Utility Customer Monitoring & Analytics

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Webinar: Market & Customer Intelligence on Gwalior for Distribution Franchisee Bidders

Webinar: Market & Customer Intelligence on Gwalior for Distribution Franchisee Bidders

View more presentations from pManifold

Webinar Brief Introduction

The revised MP Distribution Franchisee (DF) RFPs for Gwalior, Ujjain and Sagar has brought down on average coverage area by 100%, number of consumers and electricity sales by 60% and number of DTCs by 77%, with move from district level to city level. There is now mandated capex of Rs. 170 cr for Gwalior, Rs. 70 cr. for Ujjain and Rs. 30 cr. for Sagar and target ATC reductions to 15% in 2 years.

With 30+ companies in the race, already 3 RFP revisions with wider stakeholder engagement, and removal of stringent cash accrual qualification criterion, the bids will likely be more competitive and also volatile. It has become more important now to integrate various perspectives and data sets of information to validate assumptions and prepare informed bidding numbers.

Content Summary
The webinar cum workshop will focus on 3 important ‘perspectives’ that plays important role in overall investment analysis of DF business. pManifold ground study results with GIS visualizations from Gwalior city will be shared.

1. RFP analysis: How have been the load growth trends across different categories of consumers?
2. Socio Economic analysis: Which socio-economic indicators trend could give insight into future load growth of the region?
3. Utility performance analysis: What key issues related to Power reliability, Metering/Billing/Payment, Customer services, and other service attributes faced by end-customers? Could this be a Lead indicator for required Capex and Opex in the region?

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. 

Ongoing survey results preview on MP Distribution Franchisee bidding

A lot anxiety is getting build amongst the bidders and general observers of Madhya Pradhesh Distribution Franchisee bidding. With expected fourth revision in the RFP, there is a silence from MP Govt. side on the topic and next steps including tentative dates. Industry internal resources have pointed that the issue is on hold for cabinet approval. While on one side there is eagerness in existing MP Govt. to see all 9 districts see bidding before next election in 2013. However on other side, there is a fear to enter newly into this very emerging DF business model, when not much of performance (both pros and cons) clearly established from existing operating DFs. Their main concern being "How to protect utility's interest in this long tenure contract with private DF operators?". See our earlier blog Pre-Bid conference take-away from Madhya Pradesh Distribution Franchisee bids.

Keeping this in view, pManifold team floated an online survey of top management of prospective bidder companies (some 30+) for ongoing 3 regions (Gwalior, Ujjain and Sagar) DF bidding. This is an independent survey conducted to increase the understanding of Bidder's issues for MP Distribution Franchisee Bidding and taking it rightly with the policy makers. The responses so far collected are from established companies in the power sector and who have taken this pre-bidding phase very diligently. While not all prospective bidders have responded so far, the results are looking interesting and it is requested that those remaining also take upon this survey soon to let your voice resonate and influence design of RFP revisions. (see survey link. Please note that no personal identification is requested)

Some key questions that this survey intends to find opinion of bidders keeping in mind the ongoing MP bids revisions:

1. Qualification criterion improvements
2. Top viability concerns
3. Anomalies in existing RFP and suggestive key changes
4. Improvement suggestions to baseline data
5. Overall satisfaction with MP bidding and stakeholder engagement process

The so far collected response has following highlights:

• 50% entering first time into the DF bidding
• 67% of participants qualifies both technically and financially
• Only 33% are sure for bidding, while rest are still deciding
• Most interested in Gwalior, followed by Ujjain and then Sagar
• Almost all satisfied with financial qualification criterion
• 33% dissatisfied with Technical qualification criterion
• 33% dissatisfied with the overall bidding process

Some key concerns raised by survey participants:

• Most finds high mandated capex, strict reduction target and unreliable baseline as serious viability concern. Most understand importance of improved customer services and has seeked more clarity on customer satisfaction performance and evaluation.
• Major pre-bid support request from bidders is to have certified joint audit of baseline (specially ABR) and guaranteed power supply and non-performing clauses for utility made clear. 
• Many of them find R-APDRP linkage with DF performance and evaluation not fit, given R-APDRP assets have not been kept well
• There are requests to further improve transparency in the bidding process and keep all participating pre-bidders well informed on steps, delays, and broad reasons etc. in bid process handling. 

We hope that these results further aid planning and improved design of DF process, possibly the coming RFP revision for MP bids. With this broad objective to support scale-up of DF model, we request DF bidders community to participate actively in this survey and share their non-confidential learnings. (Please click here to take online survey)

Post by Rahul Bagdia @ pManifold

pManifold's services in Distribution Franchisee space: 

• Customer Side information & Analytics: as we believes that customers opinions, preferences and satisfaction play an important role in establishing good governance of the emerging model, provides actionable insights to bidders and DF operators to plan their customer-end and new capex roll outs etc.
• Industry Reports & Knowledge Platforms for all DF associated stakeholders (see our blogs, Linkedin group and organized conference)

Cheat sheet for Distribution Franchisee

This is a consolidation of our previous blogs, focussed more to help the current bidders for Madhya Pradesh DF bids.

Bidders Perspective

·         Baseline:  Key comparison of revised RFPs for MP Distribution Franchisee

·         Selection: Distribution Franchisee Attractiveness - Comparison for Madhya Pradesh's 9 districts

·         Customer mix: Customer segmentation and analytics of revised MP Distribution Franchisee bids

·         Input price: Bid analytics for MP Distribution Franchisee

·         Viability: Urban & Rural customer segmentation in revised Distribution Franchisee bids at MP

Utility and Regulators perspective

·         Baseline accuracy & trust: Third Pre-bid Conference take-away from Madhya Pradesh Distribution Franchisee Bids

·         Customer Satisfaction is key: Pre-Bid conference take-away from Madhya Pradesh Distribution Franchisee bids

·         Utility gains?:  Real gains for Utility and End-Consumers from Distribution Franchisee business

·         Large theft: Local Insights on Gwalior City - Field interview with utility ground staff

·         Capacity Building: R-APDRP: Missing understanding on usability of technology by utility people

Local business intelligence on utilities performance - take informed bidding on MP Distribution Franchised towns

The revised MP Distribution Franchisee RFPs has brought down on average coverage area by 100%, number of consumers and electricity sales by 60% and number of DTCs by 77%. Also with mandated capex of Rs. 170 cr for Gwalior, Rs. 70 cr. for Ujjain and Rs. 30 cr. for Sagar and target ATC reductions to 15% in 2 years, the bids will become more competitive and likely also volatile. It has become more important now to integrate various perspectives and data sets of information to validate assumptions and prepare informed bidding numbers. 

pManifold is an Information and Advisory company and is working broadly with relevant stakeholders to help scale-up of the emerging Distribution Franchisee model in India. In this role, we conducted a first type of study to measure Customer Opinions, Preferences and Satisfaction for Electric Utilities of Ujjain, Sagar and Gwalior, which brings a fair customer perspective that could be integrated with technical perspective to arrive at tighter estimates of Capex and Opex. We have compiled a Consolidated report on the 3 towns (priced at Rs. 25K), which could provide winning edge in the MP bids. 

Also available are comprehensive regional packages (priced at Rs. 25K) each consisting of 4 separate reports with GIS visualization and together they could help find answers to the following viability questions:

1. Customer Satisfaction – Top Results (30+ slides) includes top level findings with attribute and factor level comparisons and recommendations
   
• What are the key customer segmentation trends in terms of geographical localization, avg. monthly consumption, economic loss due to power outages, types of meters, backup equipments, education/profession, access to internet, electricity bill payment preferences, opinion on DF privatization etc? (across 4 consumer categories of Residential, Industrial, Commercial & Agri)
• What are the key issues on Power reliability, Metering/Billing, Customer services, utility communications, utility IT and records handling, Tariff and utility Management as perceived by customers across 28+ attributes? (across for 4 consumer categories and also overall)
• What areas required capital expenditures to improve overall utility's performance? How to prioritize capital expenditure for highest return on customer satisfaction, which is found to be correlated with ROI?
  

Customer segmentation and analytics of revised MP Distribution Franchisee bids

Our earlier blog Urban & Rural customer segmentation in revised Distribution Franchisee bids at MP compares the category wise distribution of number of consumers across the 3 locations of Gwalior, Sagar & Ujjain. This blog summarizes the comparison of other key parameters - Electricity Sales, Revenue Billed and Collection Efficiencies between new & old RFP regions.

Electricity Sales (in LUs)

Key observations from the above table are:

• Electricity Sales has decreased most in Sagar (>77%), followed by Ujjain (>72%) and Gwalior (>30%).
• Electricity Sales to 'Irrigation' customers has decreased more than 90% across all the 3 locations indicating that the majority of Agri customers falls outside city limits.
• Across 'Industrial' customers for all 3 locations, Sagar city has highest drop in Electricity Sales which is more than 70%.

Third Pre-bid Conference take-away from Madhya Pradesh Distribution Franchisee Bids

The third pre-bid conference organized by GoMP on 15^th October saw participation of 20+ prospective bidders, almost the same list of companies that participated in second pre-bid event with minor new additions. This includes NDPL, Torrent Power Limited, Tata Power, Reliance Infra, GTL Limited, SPANCO, CESC Ltd, Enzen Global Solutions Pvt. Ltd, Essar Power, GMR Energy, Dainik Bhaskar, Adani Power Ltd, Lanco Infratech Limited, A2Z Powertech, Dalmia Bharat Enterprise, Ramky, BLA Power Pvt. Ltd,  Shyam Indus Power Solutions Pvt Ltd, Era Infrastructure Engg Ltd., Agrawal Power Pvt. Ltd, Eltel Engineers Pvt. Ltd, Lanka Electricity Pvt. Ltd. (LECO), Moser Baer and few others. The list includes many first time entrants in the distribution sector with one international participation from LECO group. (See our earlier blog on second pre-bid conference takeaways)

GoMP has revised the Distribution Franchisee boundaries to city/town level from earlier entire district level and has also removed any minimum benchmark input prices. This potentially makes the bidding more favorable to bidders, but at the same time more competitive. See our earlier shared bid analytics and comparison results of old and new RFPs:

• Key comparison of revised RFPs for MP Distribution Franchisee
• Bid analytics for MP Distribution Franchisee
• Urban & Rural customer segmentation in revised Distribution Franchisee bids at MP

One strong message passed by Energy Secretary Mr. Mohd. Suleman was that there will be no further revisions in RFPs and no further delays in bidding dates. He guaranteed 90+% accuracy of baseline data shared in RFPs and reiterated the need for trust between utility and DF operator to further correct/refine any mutually identified issues. One strong non-negotiable point put forth by utility was high customer satisfaction to be guaranteed by DF with 24 hours power supply and improved customer services.

Urban & Rural customer segmentation in revised Distribution Franchisee bids at MP

Our previous blog Key comparison of revised RFPs for MP Distribution Franchisee compare new and old RFPs for Sagar, Gwalior and Ujjain regions across key DF decision parameters. Here we want to study and compare the customer segmentation closely to better understand the dynamics that played key role for design of new RFPs and separation of urban and rural.

Consumer Segmentation in new and old DF RFPs at MP (Source: pManifold)

Some key observations made from above table are:

1. Sagar and Ujjain towns had 70%+ less number of consumers as compared to respective districts. The new town level geographic area is on average only 2% of the area of the entire district.
2. Sagar town has significant drop (greater than 70%) in terms of most valued electricity consumers namely HT, Industrial, Domestic and Others
3. 99% of irrigation customers falls outside the new revised RFP's town boundaries. This indicate a significant presence of agri customers outside city/town limit. 

Key comparison of revised RFPs for MP Distribution Franchisee

Madhya Pradesh has revised its Distribution Franchisee (DF) RFPs for the 3rd time, inviting a third pre-bid conference on 15th October at Bhopal. (See earlier blog post Pre-Bid conference take-away from Madhya Pradesh Distribution Franchisee bids). Some major revisions in new RFPs are as follows:

1. The Distribution Franchisee scope has been revised to city/town level from earlier entire district level. Currently only one most favorable town has been picked in each of three MP zones - Sagar, Gwalior and Ujjain. The other six regions will be followed upon post finalizing DF appointment in first three.
2. In revised RFPs, there are no benchmarking minimum input rates given. The bidders are now free to select their input rates under following constraints:
• The input rates for 15 years should have only increasing trend
• Ratio of specified min. to max. input rates should be atleast 0.7
3. Customer services are given more weightage with mandated capex investment in meeting specified benchmark KPIs - SAIFI, SAIDI, min. customer services centers, consumer indexing and as laid under SOP by state Electricity Regulatory Commission.
4. In addition to detailing DF's Events of defaults, the revised RFPs detailed Distribution Licensee event of default of not being able to supply committed input units.

In our earlier blog Distribution Franchisee Attractiveness - Comparison for Madhya Pradesh's 9 districts, we ranked key DF decision parameters for 9 districts to help bidders with their selection criterion. The chart below lay down similar comparison for the 3 towns as released under revised RFPs. We have also indicated the percentage deviation of these key parameters from the earlier RFPs at district level.

DF attractiveness Matrix (Source: pManifold)

Some key changes that comes out clearly with the new revised RFPs are as follows:

1. Avg. 98% reduction in geographical area
2. Avg. 61% reduction in overall population, number of electricity consumers and also Electricity sales (lac kWh units)
3. Avg. 51% reduction in connected load
4. Avg. 1549% increase in electricity consumer density (clearly reveals urban/rural conflict)
5. Avg 18% and 22% increase in LT and HT consumption respectively (kWh/consumer/month)
6. Avg. 5% improvement in collection efficiency
7. Avg. 77% and 63% reduction in number of DTCs and transformer failure rate respectively
8. Distribution losses on avg. increases by only 2% while ATC losses on avg. reduce by 1%. If the numbers shared in RFPs are correct, this implies that rural areas contribution to the overall distribution and ATC losses is similar to that of urban areas. 

It is clear that the preferred order for established bidders from DF attractiveness will be Gwalior, followed by Ujjain and then Sagar. However for new entrants, Sagar could be a good choice to innovate a low capex and hence lower risk DF model.

pManifold takes pride in able to influence the revised RFP design and bringing more customer focus in on-going reforms attempted in power utilities. This success is also shared with MP Govt., their transaction advisors and also some bidders. With our continued work in the same, we hope to drive the importance and connection of customer monitoring with business financial performance in private and public utilities and help them develop an increased ROI based power Distribution model.

Independent all 3 towns customer intelligence reports 'EUCOPS - Electric Utility Customer Opinion, Preferences and Satisfaction' are available for purchase with pManifold. Sample report could be viewed online. We hope that the bidder community make use of this local customer intelligence to guide it's technical due-diligence better. (See detailed steps)

For more details contact Rahul Bagdia @ 95610-94490.

Post by Rahul Bagdia @ pManifold