India has achieved a 100 per cent household electricity connection rate. However, providing reliable quality power on a regular basis is an ongoing challenge and an evolving process for the Indian power sector. In order to map and assess the capacity of the electricity distribution utilities to service customers’ needs and meet ambitious electricity access targets, a report, “Status of Electricity Access and Benchmarking Utilities”, has recently been released by NITI Aayog in partnership with the Rockefeller Foundation and Smart Power India.
Aimed at capturing insights from both the demand side (electricity customers) as well as the supply side (electricity distribution utilities), the report sought to evaluate the electricity access status in India across 10 states and 25 distribution utilities. The study has been conducted across all dimensions that constitute meaningful access, benchmark distribution utilities’ capacity to provide electricity access, identify viability drivers, develop recommendations that help discoms leverage latent capacity and capitalise on viability drivers.
The study has launched the first ever India-specific framework for a comprehensive measurement of electricity access. It condenses findings from one of the largest ever surveys on electricity access, following the completion of the government’s programme on household electrification – Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya).
The key findings of the report include that there has been a significant improvement in the hours of supply across customer categories to nearly 17 hours per day; 85 per cent of customers reported a metered electricity connection; 83 per cent of household customers had access to electricity; and 66 per cent of those surveyed were satisfied (of which 74 per cent were urban customers and 60 per cent were rural).
At the launch of the report, NITI Aayog vice-chairman Rajiv Kumar said, “The report highlights the benefits of government-led schemes such as Saubhagya and the Deendayal Upadhyaya Gram Jyoti Yojana, which have been well received in rural as well as urban areas. Some of the recommendations – such as prioritising the release of new connections for non-household customers, transferring subsidies or other benefits directly into a customer’s account, enhancing technology-driven customer service, ensuring 100 per cent metering of customers, and segregating feeder lines – are all part of ongoing government programmes, but we would like the concerned ministry to expedite these to maximise the benefits.” A closer look at the main observations of the study…
The study is based on a primary survey conducted across 10 geographic states – representing 65 per cent of the total rural population of India and with a sample size of more than 25,000, including households, commercial enterprises and institutions – and the report assessed 25 distribution utilities. The study used a mixed design approach that has synthesised primary customer research and secondary research on the electricity distribution utilities serving these customers. On-ground observational surveys of substations and feeders further supplemented the understanding of key infrastructure challenges. Some of the major parameters of the study include the following.
- Grid connectivity: The study revealed that as many as 92 per cent of customers reported an overall electricity infrastructure availability within 50 metres of their premises, but not all of them had connections. For the agricultural category, the availability rate was about 75 per cent. The near 100 per cent access rate for household customers based on the primary survey indicated the Saubhagya scheme’s success. Grid access, however, varied across customer categories, utilities and states. The primary reasons for non-connection to the grid include the distance of the nearest electric pole from customers’ premises, inability to pay for electricity costs and user charges and poor service quality. Of the unconnected commercial customers, almost half stated that the main reason was unaffordability, while 43 per cent of the unconnected institutional customers were either refused a connection or had applied for one, but were still waiting for it.
- Electricity access: Overall, 87 per cent of the surveyed customers had access to grid-based electricity. The remaining 13 per cent either used non-grid sources or did not use any electricity at all. Over the past few years, as utilities focused on ensuring 24×7 power for all, supply hours have increased significantly across customer categories and stand at approximately 17 hours per day as per the survey. Power reliability has been measured through the number of power cuts and prior notification of upcoming power cuts. Agricultural and institutional customers reported no power cuts during each day of the past week, whereas 70 per cent of the household customers reported one or more power cuts during the same time. In addition, around 75 per cent of the household customers reported no prior notification of upcoming power cuts. Overall, electricity access has been observed to be affordable for 83 per cent of the household customers.
- Customer satisfaction: Customer satisfaction is often considered the end goal of a service-driven industry. The study showed that 81 per cent of surveyed grid users are satisfied with the new connection process, with the highest satisfaction among institutional customers (88 per cent) and the lowest among agricultural customers (74 per cent). A significant portion of non-users cited complications in the connection process as the primary reason for not being a grid user. There has been a significant positive impact of the Saubhagya scheme. Further, 63 per cent of the surveyed customers were satisfied with the service provided to them. Among the dissatisfied customers, 31 per cent reported an average power cut duration of no more than one hour per day. Overall, the study suggested that a total of 66 per cent of those surveyed were satisfied, with 74 per cent of customers living in urban areas and 60 per cent in rural areas.
Utilities’ capacity to provide electricity access sustainably
The parameters to deliver sustainable electricity access are characterised by discoms’ internal capacity, which, in turn, are governed by infrastructural, operational and institutional capacities.
- Infrastructural capacity: An analysis of data from 23 utilities across 10 states showed an average substation capacity ratio of approximately 3.25, and the average HT:LT ratio as approximately 0.69. The average distribution transformer failure rate, ideally zero, was found to be 11 per cent, an area that needs attention.
- Operational capacity: The aggregate technical and commercial losses for the surveyed utilities was 18 per cent for 2018-19, mainly on account of technical and billing losses of 14 per cent. All utilities except Bihar North, Assam and Meghalaya report nearly 100 per cent feeder metering coverage, while DT metering is lagging in almost all surveyed utilities with an average of 55 per cent. The average complaint resolution of the surveyed utilities was found to be 88 per cent. This is in contrast to the feedback from the customer survey, which states that only 43 per cent of customers were satisfied with the complaint resolution process. The average reported theft cases per 1,000 customers among the surveyed utilities was found to be 11. However, the study’s qualitative discussions revealed that most utilities and customers still face a significant challenge in terms of electricity theft.
- Institutional capacity: All the surveyed utilities were found to have developed vision documents, but the majority of the surveyed utilities were found to have an unstructured knowledge portal, with limited documentation. On random verification, certain crucial documents such as standards of performance were found to be missing. It was also found that the majority of the surveyed utilities have not established enterprise resource planning systems.
Sustainability drivers for utilities
It was observed that a utility’s overall access score was strongly correlated with its overall customer satisfaction score. Second, it was observed that a utility’s sustainability of electricity access score was strongly correlated with its capacity to deliver. Finally, the study clarifies that profitability alone may not necessarily give a correct picture of a utility’s financial performance. A moderate correlation between a utility’s customer satisfaction score and its profitability was also found. Supply factors such as increasing available hours for electricity do not have a significant correlation with financial performance; however, regular billing and increasing metering coverage correlate positively with financial performance.
Recommendations to improve access quality
Based on the analysis, the study outlines specific recommendations for utilities in order to improve electricity access quality in India. The key recommendations include prioritising the release of new connections for non-household customers, simplifying and standardising the new connection application process and instituting an online/app-based process for new connections.
Further, the study recommends the implementation of direct benefit transfer for establishing a streamlined, on-time and proactive subsidy transfer to consumers. It aims to initiate public outreach campaigns that increase customer awareness and ensure completion of KYC by utilities. Besides, it recommends enhancing the reach of banking or incorporate non-banking channels for subsidy disbursement in rural areas.
Some of the other recommendations made in the report include tariff rationalisation and simplification, setting realistic efficiency benchmarks for utility performance, strengthening institutions such as electricity regulatory commissions by upskilling to enable advanced data and policy analysis, strengthening customer engagement through deployment of standard operating procedures, providing enhanced technology-driven customer service, ensuring 100 per cent metering of customers and segregating feeder lines.
The above recommendations will provide a way forward for policymakers and distribution utilities to prioritise interventions. An alternative way forward may be explored through leveraging private sector actors, better capacity planning and deployment of new technology, which will establish more robust structures and hence, assure greater efficacy for implementing the recommended solutions.