Strategic Communications - A tool towards better customer engagement and loss reduction

The high risks in the complex, unpredictable and highly political process of water sector reforms are unavoidable given the "essential goods" perception of water. However, what the utility operators need to understand is that investing time and money in "strategic communications" early in the engagement of water reforms and that it leads to a much smoother operations and success of the project. A World Bank report (2006) suggests that an understanding of public perceptions leads to better adoption of strategic communications help in improving the efficiency of the public utility.

The key challenges arising due to lack of strategic communications can be listed as:

1. Social conflict due to lack of information or misinformation or a communications vacuum that creates uncertainty
2. Power struggles leading to project delays 
3. Consumer Opposition due to (justified or unjustified) fears about tariff, service levels and affordability
4. Customer dissatisfaction when hyped expectations are not met, or are not right sized at appropriate time

The idea behind this post is to try and identify areas where communication tools can support reform 

process and mitigate risks. 

The three principles which can be applied to use communications as a strategic tool towards better utility management are discussed here:

1. Principle #1: Know-Your-Customer: Instead of making assumptions about what the customers want or how they would react, it is advisable to undertake a Communication-Based-Assessment (CBA) to gauge the support for utility reforms within the stakeholders. (See pManifold's unique COPS Case Study). The CBA uses a mixture of conventional and unconventional data collection methodologies (including socio-economic parameters, Willingness-To-Pay, opinion polls, etc.) and establish baselines for stakeholders' perceptions, interests and priorities.
2. Principle #2: Creating Awareness about the Need for Utility Reform: Once the CBA has captured the perspectives of customers and stakeholders, the Utility Management may determine what about the reforms need to be communicated, through which messenger to communicate the same and how to garner political support with other political groups and agencies. The Utility Operator should:
• create awareness regarding the "state of the utility" in terms of challenges and opportunities for reforms and what it means to the customers
• communicate the effects/challenges that lie ahead, if reforms are not implemented. At the same time, if not communicated correctly, the Utility might risk being looked upon as non-transparent
• make the stakeholders understand their rights and responsibilities in the reforms process
3. Principle #3: Building Support and System for Change: Once the reforms are enacted, the communications does not stop there. The Utility should continuously use communications as a tool to build a culture of transparency and openness

The Utility, to leverage the strength of strategic communications as a tool, should make use of the following best practices:

1. The communications strategy should integrally be linked with the organizational strategy & goals and be in line with the utility operations
2. The Operator should take sufficient effort to make the information available and accessible to all the stakeholders. Establishing web portal and maintaining it constantly is critical to promote transparency.
3. Correctly identify the most trusted messengers or champions through early use of CBA
4. The Utility Operator should right size the expectations of customers as well as other stakeholders in order to mitigate the non-financial risks. Only when the beneficiaries believe that the project has met the set expectations, the Utility Operator can claim that the project has realized its full value
5. More often that not, in our typical environment, project delays occur. And when they do occur, the Utility Operator should be taking care to communicate the reasons behind the delay. This creates an environment of openness and credibility.
6. Whatever positive results are achieved by the Operator, the results should be communicated to the customers and other beneficiaries
7. Empowering the media is one of the best methods to spread word about the good work the Utility is carrying out. The media also serves as a tool to educate the consumers.
8. Collaborate with local governmental and non-governmental agencies to drive the Information-Communications-Education (ICE) campaigns to build a positive image for itself
9. Utility should invest in creating and maintaining an in-house professional communications capacity to avoid the inefficiencies in the governmental / state agencies' communications program

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*Source: Communication for Water Sector Reform: Obstacles and Opportunities, (2012), The World Bank

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Ease of doing Distribution Franchisee business - Muzaffarpur Local Intelligence

Muzaffarpur located at  26°07′N 85°24′E. The district occupies an area of 3173 km. Muzaffarpur lies between the Burhi Gandak River and Furdoo nallah. Muzaffarpur is one of the many gateways to Nepal.

Region	Muzaffarpur
Municipal Corporation	Muzaffarpur Municipal Corporation
No. of Household	650,882(2001)
Male population	2,517,500
Female population	2,261,110
Total population	4,778,610
Density(peoples/sq.km)	1,506
Slum population	77456 (2011)

Ease of doing Distribution Franchisee business - Gaya Local Intelligence

Gaya is located at 24.78°N 85.0°E. Gaya is the second largest city of Bihar. Gaya is 100 kilometers south of Patna, the capital city of Bihar. Situated on the banks of Phalgu. It is surrounded by small rocky hills by three sides and the river flowing on the fourth (eastern) side.

Region	Gaya
Municipal Corporation	Gaya Municipal Corporation
No. of Household	510,968(2001)
Male population	2,266,865
Female population	2,112,518
Total population	4,379,383
Density(peoples/sq.km)	880
Slum population	26620(2011)

Ease of doing Distribution Franchisee business - PESU Local Intelligence

Apart from technical & financial parameters it is important for the bidders to evaluate the local intelligence for its operation & ease of setting up a business. pManifold has developed a process to research on the local intelligence through its network & secondary research to provide bidders with glimpse of the region on Demographics - Social & Economical, Political stability & activities & enable them making right decisions. Below is the quick snapshot from the local intelligence report from pManifold on Ease of Operationalizing Distribution Franchisee.

Patna is the capital city of Bihar state. It is located on the south bank of the Ganges River. The city is approximately 35 km long and 16 km to 18 km wide. The table below shows the quick facts about the region

	Patna
Municipal Corporation	Patna Municipal Corporation (PMC)
No. of Household	726,364 (Census 2001)
Male population	3,051,117
Female population	2,721,687
Total population	5,772,804
Density(peoples/sq.km)	1,803
Slum households	15163
Slum population	63.5% (Census 2001)
Literacy Rate	72.47%

Review: Spanco, GTL distribution franchisees complete one year in operation

It was the summer of 2011 when both GTL (April 2011) and Spanco (May 2011) took up the distribution franchisee operations in Aurangabad and Nagpur respectively. Now in the summer of 2012, they have completed 1 year in operations.

Spanco's first year of operations in Nagpur can be termed as good as they have been able to acquire good leadership talent, arrange private equity investment (Rs. 80 Cr. from Bessemer), perform roll-out of network up-gradations (which were a little bit forced due to the storm of May 17, 2011) and establish better ways of understanding and communicating with customers and local stakeholders (including a new website, 24x7 call center, online payment facility, DF and non DF area wide independent customer surveys (twice), monsoon campaigns, door-step new connection campaign and more e.g. instituting a whitepaper promoting their newly adopted city of Nagpur as an IT/BPO destination). Although teething troubles are galore and would take a while to reach smooth operations, things seem under control on major fronts including PR, Opinion leaders and customer. The major concern still is the non-payment of over Rs. 200 Cr. to the licensee which is scheduled for hearing by MERC i.e. May 3, 2012. Spanco has customer base of approx. 4 lacs and is divided into operations into 3 Divisions, 6 Zones, 46+ payment centers and 6 customer facilitation centers. 

This is how Spanco, preferred to communicate its one year of operations at Nagpur - through advertisement in a local daily.

GTL @ Aurangabad, has similar ups and downs. The company has customer base of approx 2.5 lacs and operationally divided into 2 Divisions, 8 zones, 33+ payment centers and 2 Customer Facilitation Centers. The company has taken several initiatives - network upgradation, Electronic meter replacement with current approx. 85% connections (from last 65%), has website, launched a 24x7 call center, established online payment facility and monitored customer feedback ad-hocly. GTL also had been unable to make complete payment to MSEDCL and has due amount around Rs. 200 crore. Their parent company's struggle with downturn in the Telecom Tower business, and ongoing corporate debt restructuring could potentially shadow its DF operations.

• Both the companies have undertaken process improvement across all key business areas and are using external consultants for detailed BPR. 
• Both continue to use MSEDCL billing legacy system, inspite of some of its constraints, that impact their bill scheduling and arrears. 
• Both still continue to struggle on improving their arrears, as it continue remaining almost the same with slight different dynamics from their take over. 
• However, in terms of their core success driver i.e. AT&C loss reduction, the two companies are lower than their estimated first year projections.

As any emerging business model, there is continuing learning for Power Distribution Franchisee players. One major challenge that still remains unresolved is about funding (both debt and equity) of the Distribution Franchisees. There are rising PE players who are getting interested in this segment, but banks still needs to be convinced on the DF model's viability. There is need to educate investors on DF model and its distinction from DISCOMs, that are struggling with debt trap. Hopefully this year will see more clarity on Distribution Franchisee model with emerging new RFPs.

At pManifold, we look forward to raise an association of all operating DFs, to be able to share best practices and also rightly advocate real issues with stakeholders to support scale-up of DF model and reforms. One of best practices for DF to follow in 'Customer Engagement' is already live, with pManifold aspiring to create an unique customer rating for Utilities pan India.

Post by: Faiz and Rahul @ pManifold

Impact assessment for Open Access to 1MW+ customers

DIRECTIVE:

The Ministry of Power Govt. of India issued a directives for implementation in the all States of India, after seeking consultation with Ministry of Law and Justice and said that,

“Section 42(ii) read with the first and fifth proviso is a self-contained code with regard to consumers who required the supply of electricity of 1 MW and above and accordingly the State Electricity Regulatory Commissions cannot continue to regulate the tariff for supply of electricity to any consumer of 1 MW and above”.

“The provisions of section 42 need to be analyzed in relation to the duties of the distribution licensees and open access.  While sub-section (2) requires the State Commission to introduce open access within one year of the appointed date the fifth proviso makes it mandatory for the State Commission to provide open access to all consumers who require supply of electricity where the maximum power to be made available at any time exceeds 1 MW.  The fifth proviso was introduced by Act 57 of 2003 with effect from 27th January 2004”.

“The first issue is if open access is made obligatory whether the distribution licensees will continue to have the responsibility of universal service obligations with regard to consumers whose requirements are in excess of 1 MW.  An analysis of the various provisions (particularly section 49 of the Act) shows that if certain consumers want to have the benefit of the option to buy power from competing sources, then it is logical that DISCOMS do not have an obligation to compulsorily supply power to such consumers.  If such consumers want power from the DISCOM then  the terms and conditions of the supply would be determined in terms of section 49 of DISCOM also”.

“There is no conflict between the aforesaid conclusion and the provisions of section 42(3) of the Act which provides that a person requiring supply of electricity has to give notice in respect thereof.  If the consumer intends to use the network of the DISCOMS, he has to give notice and upon such notice to DISCOM (it) is duty bound to provide non-discriminatory open access to its network.  Section 42(3) cannot be construed to mean that giving of a notice is a pre-condition for the implementation of open access”.

The directives issued by MoP shall have great impact on power sector particularly Electricity consumers, generators, traders and power market.  There are positive as well as negative sides which are to be looked into minutely.  The Commission will have a great responsibility to implement the suggestions of MoP by making suitable Regulation as well as to protect consumers against some negative points which are elaborated below.

POSITIVE POINTS:

1. Consumers of 1 MW and above are deemed OA consumers and shall have choice of purchase of power from cheaper sources including Discom. 
2. The tariff of such consumers shall not be regulated by Commission and the heavy burden of cross subsidies shall not be loaded to such consumers.