Established in November 2010, following the division of the erstwhile Tamil Nadu Electricity Board (TNEB), Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) is responsible for power generation and distribution in the state of Tamil Nadu. The integrated utility serves nearly 30 million consumers and is the largest in the country in terms of consumers. Its aggregate technical and commercial (AT&C) losses stood at nearly 17.29 per cent in 2018-19, down from 24.74 per cent in 2014-15.
TANGEDCO owns a generation portfolio of over 7 GW. While the generation capacity has remained constant in the past five years, it has a project pipeline of 6.2 GW for the next five years. Of this, units totalling 2 GW are likely to come online in 2020-21. A capex plan of about Rs 490 billion is proposed for the period 2020-21 to 2021-22, with an emphasis on generation expansion and distribution system strengthening.
Generation portfolio and performance
As per the Central Electricity Authority, TANGEDCO’s installation capacity aggregates 7,145 MW as of March 31, 2020. Coal accounts for 60.5 per cent (4,320 MW) of the total installed capacity, hydro for 30.5 per cent (2,178.20), natural gas for 7 per cent (524.08 MW) and renewable energy sources for the remaining 2 per cent (122.7 MW). During 2019-20, the total generation by TANGEDCO (excluding renewables) stood at 28,099.42 MUs, a decline of 15 per cent from the 33,163.05 MUs generated in 2018-19.
The company owns and operates four coal-based power stations, the 1,830 MW North Chennai thermal power station (TPS), the 1,050 MW Tuticorin TPS, the 840 MW Mettur TPS I and the 600 MW Mettur TPS II. The total electricity generation from these coal-based power plants stood at 21,566.60 MUs in 2019-20, a 17 per cent decline from the 25,977.75 MUs recorded in 2018-19. The plant load factor (PLF) stood at 56.83 per cent in 2019-20, a significant decline from 68.65 per cent in 2018-19.
The four gas-based power plants, the 120 MW Basin Bridge gas turbine power station, the 108 MW Kovikalpal combined-cycle power plant (CCPP), the 100 MW Kuttalam CCPP and the 186.20 MW Valuthur CCPP, generated 1,767.58 MUs during 2019-20, while hydropower generation across over 17 hydroelectric plants (HEPs) stood at 4,765.24 MUs.
Distribution network and performance
As of March 2019, the utility’s overall consumer base stood at 29.60 million, up by 2.7 per cent from 28.81 million in 2017-18. In 2018-19, TANGEDCO registered total energy sales of 91,918 MUs, an increase of 7 per cent from 85,890 MUs in 2017-18. TANGEDCO’s total distribution line length stood at 805,456 ckt. km in 2018-19. The line length registered a compound annual growth rate (CAGR) of 1.32 per cent during 2014-15 to 2018-19. Of the total line length, LT lines accounted for around 78 per cent or 628,066 ckt. km, while HT lines accounted for the remaining 22 per cent or 177,390 ckt. km. Further, the utility owned 309,468 distribution transformers with a transformation capacity of 41,649.80 MVA. Of these, 73 per cent were at the 11 kV level, while the remaining 27 per cent were at the 22 kV level.
TANGEDCO’s AT&C losses have reduced from 24.74 per cent in 2014-15 to 17.29 per cent in 2018-19 owing to initiatives such as network reconfiguration, network re-conductoring, conversion of overhead lines into underground cables, automated meter reading (AMR), theft prevention by regular inspections and surprise checks, and replacement of existing electro mechanical meters with static meters. In addition, the utility has undertaken significant network strengthening under central government programmes like IPDS and DDUGJY.
Its average cost of supply (ACS)-average revenue realised gap stood at Rs 1.02 per unit during 2018-19 as against Rs 1.66 per unit in 2014-15. The collection efficiency increased from 96.63 per cent in 2014-15 to 99.50 per cent in 2018-19. As per the UDAY portal (accessed on July 27, 2020), TANGEDCO has achieved 100 per cent distribution transformer metering in urban areas while only 10 per cent in rural areas. Further, the utility has achieved 100 per cent feeder metering in both urban and rural areas. The failure rate of these transformers has decreased from 4.88 per cent in 2014-15 to 3.49 per cent in 2018-19.
The company’s revenue from operations has increased at a CAGR of 3.67 per cent during 2016-17 to 2018-19, while the total expenditure has grown at 10.94 per cent over the period. In 2018-19, the company registered revenue of Rs 472.51 billion from operations, a growth of 8.35 per cent over the previous year. The total expenditure stood at Rs 742.90 billion in 2018-19, an increase of 11.06 per cent over the previous year. The net loss registered by the utility rose to Rs 126.23 billion from Rs 77.61 billion during the same period. TANGEDCO faces a high financial risk on a stand-alone basis arising from cash losses and low cost coverage. The total borrowings of the integrated utility as of March 31, 2019 stood at Rs 1,134.38 billion.
The capital expenditure incurred during 2018-19 stood at Rs 88.54 billion, an increase of 31 per cent over Rs 67.42 billion incurred during 2017-18. Of the total capex, Rs 41.45 billion was spent on distribution, while the remaining Rs 47.10 billion was spent on generation projects during 2018-19. For 2019-20, the estimated capex stands at Rs 110.94 billion.
As per TANGEDCO’s revised capital investment plan for the multi-year tariff (MYT) control period of 2019-22, a total capex of Rs 490 billion has been projected for 2020-21 and 2021-22, of which 73 per cent will be spent on generation and 27 per cent on distribution. As per the plan, a capex of Rs 254.67 billion is expected in 2020-21 and Rs 236.94 billion in 2021-22.
TANGEDCO has five supercritical coal-based projects aggregating 5,700 MW capacity, which are under construction and are expected to be commissioned in the next four to five years. These are the Ennore Expansion TPS (1×660 MW), Ennore SEZ TPS (2×660 MW), North Chennai TPS Stage III (1×800 MW), Uppur TPS (2×800 MW) and Udangudi TPS Stage I (2×660 MW). In addition, the utility is developing the 500 MW Kundah pumped storage project (PSP) (4×125 MW). The North Chennai and Uppur TPSs are expected to be commissioned in 2020-21, the Ennore SEZ and Udangudi TPSs by 2021-22, the Kundah PSP by 2022-23 and the Ennore Expansion TPS by 2023-24.
Further, new thermal projects totalling over 11 GW have been proposed. In the renewables segment, it is planning to set up the Sillahalla pumped storage HEP (4×500 MW), the Kadaladi ultra mega solar photovoltaic (PV) park power project (500 MW) and floating solar PV power projects in Theni, Salem and Erode districts (250 MW).
In the distribution segment, TANGEDCO plans to implement smart and prepaid metering to further improve its performance. It has proposed to install over 14.5 million smart meters in a phased manner at T. Nagar as part of the smart city project. The tenders for the installation of smart meters at T. Nagar worth Rs 1.2 billion were floated in October 2019.
Impact of Covid and other challenges
Owing to the Covid-19 induced lockdown, the electricity demand in the state has fallen by nearly 18 per cent from about 30,200 MUs in April-June 2019 to 24,800 MUs in the corresponding period in 2020. The peak demand has also reduced from 15,627 MW to 14,590 MW during the same period. The billing and collection activities of the utility have been hampered. This has severely impacted its liquidity. To tide over the crisis, the utility has sought loans of around Rs 206 billion from the central government under the AtmaNirbhar Bharat package for the discoms. Also, since TANGEDCO does not have any headroom for further borrowing within the working capital limits set under the UDAY scheme, it has requested the centre to relax the working capital limits.
TANGEDCO is also facing challenges in meeting the environmental norms within the stipulated deadline. In December 2019, the utility sought an extension of two years to install flue gas desulphurisation systems in two units at its North Chennai TPP. There are also concerns related to fuel supply as Coal India Limited has curtailed the present linkage quantity of 20.445 million tonnes per annum (mtpa) to 18.791 mtpa and the state authorities have urged the restoration of the original linkage quantity. Further, the Chandrabila coal block allotted to TANGEDCO for the supply of coal to the Ennore Expansion TPS, the Ennore SEZ TPS and the Udangudi Stage-I TPS in Tuticorin has been cancelled owing to the lack of environmental clearance and the state government has sought the environment ministry’s intervention.
Further, the utility’s dependence on tariff subsidy from the state government has increased substantially over the years. In the seventh annual integrated ratings report released by the Power Finance Corporation (PFC) for the financial year 2018, TANGEDCO’s rating stood at “B”, same as the previous year.
In the coming years, the power demand in the state is expected to increase to 21,075 MW in 2025 and 26,281 MW in 2030 (as per the CEA’s 19th Electric Power Survey), next only to West Bengal, Uttar Pradesh and Maharashtra. Going forward, this would require TANGEDCO to ramp up its generation and distribution infrastructure expeditiously.