51.76
• Transmission Loss Level : 9% 58
 General Performance of unbundled
utilities: IIPA report
ANDHRA PRADESH:
• The metered electricity consumption has increased from 38 per
cent in 1999-2000 to 52.4 per cent by 2004-05;
• The overall collection efficiency in the post-reform period is
ranging from 96.52 to 102.87 per cent as compared to 92.74
per cent in 1999- 2000; and
• all the six restructured Power Utilities in the State are
registering profits since 2004
• The DISCOMs have not been granted full autonomy.
Though separated from APTRANSCO more than five years
ago, these are still operating under the directions and
guidance of APTRANCO.
• The functioning of the Utilities is more or less akin
to that of the erstwhile APSEB.
59
 Performance of Tamil Nadu SEB:
IIPA report
• The Board could take pride for 100 per cent
consumer metering, billing and collection, thanks
to its long-established systems.
• Implementing energy audit in all the 22/11 kV
feeders, having line losses of more than 10 per cent;
• 100 per cent metering of 11 kV feeders;
• Special focus on energy conservation;
• Computerisation of inventory management;
• Computerisation of LT and HT billing;
• A focus on consumers through call centres and a
web-enabled consumer redressal system;
60
 Performance of Tamil Nadu SEB:
IIPA report
• An excellent system for monitoring interruptions in
supply;
• Installation of high quality meters;
• Installation of capacitors both in substations and in
consumer premises to improve the system power
factor;
• Close monitoring of billing, collection and
disconnections;
• High level of PLF of thermal power stations by
better maintenance and management; and
• Efficient use of the hydel storage to mitigate the
peak-hour shortages. 61
 Performance of West Bengal SEB:
IIPA report
– The WBSEB achieved turnaround pending its
restructuring.
– Commendable work has been done in the State
in the matter of metering, billing and collection.
– The quality of service has also improved
significantly.
– Conscious attempts have been made to reduce
theft of electricity.
– WBSEB has been unbundled in 2007 into three
companies one each for Generation,
Transmission and Distribution.
62
 What really happened?
5th Assumption
• UNBUNDLING WOULD HELP IN
BRINGING IN MORE AND BETTER
FOCUSED INVESTMENTS IN ALL
SEGMENTS
• SINCE GENERATION WILL BE
PROFIT MAKING SEGMENT SO IT
WILL ATTRACT HUGE INVESTMENTS
63
 Has unbundling facilitated flow of
private capital in the sector?
• GENERATION
 Most of the generating plants in private sector have been
set up in the Southern & the Western states of India
notably Gujarat , Maharashtra, Andhra Pradesh, Tamil
Nadu etc. not because of the structure of the utilities but
due to their locational advantage viz near to port or source
of fuel and overall investment climate in the state.
 No generating plant in private sector has been set up in
Haryana, Punjab, Rajasthan or Uttar Pradesh.
On the other hand, private investment in generation (1166
MW) has been made in Tamil Nadu having an integrated
SEB. In HP IPPs has already added about 436 MW.

64
 Private Generation (MW)
Net addition
State (Year of Before
As on 30.09.07 after
restructuring) Restructuring
unbundling
Haryana (1999) 0 0 0
Rajasthan (2002) 0 0 0
Uttar Pradesh (2000) 0 0 0
Andhra (1999) 443.4 1640 1196.6
Pradesh
Karnataka (1999) 18 586 568
Orissa (1996) 0 0 0
Gujarat (2005) 2560 2560 0
Maharashtra (2005) 2318 2318 0
West Bengal (2007) 1069 1069 0
Tamil Nadu (SEB) 1166 1166 0
Punjab (SEB) 0 0 0
HP (SEB) 436 436 0

65
 Has unbundling facilitated flow of
private capital in the sector?
Distribution
 Orissa was first state to privatize its entire distribution business
in 1999.
 All the four companies were handed over to private sector
 One private investor (AES) left the management of CESCO
with unpaid liability of over Rs. 400 Cr. & remaining three
companies being managed by BSES (a Reliance company)
being served show cause notice for suspension of their
distribution license by State Regulator
• DELHI was the second state to hand over distribution to private
sector. The CAG report on privatization carried in Delhi and a
House committee headed by a ruling party MLA has passed
serious strictures on the whole exercise
• Delhi Govt. was supposed to pay a subsidy to Rs. 3450
Crore during these 5 years but the subsidy amount was
exhausted much earlier to prevent tariff shock to the
consumers. 66
 Has unbundling facilitated flow of
private capital in the sector?
• No private player has taken over distribution company
of any state after Delhi
• Failure to attract private investment in Distribution
sector forced the Central Government to launch
‘Accelerated Power Development Reform
Programme’ in 2002 and a budget provision of Rs.
40,000 Cr. during 10th plan was made for
strengthening of distribution network.[Delhi availed Rs.
872 Cr. under APDRP, HP: 322 Cr.]
• The flow of central funds including grants in the
distribution sector with riders to improve performance
parameters particularly reduction in Aggregate
Technical and Commercial losses (AT&C) in the
towns/circles covered under APDRP, helped many
utilities to reduce losses. 67
 Has unbundling facilitated flow of
private capital in the sector?

• The general improvement in the

performance parameters of many states
relating to distribution sector particularly
after the year 2002-03 is more due to flow
of funds with riders to achieve Key
Performance Indicators (KPIs) under
APDRP rather than unbundling or
otherwise.
68
 Rural Electrification:- A Victim of
Reforms
 During 8th and 9th plans (1992-2002) the rural
electrification was totally ignored with no specific scheme
launched to fund the rural electrification projects. During
these 10 years, only about 8000 villages were electrified in
the country.
• As per 2001 census, there were still more than 1,50,000
un-electrified villages
• Ulimately, Central Government introduced Rajiv Gandhi
Grammin Vidyutikaran Yojna (RGGVY) in April 2005 with
90% grant to the states to electrify all 1,25,000
unelectrified villages and 7.8 Cr. households including 2.34
Cr BPL households at an estimated cost of Rs 16,000 Cr.
(38875 villages & about 18 lac households have been
electrified in two years under this scheme. )
69
 What really happened?
6th Assumption
• SMALL COMPANIES WILL HAVE
QUICKER DECISION MAKING WHICH
WILL BE REQUIRED MORE & MORE IN
THE FUTURE DUE TO THE RAPIDLY
GROWING COMPETITION & TRADING
IN ELECTRICITY MARKETS

70
 IS SEPARATION OF FUNCTIONS
DESIRABLE?
• It is a fact that even after several years of
unbundling and various provisions of the Act, all
the unbundled utilities are operating their
generation, transmission & distribution businesses
under unified control in the same manner as was
existing in erstwhile SEBs. This is being carried out
either by formation of a holding company or
through a common Chairperson for all the
companies.
• Companies instead of operating its power system
in an independent manner, have authorised one
agency in the state to manage the power system
operations particularly power purchase, scheduling
etc.
71
 IS SEPARATION OF FUNCTIONS
DESIRABLE?
• In a scenario of power shortage, the major objective is
the optimum utilization of available power generation
capacity.
• Economy in grid operation is achieved only through a
unified and vertically integrated grid operation system
starting from the generating station and going down to
the consumer power supply.
• This matching of generation with demand can be
better achieved only through a vertically integrated
structure covering generation, transmission &
distribution.
72
 IS PRIVATE SECTOR WORKING IN
UNBUNDLED MANNER ?
• Reliance Energy/BSES are operating in an integrated mode
even after the enactment of Electricity Act 2003. BSES having
distribution license for western suburbs of Mumbai is also
generating power from 500 MW Dahanu Thermal Plant and has
established 473 KM transmission network with three 220/33KV
receiving stations to take supply to its distribution network.
• In Delhi also, Reliance has approached Delhi Govt. for
allotment of land in Najafgarh or Tikri to set up 1400 MW
generating plant. NDPL is also setting up its own
generating plant in Delhi.
• Torrent’s Power Company is an integrated company engaged in
generation, transmission and distribution in cities of
Ahmedabad ,Gandhinagar & Surat in Gujarat. Its installed
capacity is 500 MW and distribute power to 2 million consumers
through 300 KM EHT,4481 KM HT and 17500 KM LT mains.
73
 IS PRIVATE SECTOR WORKING IN
UNBUNDLED MANNER ?
• CESC (Calcutta Electricity supply company) having
generating capacity of 975 MWs also distribute power
to 12 million consumers in the metropolitan area of
Kolkata. Similarly Tata Power Company with
generation capacity of 2300 MW and transmission
network of 1200 Ckt. Km also distributes power in
Mumbai.
• So, if private companies can generate, transmit
and distribute the power in its area of operation
then why SEBs are denied the same opportunity to
optimize their operations ?
SLOGAN OF RELIANCE ENERGY: SERVICE FROM
“GAS WELL TO WALL SOCKET” IN AN
INTEGRATED MANNER
74
 Are Companies After Unbundling
Working Independently?
• In Haryana, the power procurement cell is working under
generation company (earlier it was under Transco). All the
decisions of power procurement, sale, banking are being taken
by this company. Though there is separate system operation
organization but the power scheduling, power cuts, overdrawls
are being carried out unofficially by Chief Engineer/ power
procurement .
• in Delhi where private companies are operating for the last five
years, all the power procurements are being handled by
Transco. Though officially the new contracts are being signed
by the companies but they cannot schedule the powers of their
own. It has to be decided by Delhi Transco
• In Rajasthan the system operation organization was under
Transmission Company. To bypass the provisions of the Act,
Rajasthan has placed the power procurement group of the
officers drawn from transmission company under Jaipur
Discom. This cell is making all the procurements on behalf of all
the other DISCOMs 75
 COST OF RESTRUCTURING
• The restructuring or unbundling of SEB is a
high risk, low return and irreversible
process which cannot be undertaken
without clear objectives and the capacity to
bear huge financial cost during transition
period.
• Financial Restructuring Plan (FRP) with
specific commitments from state
government for financial turnaround of the
sector is an integral part of reform package
76
.
 COST OF RESTRUCTURING
• Gujarat Govt. during restructuring of its SEB has
committed a total of Rs. 15352 Crore for five years i.e.
an average of Rs. 3070.4 Cr per year.
• U.P. assumed the past liability of more then Rs. 31300
Crore by writing off state govt. loans, interest liabilities,
CPSU liabilities plus owing employees terminal benefits
& GPF liabilities amounting to over Rs. 8000 Crore.
• Karnataka Government took over loan liabilities of Rs
1,050 crore, written off bad and doubtful debts
amounting to Rs 866 crore, and took over the terminal
and pension liabilities of the KEB/KPTCL staff till the
date of restructuring.
• M.P State Government took over liabilities of MPSEB to
the tune of Rs 4,431 crore
77
 Reforms Of 1990’s :Capacity Addition
During 9th & 10th Plans
• As per 15th EPS, an additional installed capacity of
57000 MW during 9th plan & 67000 MW in the 10th
plan i.e. a total capacity addition of 124000 MW in 10
years was required which needed an investment of
more than Rs. 9, 90,000 Crore
• Since it will not be possible to add more than 20000
MW in each plan through public sector due to funding
constraints so remaining 84000 MW has to be financed
through private sector.
• The unrealistic demand projections through successive
Electric Power Surveys (EPS) and precarious financial
health of the central government in early 1990’s
created panic reaction in the establishment forcing it to
rely excessively on private sector to add generating
capacity. 78
 Electric Power Survey (EPS)
PROJECTIONS
Peak demand (MW) Energy demand per annum (MU)

Period
th th Actually
15 EPS 16 EPS 15th EPS 16th EPS Actually Met
Met

End of 9th
plan (2001- 95757 85132 71574 569650 529013 483520
02)

End of 10th
plan (2006- 130944 115705 86818 781863 719097 624495
07)

79
 REFORMS OF 1990’S:
Over-Dependence on Private Sector

• Only 53.77%, 47.25% and 57.52% of

capacity addition targets fixed for 8th,
9th & 10th Plans respectively were
achieved.
• From 1992 to 2007 i.e. in 15 years
private sector added only 8433 MW
against total capacity addition of
56618 MW achieved by the country
during this period. 80
 CAPACITY ADDITION - 8TH PLAN (1992-97) (In MW)
T: Target, A: Achieved
Type Central Sector State Sector Private Sector Total

T A T A T A T A

Hydro 3260 1465 5860 794.7 162 168 9282 2428

Thermal 8498 6252 9010 6041 2648 1262 20156 13555

Nuclear 1100 440 0 0 0 0 1100 440

Total 9282 2428 14870 6835 2810 1430 30538 16423

81
 CAPACITY ADDITION - 9TH PLAN (1997-2000) (In MW)
T: Target, A: Achieved
Type Central Sector State Sector Private Sector Total
T A T A T A T A

Hydro 3455 540 5815 3912 550 86 9820 4538

Thermal 7574 3084 4933 5538 17038 4975 29545 13597

Nuclear 880 880 0 0 0 0 880 880

Total 11909 4504 10748 9450 17588 5061 40245 19015

82
 CAPACITY ADDITION -10TH PLAN (2002-07) (In MW)
T:Target, A:Achieved

Type Central Setor State Sector Private Total

T A T A T A T A

Hydro 8742 4495 4481 2691 1170 700 14393 7886

Thermal 12790 7330 6676 3553 5951 1231 25417 12114

Nuclear 1300 1180 0 0 0 0 1300 1180

Total 22832 13005 11157 6244 7121 1931 41110 21180

83
RESTRUCTURING OF HPSEB
Suggested Model

84
 EXISTING SYSTEM OF HPSEB
( As on March 31, 2008)
A. POWER SYSTEM
INSTALLED CAPACITY 467 MW
VILLAGES ELECTRIFIED 16915 Nos
HAMLETS ELECTRIFIED 4082 Nos
CONSUMER CONNECTED 18.30 Lacs
CONNECTED LOAD 4037302 KW
EHV STATIONS 36 Nos
DISTRIBUTION SUB-STNS. 19627 Nos
H.T LINES 29471 KMS
L.T LINES 51924 KMS

85
 MISSION STATEMENT

 To provide reliable and quality power at

affordable cost to all the consumers of the
State round the year on round the clock
basis.
 To make Himachal Pradesh ‘POWER
BOWL’ of the country.

86
H.P. SCENARIO -
HOW WE DIFFER FROM OTHER STATES

• Our systems are small & well manageable

• 100% consumer metering and billing in the State
• No gap in supply & demand
(we can meet demand - only question of tariff)
• There is no free power to any category of
consumers and all are billed
• Most of the Hydro Power Plants execution already
being done through IPPs/ joint Sector/ Central
Sector as being envisaged as major objective
through reforms
• HPSEB controls only 467 MW & taking up very small
fraction of Generation Projects 87
 ILLS OF OUR SYSTEM

 OWN GENERATION IS LESS THAN THE DEMAND

WITHIN THE STATE
 HIGHER CONSTRUCTION COST PER MW
 INADEQUATE INVESTMENT IN DISTRIBUTION
SYSTEM & ITS RAPID GROWTH (HT:LT RATIO 1:2.5)
 HIGH T&D LOSS WITHIN THE STATE
 HIGH ESTABLISHMENT COSTS
 HIGH COSTS OF POWER PURCHASE
 UNECONOMIC TARIFF STRUCTURE
 POLITICAL INTERFERENCE
 LACK OF ACCOUNTABILITY

88
 HPSEB’s Turn Around
Strategy/Model
“ TO MAKE THIS ORGANISATION A LEAN, TRIM & SELF
SUSTAINED ORGANISATION”
• MORE SEB OWNED GENERATION
• IMPROVEMENT IN DISTRIBUTION SYSTEM TO BRING DOWN
H.T:L.T RATIO
• SPEEDY ELECTRIFICATION OF LEFT OUT VILLAGES &
HAMLETS
• FURTHER REDUCTION IN T & D LOSSES
• REDUCTION IN COSTS OF POWER PURCHASE
• REDUCTION OF ESTABLISHMENT COSTS
• REDIFINING STAFF & FIELD FUNCTION
• USE OF MODERN MANAGEMENT TOOLS
• ESTABLISHMENT OF SEPARATING ACCOUNTABILITY OF
ALL
89
 Capacity Additions – A Must
Capacity Addition

• HPSEB must double up its Generation Capacity

to 1000MW by 2012.

• Also one Thermal Plant of 500MW is required

to mitigate the shortages during winter months
when hydro generation falls down to 15 to 20%.

90
 OUR STRENGTH

 OUR MANPOWER READY TO ACCEPT ANY

CHALLENGE
 AVAILABILITY OF EXPERTISE FOR
GENERATION, TRANSMISSION &
DISTRIBUTION OF ELECTRICAL POWER
 UNIQUE DISTINCTION OF 100%
METERING BILLING & COLLECTION
 HIGHEST HOUSEHOLD AVERAGE RATIO
IN THE COUNTRY
 A SMALL & MANAGEABLE BOARD
91
 HPSEB’s Performance Indices

Increase in e Generation Capacity in state Sector 150 %

 T & D Losses 7.5 %
Reliability of Supply 15 %
%age Voltage Regulation + 6%
Productivity 80 %

92
Myth about employees
strength
Total No. of consumers 18.92 lac
Total No. of MkWh sold per year 6200 MU
Total No. of employees engaged
on energy generation, transmission,
distribution & bill collection etc. 17000 Nos.
i) No. of employees per 1000
consumers 9
ii) No. of employees per MkWh sold 3.6
All India averages 11.3 & 3.7 for (i) & (ii)
respectively
93
HPSEB SIGNED MOU WITH
GOI
 MOU Signed by GOHP with Ministry of Power,
GOI on 31st March, 2001
PREAMBLE
“The Govt. of Himachal Pradesh is committed
to reforming its Power Sector with a view to
achieve commercial viability and provide
reliable and quality power at competitive
prices to all consumers in the State”
 This MOU will be for a period of five years and
will be subject to review annually
 10/11 major milestones set in the MOU to be
achieved in specified time frames.
94
 OUR PROPOSED MODEL

• In order to effect efficiency, economy & promptitude in

the areas of investigation, planning, execution of HEPs,
generation, O & M of existing plants transmission &
distribution, there is need to isolate the functional
responsibility of each one of these so that focused
attention is ensured .These centers with separate
accounts will be :
– Project construction Wing
– O&M (Existing Power Houses) Wing
– Transmission Wing
– Operation Wing
 Separate Entity to take care the Trading i.e. Sale and
Purchase of power with outside agencies.

95
 OUR PROPOSED MODEL

CHAIRMAN

MEMBER(A) MEMBER(F) MEMBER(P) MEMBER(G&T) MEMBER(O)

Central Services: CP,DSS,MIS(Data Bases) , Legal Services, Monitoring & Expenditure

• Planning & Policy frame work

• Arrangement of funds for all capital works
• Top level Decision Making
• Monitoring & implementation controls
• Allocations of profits/revenues (If generated amongest
respective wings for construction of new HEPs, R&M of plants,
T&D system after meeting the expenditure of central services
& Board Management
96
 Chairman

Member (A) Member (F) Member (G&T) Member (P) Member (O)
Central Services: Corporate Planning, MIS, Maintenance of Central Data Base, Integrated System Studies, R&D, Legal Services, Monitoring & Expenditure Control

Secretary & Associated CAO & Associated CEs & Associated CEs & Associated CEs & Associated
staff staff staff staff staff

Controls & Controls & accountability Controls & Controls & Controls &
accountability in in respect of: accountability in accountability in accountability in
respect of: To finalise the budgets for all respect of: respect of: respect of:
All administrative the wings of the Board on O&M of Power Houses Construction of HEPs Operation & Maintenance
functions. year to year basis. under operation. under State Sector. of entire electricity
HRD/HRM. Release of monthly limits for Operation & Maintenance Preparing Master Plan for distribution system in the
Placements/ the works & monitoring of of all the transmission Hydro Power Pradesh.
recruitments. expenditure head-wise. system infrastructure of Development. Future Distribution
Maintenance of separate 66 kV level and above. Preparing Pre-feasibility Planning, preparation of
accounts, profit & loss R&M of power houses reports of all HEPs. schemes, sanctions &
statement of all the four under operation. Preparation of DPRs & construction/
independent centres i.e. (i) Plans for new EHV obtaining various implementation
Project Construction Wing, schemes, sanctions & clearances.
(ii) O&M (Power Houses) construction/
Wing, (iii) Transmission implementation.
Wing & (iv) Distribution
Wing.

97
 OUR PROPOSED MODEL

MEMBER(ADMN)

SECRETARY & ASSOCIATED

f STAFF

Controls & accountability in respect of :-

All administrative functions
HRD/HRM
Placements/recruitments as per the
requirements of different wings
98
 OUR PROPOSED MODEL
MEMBER (F&A)

CAO & ASSOCIATED STAFF

Controls & accountability in respect of :-

 To finalise the budgets for all the wings of the board on
year to year basis
 Release of monthly limits for the works and monitoring of
expenditure Head-wise
 Maintenance of separate accounts, profit & loss
statement of all the four independent centres i.e.
1) Project Const. Wing
2) O & M (Power Houses) Wing
3) Transmission Wing
4) Distribution Wing
 To finalize sale and purchase of power with out side
agencies.
99
 OUR PROPOSED MODEL
MEMBER (GENERATION & TRANSMISSION)

CEs & ASSOCIATED STAFF

Controls & accountability in respect of :-

 O & M of Power Houses under operation
 O&M of all the available Transmission system infrastructure of 66
kv level and above
 R & M of Power Houses under Operation
 Plans for new EHV schemes, sanctions and
constuction/implementation
 Determination of costs per unit at Bus Bar Level of various Power
Houses, up to distribution grid station transmission costs , wheeling
charges etc.
 Evacuation of power from own power houses to distribution grid
station & import & export of power
100
 OUR PROPOSED MODEL
MEMBER (PROJECTS)

CEs & ASSOCIATED STAFF

Controls & accountability in respect of :-

 Preparation of Master Plan for Hydro Power
Development
 Investigations & Preparation of Pre-feasibility
reports of all HEPs under Master Plan
 Preparing of DPRs and obtaining various
clearances
 Construction/Commissioning of HEPs under
execution in State Sector & taking up new
projects
 Determination of generation cost at Bus Bar level
101
 OUR PROPOSED MODEL
MEMBER (OPERATION)

CEs & ASSOCIATED STAFF

Controls & accountability in respect of :-

 Operation & Maintenance of entire
electricity distribution system in the
Pradesh
 Future Distribution Planning, preparing of
schemes, sanctions and
construction/implementation
 Determination of energy costs at
distribution level and customer class wise
102
 OUR PROPOSED MODEL

 All the four Wings shall work

independently under the controls of
respective Members of the Board with
decentralisation of Powers
 Separate accounting system shall be put
in place for each Wing & shall be
maintained by Chief Accounts Officer
Responsibility Centre – CAO with assistance
from respective CEs
& Secy. Office

103
HPSEB MARCHES AHEAD…

for Reference
104
 Extract from Agenda Notes for CM’s Conference on Power Sector issues
held under the Chairmanship of Hon’ble Prime Minister on 28-05-2007
Status of Households Electrification

No. of % age of
No. of
Unelectrifie Unelectri
Rural
S.NO. STATE d fied
Household
Household Househo
s
s lds
1 2 6 7 8
1 Andhra Pradesh 12676218 5114485 40.35
2 Arunachal Pradesh 164501 91251 55.47
3 Assam 4220173 3522331 83.46
4 Bihar 12660007 12010504 94.87
5 Chhattisgarh 3359078 1810152 53.89
6 Gujarat 5885961 1641203 27.88
7 Haryana 2454463 527649 21.5
8 HP 1097250 60551 5.51
105
 No. of
No. of % age of
Rural
S.NO. STATE Unelectrified Unelectrified
House
Households Households
holds

10 Jharkhand 3802412 3422425 90.01

11 Karnataka 6675173 1858260 27.84
12 Kerala 4942550 1703651 36.47
13 Madhya Pradesh 8124795 3061371 37.68
14 Maharashtra 10993623 3829566 34.83
15 Manipur 296354 140675 47.47
16 Meghalaya 329678 229916 69.74
17 Mizoram 79362 44334 55.86
18 Nagaland 265334 114405 43.12
19 Orissa 6782879 5470135 80.65
20 Punjab 2775462 292537 10.54
21 Rajasthan 7156703 4006147 55.98
106
 APDRP INVESTMENT STATUS
Project Utilisation
Outlay
SI STATE Nos. of APDRP Release Total %
Projects Comp. (Rs. Cr.) (Rs. Cr.) Fund
(Rs. Cr.)
Non Special Category State
1 Andhra Pr. 1127.12 100 565.16 566.76 961.34 85
2 Bihar 823.15 15 362.38 313.18 481.63 59
3 Chattisgarh 353.33 7 167.94 159.21 170.93 48
4 Delhi# 211.02 2 105.51 105.51 211.02 100
5 Goa 288.94 7 128.94 113.40 159.18 55
6 Gujarat 1083.22 13 470.94 400.26 928.45 86
7 Haryana 431.95 18 192.48 168.99 231.57 54
8 Jharkhand 423.65 8 182.85 153.87 217.59 51
9 Karnataka 1186.31 35 514.30 460.47 798.69 67
10 Kerala 858.50 52 329.90 230.55 379.74 44
11 M.P. 663.20 48 230.74 149.87 283.11 43
12 Maharashtra 1643.12 34 544.90 374.13 919.43 56
13 Orissa 206.73 4 88.69 74.02 30.58 15
14 Punjab 715.57 26 268.26 178.74 348.80 49
15 Rajasthan 1193.25 29 491.23 403.33 754.99 63
16 Tamil Nadu 948.12 41 457.94 441.82 724.14 76
17 Uttar Pr. 1069.25 35 334.57 236.62 798.61 75
18 West Bengal 441.85 20 130.55 92.92 294.78 107 67
 APDRP INVESTMENT STATUS
Project Utilisation
Outlay
Nos. of APDRP Release Total %
SI STATE Projects Comp. (Rs. Cr.) (Rs. Cr.) Fund
(Rs. Cr.)
19 Arunachal Pr. 82.69 4 78.09 36.68 25.44 31
20 Assam 650.73 15 601.54 349.28 358.92 55
21 Himachal Pr. 322.77 12 306.89 277.72 294.52 91
22 J. & K. 1100.13 6 1021.61 550.05 377.80 34
23 Manipur 141.62 5 127.73 11.67 2.67 2
24 Meghalaya 227.44 9 210.53 90.45 78.10 34
25 Mizoram 108.74 7 100.76 78.01 67.31 62
26 Nagaland 122.27 3 114.33 68.58 52.83 43
27 Sikkim 152.09 3 152.35 154.73 152.09 100
28 Tripura 146.74 7 135.83 54.31 51.45 35
29 Uttaranchal 310.08 6 303.15 279.76 230.69 74
Total 3365.30 77 3152.81 1951.24 1691.82 50
GRAND TOTAL 17033.58 571 8720.09 6574.89 10386.40 61

As on 31st January 2007

108
 STATUS OF 11kV FEEDER METERING (2006-07)
SL State Numbers Metered %age
1 Andhra Pradesh 10653 10644 100
2 Arunachal 201 1 0
3 Assam 709 709 100
4 Bihar 1125 465 41
5 Chattisgarh 2030 2030 100
6 Delhi 2269 2269 100
7 Goa 179 179 100
8a Gujarat (GEB) 5307 5307 100
8b Gujarat (Torrent/AEC 738 738 100
8c Gujarat (Torrent/SEC 357 357 100
9 Haryana 5386 5386 100
10 HP 810 788 97
11 Jammu & Kashmir 1558 1480 95
12 Jharkhand 461 396 86
13 Karnataka 5445 5445 100
14 Kerala 1272 1272 100
15 Madhya Pradesh 5660 5660 100 109
 STATUS OF 11kV FEEDER METERING (2006-07)
SL State Numbers Metered %age
16 a Maharashtra (BEST) 558 120 22

16 b Maharashtra (MSEB) 6863 6863 100

16 c Maharashtra (REL) 600 300 50

17 Manipur 193 40 21

18 Meghalaya 175 175 100

19 Mizoram 122 85 70

20 Nagaland 164 140 85

21 Orissa 1792 1699 95

22 Punjab 7455 7455 100

23 Rajasthan 8411 8411 100

24 Sikkim 115 115 100

25 Tamilnadu 3777 3777 100

26 Tripura 209 209 100

27 Uttar Pradesh 8507 8507 100

28 Uttaranchad 1106 1106 100

29 West Bengal 2265 2265 100

30 Chandigarh 174 174 100

31 Daman & Diu 51 51 100

32 Pondicherry 89 89 100
Grand total 86786 84707 98110
STATUS OF CONSUMER METERING (2006-07) Consumer in Lakhs

SL State Numbers Metered %age

1 Andhra Pradesh 183.42 162.12 88

2 Arunachal 1.13 0.52 46

3 Assam 12.74 12.09 95

4 Bihar 12.50 6.23 50

5 Chattisgarh 27.13 26.81 99

6 Delhi 26.65 26.65 100

7 Goa 3.96 3.86 97

8a Gujarat (GEB) 74.77 69.57 93

8b Gujarat (Torrent/AEC 13.12 13.12 100

8c Gujarat (Torrent/SEC 5.53 5.53 100

9 Haryana 44.49 40.49 91

10 HP 17.55 17.55 100
11 Jammu & Kashmir 10.00 4.00 40

12 Jharkhand 6.53 4.90 75

13 Karnataka 139.99 120.14 86

14 Kerala 83.95 83.95 100

15 Madhya Pradesh 64.92 46.50 72

16 a Maharashtra (BEST) 9.15 9.15 100

16 b Maharashtra (MSEB) 135.32 118.12 87

111
16 c Maharashtra (REL) 24.95 24.95 100
 STATUS OF CONSUMER METERING (2006-07)
Consumer in Lakhs

SL State Numbers Metered %age

17 Manipur 1.70 1.40 82
18 Meghalaya 1.68 0.84 50
19 Mizoram 1.34 1.33 99
20 Nagaland 1.88 1.14 61
21 Orissa 21.49 17.45 81
22 Punjab 60.28 52.05 86
23 Rajasthan 58.45 54.78 94
24 Sikkim 0.66 0.61 92
25 Tamilnadu 34.15 30.33 89
26 Tripura 3.41 3.03 89
27 Uttar Pradesh 88.06 80.38 91
28 Uttaranchad 10.60 10.04 95
29 West Bengal 61.36 59.48 97
30 Chandigarh 1.97 1.97 100
31 Daman & Diu 0.52 0.52 100
112
32 Pondicherry 2.19 2.11 96
PERFORMANCE OF STATE ELECTRICITY BOARDS/UTILITIES (AN EXCERPT FROM
AGENDA NOTES FROM PROCEEDINGS OF CONFERENCE OF CHIEF MINISTERS
ON POWER SECTOR ISSUES HELD ON 28TH MAY 2007
AT&C LOSS (% ) FOR STATE POWER UTILITIES
Region State 2001-02 2002-03 2003-04 2004-05 2005-06
Eastern
Bihar 66.02 77.64 66.25 66.01 67.46
Jharkhand 60.21 72.63 62.47 69.24 54.10
Orissa
-CESCO 48.81 29.40 49.97 55.81 42.55
-NESCO 51.02 40.26 45.05 39.52 36.77
-SESCO 40.47 36.76 38.21 35.65 45.48
-WESCO 46.42 39.70 38.32 35.89 37.48
Sikkim 81.33 80.12 66.67 63.60 64.45
West Bengal 35.29 26.62 32.87 23.91 26.60
Total 47.34 44.37 44.81 41.90 40.70
North Eastern
Arunachal Pradesh 61.94 61.73 16.34 25.43 37.19
Assam 36.97 39.43 43.35 39.31 N.Av.
Manipur 74.11 76.81 69.70 88.56 77.83
Meghalaya 21.60 42.39 39.35 38.12 18.47
Mizoram 76.10 49.63 38.70 24.61 16.92
Nagaland 60.89 53.74 55.63 43.13 45.04
Tripura 31.60 34.27 14.84 20.78 24.08
Total 40.65 44.10 40.56 39.98 32.32

113
PERFORMANCE OF STATE ELECTRICITY BOARDS/UTILITIES (AN EXCERPT FROM
AGENDA NOTES FROM PROCEEDINGS OF CONFERENCE OF CHIEF MINISTERS
ON POWER SECTOR ISSUES HELD ON 28TH MAY 2007
AT&C LOSS (% ) FOR STATE POWER UTILITIES
Region State 2001-02 2002-03 2003-04 2004-05 2005-06
Northern
Delhi 60.06
-BRPL 51.78 45.72 41.98 39.06
-BYPL 62.49 55.54 51.70 48.58
-NDPL 56.39 48.16 35.89 28.01
Northern
Haryana
-DHBVNL 40.70 41.40 40.53 43.96 40.78
-UHBVNL 45.93 42.54 40.09 43.37 41.90
H.P. 28.30 29.52 9.26 21.71 15.15
J&K 68.22 68.22 68.79 68.33 68.25
Punjab 27.66 26.45 25.52 24.00 25.84
Rajasthan
-AVVNL 49.03 41.22 46.21 49.76 47.55
-JDVVNL 52.77 41.99 45.75 47.57 47.03
-JVVNL 59.32 39.99 41.68 43.22 42.26
Uttar Pradesh
-UPPCL 46.92 31.78
-DVVN 51.46 58.02 55.59

-MVVN 39.48 38.72 49.46

-PaVVN 38.29 32.40 42.43
-PoVVN 45.36 58.07 46.08
Uttaranchal 37.59 43.48 45.62 38.20
Total 46.01 37.85 41.14 41.25 40.41
114
PERFORMANCE OF STATE ELECTRICITY BOARDS/UTILITIES (AN EXCERPT FROM
AGENDA NOTES FROM PROCEEDINGS OF CONFERENCE OF CHIEF MINISTERS
ON POWER SECTOR ISSUES HELD ON 28TH MAY 2007
AT&C LOSS (% ) FOR STATE POWER UTILITIES
Region State 2001-02 2002-03 2003-04 2004-05 2005-06
Southern
Andhra Pradesh
-APCPDCL 28.90 30.19 18.99 23.96 18.82
-APEPDCL 14.48 17.62 16.57 14.27 12.67
-APNPDCL 26.50 27.09 9.80 21.91 15.26
-APSPDCL 27.47 27.44 17.06 20.55 16.51

Southern
Karnataka
-KPTCL 40.50
-BESCOM 35.70 28.91 27.62 35.75
-GESCOM 43.53 43.86 42.99 52.74
-HESCOM 47.72 31.65 41.65 40.38
-MESCOM 35.68 25.82 26.63 20.83
-CHESCOM 46.03
Kerala 31.83 36.19 32.73 32.12 25.95
Pondicherry 38.94 41.67 20.53 16.46 16.05
Tamilnadu 19.26 20.02 20.64 19.41 20.46
Total 27.63 28.05 22.71 23.92 23.73
Western
Chattisgarh 39.02 37.48 30.99 32.30 38.19
Goa 48.53 22.99 21.28 17.27 15.92
Gujarat 23.28 31.24 35.48 35.15
-DGVCL 22.40
-MGVCL 24.61
-PGVCL 43.05
-UGVCL 27.57
Madhya Pradesh 48.60 49.42 41.52 54.27 50.35
-MPMKVVCL 43.20
-MPPKVVCL 46.91
-MPPuKVVCL 26.51
Maharasthra 46.34 44.25 38.95 26.62 50.22
-MSEDCL 35.71
Total 39.60 40.45 37.55 34.58 36.88
Grand Total 38.86 36.64 34.90 34.33 34.54

115
 Achievements/Financial Turn Around
FIGURES OF HPSEB (Rs. in crore)

2500.00 2271.16 2447.90 2348.59

2197.18
2031.33
1976.34
2000.00

1500.00

1000.00

500.00
54.99 73.98 99.31

0.00
2006-07 2007-08 2008-09

Revenue Receipt Revenue Exp. Net Operating

Surplus 116
 Reduction in T&D LOSSES
(in %AGE)

30
24.85
25 24.03
22.44
19.25 18.98 18.91
20 16.38
15.63 15.29 15
15

10

0
2002-03 2003-04 2004-05 2005-06 2006-07

Overall Within State

117
Why we propose this model?
• Our systems are small and geographic & demographic
conditions of State are stringent.
• In case Generation, Transmission & Distribution activities
become separate entities, the problem of
integrated/coordinated grid operation would become
unmanageable.
• In the conditions of scarcity, vertically integrated utilities can
definitely perform better.
• To continue as an extended arm of the Govt. to take up
social obligations.
• Last but not the least, HPSEB has performed well and has
been ranked 4th in the study conducted by ICRA for MOP on
performance of SEBs/Utilities in Power Sector reforms.

118
Therefore, we finally suggest:

• Let HPSEB be contributed as one entity:

– Management of SEBs is made professional &
accountable;
– Internal reforms are geared up;
– Functional unbundling under overall aegis of SEB
be done to make it responsive, accountable &
sustainable organisation.
– A separate entity for trading functions be created.

119
 Why power reforms initiated in the
country in 1991 has not shown results?
• The main reason for the failure of the power sector
reforms process in our country is that it has been
conceived, drafted and managed primarily by
consultants/financial experts who understand the
intricacies of financial and market economy but not
of power system engineering.
• The power engineers have been totally
marginalised & sector has been captured by the
non-professionals in the states
• Without motivated managerial class, no
organisation can improve its performance
120
 WAY FORWARD
State Level Initiatives
• Insulate the sector from unwanted political and bureaucratic
controls.
• Professionalize the top management of the Board having
fixed tenure but linked with performance. The sector which is
an INDUSTRY needs top managers/technocrats.
• Memorandum of agreement (MoA) between the state
government and the management be signed wherein the
achievement of performance targets and matching support
expected from the state government should be clearly
defined.
• Revamp the State Regulatory Commission by inducting top
professionals of respective fields with sufficient experience of
the power sector as per the letter and spirit of the Act.
121
 WAY FORWARD
Commercial Viability
• Timely filing of tariff petitions and implementing the
tariff orders in letter and spirit.
• Ensuring quarterly advance payment of subsidy by
the state government as per Electricity Act 2003.
• Ensuring commercial discipline in the organization
by increasing transparency and accountability at all
levels. Cleaning up the balance sheet and ensuring
adequate financial support through Financial
Restructuring Plan (FRP) in the next 3 to 5 years to
make the sector commercially viable in the long run.

122
 WAY FORWARD
Internal Reforms
• Each generating station and distribution circle be
declared a profit centre with commensurate
delegation of powers.
– Memorandum of Agreement (MoA) spelling out
targeted performance parameters expected from each
officer incharge of profit centre be signed with
between Superintendent Engineer and the utility. The
continuation or future promotions of the officers to the
top posts may be linked to their performance.
– Make each 11 kV feeder a ‘Business Unit’ under the
charge of “feeder manager” accountable for each unit
fed into the system. Similar MoA may be signed with
feeder incharge. 123
 WAY FORWARD
– Ensure energy audit up to DT-level to identify
pockets of high losses.
– Set up special police stations and special courts to
try theft of energy cases.
– Introduce I.T to bring transparency, efficiency and
accountability. I.T would go a long way in reducing
the human interface thus tackling corruption at
various levels.
– Functional restructuring of the distribution set up
at the gross root level particularly in the high
density urban areas by dispensing with the
existing structure. 124
 WAY FORWARD
– Convert HPSEB from ‘person driven’ to
‘system driven’ organization with intensive
HRD initiatives.
– Introduce HRD to optimize employees
productivity and align them with the
organizational goal.
– Change the outdated rules & procedures
– Put all initiatives and changes proposed in
the power sector before the public and
employees and encourage open debate /
discussion on the subject
125
CONCLUSIONS
The failure of reforms through unbundling/
privatization is
a reality
and Success of Reforms through “Open
Access” is
a belief.
Integrated, autonomous HPSEB with functional
unbundling is the only solution
126
 Therefore, HP Govt. may
request Govt. of India to give its
consent for the continuance of
HPSEB as it is i.e. as State
Transmission Utility and a
licensee up to 2012

127
Generation Transmission Distribution

Prayer:
Be My Savior
HP Govt.

SEB

UNITY IS STRENGTH
128
129