Sunday, April 3, 2011

Challenges with scaling Power Distribution Franchisee Model

Power Distribution Franchisee (DF) remains a new and big canvas in India's Power Distribution sector with few painters and there is not much history to build and learn from others. While 'learning' from 'doing' is way forward, but still there remains a gap in Distribution Franchisee Thought Leadership to establish and quantify DF's potential impact and lay strong 'model' driven design. So while different tuning of parameters could happen from one implementation to other, the base model should grow stronger with collaborative knowledge and best practices sharing.

Some critical design issues that needs addressing to scale Power DF model are discussed below. The issues are addressed in order of execution of DF model.
  1. Performance benchmarking of power utilities: This aspect is seriously missing in utilities inspite of enormous MIS and Energy Audit data available. At first place, the data completeness, it's authenticity and its time aggregation process to produce MIS report and KPIs is highly questionable. The derived operational KPIs like SAIFI, SAIDI, ATC etc. have hence lost their absolute meanings and its always chasing some incremental improvement without focusing on the end-consumers. Also, since the utility financial losses could be easily passed to end-consumers in next year ARR and increased tariff petition, there is not much good incentives for utility to perform. There is a need to develop a more integrated framework for performance benchmarking and regular monitoring.

  2. Rationale process for Distribution Franchisee bidding: The RFP for DF bidding has some minimal information on DF selected area. It miss upon several key information like assets health, load curves, trends etc. to work a good investment plan. This limited information leads to erroneous or irrational bidding. This in turn affects raising good competition amongst participating bidders and encourage more established players to participate in DF. There is need to develop good common pool of DF area audit and share results with all bidders. There should probably be no good reason that joint audit between utility and selected DF bidder cannot happen before inviting bidding to establish robust baseline.

  3. Good Change Management: The transition from utility to DF is a big one and needs diligent planning on both soft and technical side. On softer side, people's issues needs to be tackled with bringing positive support from all DF stakeholders. Among key stakeholders, the utility employees and end-consumers need to be engaged tightly as DF change agent. On technical side, a strong capacity building would be needed to generate good MIS and base expedited decision making.

  4. Good Performance Monitoring: DF being still an emerging model, there is need to draw continuous observations from focused pilots to scale them up. The integrated performance monitoring framework should tie operations, customer services, MBC (metering - billing - collection) etc. to financial business performance of the utility in easy and regular trackable KPIs.

  5. Good System Integration: DF is not an end to a mean, but a mean to an end. With improved distribution infrastructure and service levels - distributed generation, DSM (Demand side Management) and efficient power trading for improved price discovery could soon become reality. What will be needed is a good system integration.
Scaling Challenges with DF (Source: pManifold)

    Ultimate success for DF would be to bring more choices to end-consumers for them to select source of procurement of power and that will be the tipping point to scale DF.

    Post by: Rahul Bagdia @ pManifold

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