Maharashtra State Electricity Distribution Company Limited (MSEDCL), India’s largest electricity distribution utility, has been successfully catering to the growing electricity demand of the state. Incorporated in 2005 following the unbundling of the erstwhile Maharashtra State Electricity Board, MSEDCL currently serves more than 24 million consumers across all categories in 30 districts of Maharashtra (except Mumbai). It has been taking several initiatives to manage its weak financial position including strengthening its distribu tion infrastructure and procuring additional power from the short-term market. Despite these measures, 15 per cent of its consumers continue to face load shedding. Going forward, the discom aims to make the state free of load shedding.
MSEDCL’s consumer base grew from 23.17 million in 2015-16 to over 24 million in 2016-17. As of March 2016, its distribution line length stood at 947,948 ckt. km, one of the highest among utilities in the country. The discom has 66.3 per cent of the transmission line at the low tension (LT) level, 29.33 per cent at the 33 kV level and the remaining at the 11 kV level. It has a transformer capacity of 81,073 MVA. Of the total, 52,503 MVA of capacity is at the 11 kV level. The utility has also been performing well in terms of metering with 100 per cent coverage at the domestic and industrial consumer levels, and 97 per cent coverage at the feeder level.
In 2007, MSEDCL became the first utility to implement the urban distribution franchise arrangement, wherein it handed over the distribution of the Bhiwandi circle to Torrent Power Limited under a 10-year franchise agreement. Given the positive results of the model, the agreement has been extended further by 10 years, that is, from January 26, 2017 to January 25, 2027. This has created interest among other utilities to have a similar business model. MSEDCL is also planning to implement the model in six other locations – Jalgaon, Aurangabad, Dhule, Latur, Thane and Nagpur.
As of March 2016, the utility recorded a total revenue of Rs 565.89 billion, the highest compared to other utilities in the country. However, it has been incurring losses similar to its counterparts. The discom suffered financial losses of Rs 149 billion in 2015-16, compared to a loss of Rs 3.66 billion in 2014-15. In the past couple of years, it has faced financial distress because of two reasons primarily. The first is the rising power procurement costs, with the discom having had to pay fixed charges to generation companies under long-term power purchase agreements for 20 per cent of additional capacity. Second, MSEDCL claims that the Maharashtra Electricity Regulatory Commission’s distribution open access regulation 2014 has had a negative impact on its financial health. The regulation allows consumers with a contract demand of 1 MW and above to be eligible for open access (direct power purchase from exchanges or other sources). Given the high power tariff for industrial units, many of them have opted for open access to meet their demand. Reportedly, this has led to a net loss of Rs 17 billion to the discom.
In 2016-17, MSEDCL registered distribution losses of 14.5 per cent and a collection efficiency of 96 per cent. The shortfall of 4 per cent in collection efficiency was primarily because of inadequate recovery from the agricultural sector. The discom has around 4.2 million agricultural pumps installed in the state (the highest in the country), which increases its cost burden. Meanwhile, it recorded an average cost of supply-average revenue realised (ACS-ARR) gap of Re -0.05 in 2016-17, exceeding its target of Re 0.03 per unit. For 2017-18, MSEDCL is eyeing an aggregate revenue of Rs 600 billion, assuming that there will be an improvement in power offtake.
The discom has been making consistent efforts to reduce its aggregate technical and commercial (AT&C) losses and has witnessed an improvement of almost 5 percentage points in 2016-17 at 18.3 per cent. The losses can be attributed to power thefts in certain areas. MSEDCL aims to further reduce its AT&C losses to 13.5 per cent by the end of 2017-18 and achieve a single-digit figure in the long term through a reduction in illegal power procurement.
In January 2017, MSEDCL introduced the practice of energy accounting, as a part of which detailed reports are prepared on a daily and a monthly basis. This allows the concerned officials to view the bill amount generated as against the energy consumed during a given period. This has allowed the discom to analyse feeder-wise and town-wise details and identify energy leakages using the data.
In November 2017, MSEDCL conducted a three-day drive in power theft-prone areas of Maharashtra to inspect the electricity meters and identify cases of illegal power consumption. Further, it disconnected 36,166 power connections across the domestic, commercial and industrial consumer categories because of payment defaults, as a part of the zero arrears drive conducted in Pune zone. Consumers who failed to clear their electricity bills were mainly from Pune, Pimpri Chinchwad and rural areas and had defaulted on payments of Rs 180 million. Power supply to 17,983 consumers was discontinued permanently. The drive was aimed at creating awareness amongst people to prevent them from treating electricity as a free good and clear their dues on time.
In order to improve its billing and collection efficiency, MSEDCL has also launched an in-house mobile application, Mahavitaran, which allows consumers to submit their meter readings, register complaints and make online bill payments. In 2016, the utility collaborated with Sensus, a Xylem brand, to roll out an advanced metering infrastructure solution in the Nagpur area. The project is expected to help MSEDCL offer improved operational services and cater to the smart grid needs in the state.
MSEDCL has also been undertaking multiple initiatives for improving its operational performance using the funds sanctioned under the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and the Integrated Power Development Scheme (IPDS). It plans to make a capital expenditure of Rs 328 billion from 2016-17 to 2019-20 and aims to add 101,031 ckt. km of line length during this period. Out of the amount sanctioned, almost Rs 50 billion has been earmarked for achieving the targets set under the two schemes. The company also has a planned capex of around Rs 30 billion for its Infra II project. This project was launched in 2013 with the objectives of meeting the load growth requirements, upgrading the existing system and augmenting the network for releasing new connections, among others. As a part of the project, MSEDCL aims to instal new substations, especially in the rural areas, and upgrade the existing LT lines to HT lines.
MSEDCL currently enjoys almost complete monopoly in the state. However, the possibility of consumers opting for open access or parallel licensing threatens its financial position. On its part, the discom has to continue taking measures for improving its AT&C losses, reducing outstanding debt and ensuring better collection efficiency, especially in the rural areas and the agricultural sector. One way of reducing its AT&C losses and improving collection efficiency is to deploy the franchise model, which has been successful in Bhiwandi. Central schemes such as the Ujwal Discom Assurance Yojana, IPDS and Unnat Jyoti by Affordable LEDs and Appliances for All are expected to have a positive impact on the discom’s financial and operational performance. To make the state free of load shedding, the utility will have to take measures to address the issue of power loss due to coal shortage and reduce power thefts across the state on a priority basis.