Private integrated utility CESC Limited serves more than 3.3 million consumers in Kolkata and Howrah. In recent years, CESC has won bids for three distribution franchises (DFs) in Rajasthan – Kota and Bharatpur, which became operational in 2016-17, and Bikaner, which became operational in 2017-18. In 2018-19, CESC won the bid for the Malegaon circle in Maharashtra, which commenced operations in March 2020. At a recent webinar organised by Power Line, Debasish Banerjee, Managing Director, Distribution, CESC Limited, spoke about the measures implemented by the company to mitigate the challenges due to the Covid-19 lockdown to ensure uninterrupted consumer services, the outlook for the power distribution segment, the Electricity Act amendments and the opportunities with regard to the proposed privatisation of union territories.
Impact of Covid on operations and revenues
The Covid-19 pandemic gathered momentum in the last week of March 2020. A lot of things were impacted due to the subsequent nationwide lockdown, imposed to curb the spread of the virus.
As far as electricity demand is concerned, CESC witnessed a dip in demand like all other power utilities. During the lockdown, even though residential consumption was there, commercial and industrial consumption had a dip due to partial operations in various sectors and the closure of commercial establishments including offices, malls, hotels and multiplexes. The encouraging part of the “unlockdown” is that demand is nearly back to normal with the opening up of various industries and commercial establishments.
In these challenging times, we all need to look at optimising costs through an improvement in operational efficiencies and leveraging innovative technologies and digitalisation. During this pandemic, our existing digital ecosystem helped us provide a large number of services digitally – new connections, name changes, AC applications, online payments, etc. CESC provides user-friendly online payment platforms and this helped consumers during the intermediate period, especially when cash counters were temporarily closed. We also successfully maintained our commercial and supply call centre services. Such initiatives enabled us to deliver reliable power supply services to our consumers and manage our network and operations efficiently.
For businesses to be viable and sustainable, they need to be proactive, anticipate change and act in real time. CESC has widely embraced the use of data analytics as a strategic tool to upgrade operations, optimise costs and further reinforce systems and processes. We also use analytics at various customer touchpoints for creating customer delight.
Some of the stellar use cases where we have applied data analytics are fault prediction, distribution transformer load management, material management, health indexing of transformers, analytics for increasing online payments and customer sentiment analysis. Our capex planning is based on data analytics for effective asset saturation through network reorganisation towards accommodating higher demand capacity and enhancing the reliability of network infrastructure. During the pandemic and intermediate lockdown, our payment analytics was of immense help to identify various customer segments and their payment behaviour. We were successfully able to target consumers with focused communication and drive online payments. We are also exploring the use of new technologies such as augmented reality (AR), virtual reality (VR), and digital twin for remote troubleshooting and real-time monitoring, which has become all the more pertinent during this pandemic.
“We are excited about the privatisation of discoms in the union territories. This new opportunity will enable us to increase our power distribution footprint across India.”
DF experience so far and opportunities in the distribution segment
CESC has power distribution franchise businesses in Kota, Bharatpur and Bikaner in Rajasthan, and Malegoan in Maharashtra. We are excited about the privatisation of discoms in the union territories. Chandigarh, Puducherry, Daman & Diu, and Dadra & Nagar Haveli appear to be attractive opportunities. This new opportunity will enable us to increase our power distribution footprint across the country.
Proposed amendments to electricity policies
A key point in the proposed amendments is the progressive reduction of cross-subsidies. This has been a challenge faced by all utilities. If you look at the mix of consumers, cities like Mumbai and Kolkata have a very large number of consumers who use up to 200-300 units of power and come under the cross-subsidised category. Industrial and commercial category consumers cross-subsidise their tariffs. As per policies, this gap is required to be brought down so that industrial and commercial businesses are encouraged and contribute to GDP growth.
Smart meters can always be used in pre-payment mode and there are other additional use cases for smart meters, which can go a long way in enhancing operational efficiencies through the effective use of data analytics. If a smart meter is coupled with time-of-use tariff for residential consumers also, it could encourage them to shift some of their consumption to off-peak periods. This arrangement may create a potential for the utility to flatten its peak demand and create probable opportunities for some optimisation of power purchase costs and rationalisation of capex.
It is desirable that consumers pay for their actual consumption of electricity and on time, which would help discoms. This is important for discoms, as realisation of the entire consumption of electricity would support them to service their cost of supply.
On the privatisation of electricity distribution through the sublicence route, we need to always consider the models of Kolkata, Mumbai and Ahmedabad. Complete privatisation is supposedly a welcome model because the company would then have the necessary scope to further upgrade its customer service and network, while also focusing on increasing operational efficiency and the adoption of digital technologies.
“It is desirable that consumers pay for their actual consumption of electricity and on time. This is important for discoms, as realisation of the entire consumption of electricity would support them to service their cost of supply.”
Sector outlook
One of the reform areas that need to be looked at is encouraging the upgradation of transmission corridors in cities to enable higher import of power, for meeting both the increase in demand and any emergency during import network tripping.
Overall, the future is electric as it is important to reduce the carbon footprint and pollution in cities. Electric vehicles (EVs) and e-cooking are the way forward in this direction, and for faster adoption of technologies in India, we need to fund initiatives such as energy storage. There is a need to promote technologies such as EV charging, AR/VR/MR and smart grids through effective incentives.
We also need to contribute our bit towards enhancing the ease of doing business so as to expedite the grant of new connections. Timely liquidation of regulatory assets is also important so that cross-subsidies can be reduced.