Metering, billing and collection are integral components of the power sector that have a significant impact on its efficiency, revenue collection and the overall consumer experience. The government’s Revamped Distribution Sector Scheme (RDSS), which has an outlay of over Rs 3.03 trillion, also focuses on smart metering. In the first phase, around 100 million prepaid smart meters are proposed to be installed by December 2023.
The central government has introduced various programmes and initiatives to implement smart metering across the country. Scheme-wise, over 842,899 smart meters have been installed under the Integrated Power Development Scheme (IPDS) while 168,744 smart meters have been installed under the National Smart Grid Mission (NSGM). In addition, 377,182 smart meters have been installed under the Prime Minister’s Development Package, 1,984,956 182 under the RDSS and 38,400 under the Deendayal Upadhyaya Gram Jyoti Yojana. Among agencies, Energy Efficiency Services Limited has installed 65,000 smart meters and REC Power Development and Consultancy Limited has installed 4,844,735 smart meters. Further, power utilities have cumulatively installed 270,100 smart meters and PFC Consulting Limited has installed 1,698,459 smart meters.
Progress so far
The country’s aggregate technical and commercial (AT&C) losses fell to 16.42 per cent in 2021-22, a 6 per cent decrease from the 2020-21 levels and a 4 per cent decrease from the 2019-20 levels. The AT&C losses further reduced to 13.5 per cent (provisional) in 2022-23. This can be attributed to improvement in collection efficiency, which increased from 92.71 per cent in 2019-20 to 97.25 per cent in 2021-22. Meanwhile, billing efficiency remained constant at about 85 per cent during the same period.
During 2021-22, Haryana, Chhattisgarh, Assam, Karnataka, Kerala, Nagaland, Puducherry, Rajasthan and Uttarakhand achieved 100 per cent collection efficiency, whereas Arunachal Pradesh recorded the lowest billing efficiency of 53.3 per cent. Meanwhile, the highest billing efficiency of 95.39 per cent was achieved by Maharashtra, whereas Bihar registered the lowest collection efficiency of 85.75 per cent.
On the metering front, 205.32 million consumer meters, 5.41 million distribution transformer meters and 201,695 feeder meters have been sanctioned under the RDSS, at a total sanctioned cost of approximately Rs 1.35 trillion. As of February 2023, tenders have been issued for smart metering works, covering approximately 103 million prepaid smart meters for consumer metering, as well as 3.8 million system meters for distribution transformers and feeders. Further, tenders have been issued for distribution infrastructure/loss reduction works amounting to Rs 788.27 billion.
As per PFC’s Report on the Performance of Power Utilities, the aggregate losses of distribution utilities decreased from Rs 465.21 billion in 2020-21 to Rs 310.26 billion in 2021-22. Meanwhile, the tariff subsidy billed by distribution utilities increased from Rs 1,333.06 billion to Rs 1,437.81 billion. The tariff subsidy released by the state governments as a percentage of tariff subsidy billed by distribution utilities increased from 84 per cent in 2020-21 to 109 per cent in 2021-22. The revenue gap on tariff subsidy billed basis decreased from Re 0.38 per kWh in 2020-21 to Re 0.23 per kWh in 2021-22, while the gap on tariff subsidy received basis, excluding regulatory income and revenue grant under Ujwal Discom Assurance Yojana for loan takeover, improved significantly from Re 0.69 per kWh to Re 0.15 per kWh.
Progress under government programmes
Under the RDSS, prepaid smart metering is envisaged with an estimated outlay of around Rs 1,500 billion and gross budgetary support of about Rs 230 billion. The objective is to install 250 million prepaid smart meters during the scheme’s duration. In addition to prepaid smart metering for consumers, system metering will be undertaken at the feeder and distribution transformer levels, equipped with communication features, associated advanced metering infrastructure (AMI) and a unified billing system. This will enable discoms to automatically measure energy flows at all levels, perform energy accounting and conduct audits without any human interference.
Under the NSGM, 168,744 smart meters have been installed so far out of the 178,522 sanctioned. Currently, two projects worth Rs 1,160.1 million are being implemented in Chandigarh, along with one integrated project in six towns of Rajasthan. As per the SMNP dashboard accessed in October 2023, around 1.58 million smart meters have been installed, resulting in an average discom revenues increase of 20.5 per cent, equivalent to a monthly per meter increase of Rs 301. According to the latest data from the IPDS portal for smart metering, the total approved project cost and project management agency cost is around Rs 2.29 billion and the total government grant is Rs 1.44 billion, of which Rs 812.4 million has been disbursed.
AMI is an essential step towards the digitalisation of utilities. It involves the deployment of smart meters, which provide real-time data on energy consumption to both consumers and utility providers. Besides energy accounting and loss identification, AMI data can be used for analysis through advanced digital tools. This analysis helps in achieving accurate demand forecasting across different time intervals (daily/weekly/ seasonally), thereby reducing the power purchase cost, optimising network assets and operations, expediting outage detection and service restoration, and enabling remote operations. It will also ensure accurate measurement of reliability indices and power quality measurement. For customers, AMI adoption has several advantages. These include error-free billing, elimination of the need for physical visits to billing centres, access to innovative tariff options, remote appliance management and control, and the potential for significant savings through improved electricity consumption management. However, the implementation and maintenance of an AMI system involving millions of meters is a very complex process that requires trained personnel.
Distribution utilities often delegate certain areas to distribution franchisees (DFs) with the aim of reducing AT&C losses and enhancing overall performance. These improvements encompass metering, billing, collection practices and modernisation of the distribution network, among other measures. Currently, approximately 12 DFs are active in various circles/divisions across states such as Maharashtra, Uttar Pradesh, Rajasthan, Meghalaya and Tripura. Of these, CESC Limited manages four DF contracts (Kota, Bharatpur, Bikaner and Malegaon), while Torrent Power Limited oversees three DF contracts (Bhiwandi; Agra; and Shil, Mumbra and Kalwa). In addition, Feedback Electricity Distribution Company Limited is responsible for specific electricity divisions in Meghalaya and Tripura, Sai Computers manages two contracts (Dalu and Kailashahar), while Tata Power handles a single contract in Ajmer.
To improve the financial stability of discoms and establish a sustainable framework for the power sector, the Ministry of Power (MoP) issued the Electricity (Second Amendment) Rules, 2023, incorporating provisions for subsidy accounting and payment, and the framework for financial sustainability. As per these amendments, discoms are now required to provide quarterly reports with detailed information about subsidy payments. The amendment also introduces procedures for allowing the transfer of expenses incurred by distribution licensees for the creation and upkeep of distribution assets.
In June 2023, the MoP issued the Electricity (Rights of Consumers) Amendment Rules, 2023. Through this amendment, the ministry introduced time-of-day (ToD) tariffs and rationalised smart metering provisions. According to the new rules, smart meters must be read remotely at least once a day, while other prepayment meters should be read by an authorised representative of the distribution licensee at least once every three months. Under the ToD tariff system, the tariff during solar hours of the day will be 10-20 per cent lower than the normal tariff, while the tariff during peak hours will be 10-20 per cent higher. The ToD tariffs will come into effect from April 1, 2024 for commercial and industrial consumers with a maximum demand of over 10 kW; and from April 1, 2025 for other consumers, except agricultural consumers. The new rules will help streamline the procedures and protocols for smart meter reading and improve consumer access to smart meter data while enabling energy efficiency.
Recently, in September 2023, GMR Smart Electricity Distribution Private Limited (GSEDPL) received a letter of award (LoA) from Dakshinanchal Vidyut Vitran Nigam Limited to implement a smart metering project in the Dakshinanchal (Agra and Aligarh zone) area of Uttar Pradesh. GSEDPL will install, integrate and maintain 2.55 million smart meters. The implementation tenure is expected to be 27 months from the date of execution of the contract, with an operating period of 93 months. The total contract value (inclusive of goods and services tax) for the Agra and Aligarh zones is about Rs 24.7 billion.
In July 2023, Tata Power received an LoA to implement a smart metering project for Chhattisgarh State Power Distribution Company Limited. The project will be implemented in the Raipur area (Raipur city and Raipur rural areas) of Chhattisgarh. Tata Power’s responsibilities include the installation and maintenance of 1.86 million meters. The value of the project is around Rs 17.44 billion and will span a period of 10 years. During the same month, GMR Smart Electricity Distribution Private Limited, a subsidiary of GMR Power and Urban Infra Limited, was awarded an order worth Rs 75.93 billion to implement a large-scale smart metering project under the RDSS.
To improve the financial performance of discoms and enhance consumer satisfaction, there has been a strong policy focus on the distribution segment. With the introduction of innovative technologies and strategies, the sector is gradually overcoming its challenges including high AT&C losses, and poor billing and collection efficiency. In order to streamline accounting, billing and subsidy payments, the government has recently amended the electricity rules, mandating discoms to submit quarterly reports on the subsidy demand raised across various subsidised categories. The ministry has also mandated the introduction of ToD tariffs for all consumer categories by 2025. Going forward, smart meters are increasingly empowering consumers with greater control over their energy consumption and energy bills, while enhancing the billing and collection efficiency of discoms.