Saturday, April 2, 2011

What's there in Distribution Power Franchisee?

With ongoing operationalization of Distribution Franchisee (DF), one common question that keeps hitting again and again is 'Why need of DF? What it can do, which utility cannot or have not?'. While answer to this is pretty subjective, I would share my opinion in 3 breakups:
  1. What are key issues with Distribution Utilities?
  2. How that has constrained key stakeholders potentials?
  3. Does Distribution Franchisee has solutions to above?

Key issues that are affecting profitability of distribution utility:
  • Link from Measurements (MIS) to Effective Distribution Management missing
  • Lack of Incentivization
  • PSU Organizational Constraints
  • No Investment in skill enhancement
  • Low Enforcement
  • Govt. hindrance & manipulation
  • Low Accountancy
Key stakeholders revenue potential constrained with missing last-mile robustness:
  • End consumers not getting reliable, sufficient and rightly priced power
  • Generators unable to get guaranteed evacuation of all generated power
  • Distributors (Utilities) themselves in losses
  • Power Traders do not have predictability
Does DF has a solution to above:

At the end of day, it will do same thing as utility, but with a difference - more concentrated ownership that will expedite decisions to actions. Another way to look upon it will be as an extended 'Business Outsourcing' model, wherein the Franchisee becomes the new front end to the end-consumers, but assets still remains on book of the original Utility. The real underlying phenomenon driven by franchisee model is:
  • Performance benchmarking through establishing baseline
  • Incentives alignment of all stakeholders
It is this 'Measurements and Analytics' that will drive the change and bring above suggested values to all stakeholders.

Post by: Rahul Bagdia @ pManifold

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