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Saturday, July 24, 2004

The past few days gave us good, strong showers of rain that were long overdue.  But heavy rains also brought with them longer power cuts to many homes.   But, to have power interruptions we do not need heavy rains - the current supply could be knocked out even by the weakest of winds and the lightest among drizzles.  While such power cuts certainly are an inconvenience and a nuisance to us consumers, they also reflect a far more serious problem.  They indicate inefficiencies in our electrical network that directly result in huge losses to the public money.

Once electricity is purchased from the generating companies, it travels through a transmission and distribution network (made up of transmission lines, step-up and step-down transformers, and distribution lines) before reaching our homes.  The performance efficiency of such an electrical network is lowered by the presence of old or outdated equipment, lack of adequate operational maintenance to the hardware, etc.  It is estimated that these network inefficiencies lead to wastage of nearly a quarter of the total electrical energy purchased in our state.  At the power purchase rate of Rs. 1.76 for the year 2004-05,  it  means  an  annual   loss   of  over Rs. 2000 crore rupees.  This is a significant burden on both the government and the consumers.

The transmission and distribution losses cannot be eliminated completely but they could be brought down considerably.  Especially on the distribution side of the network.  There are two key factors that help contribute to improved performance of the networks: financial investments and decentralization of operation and maintenance (O&M) issues. 

Financial investments are needed to install new and more efficient equipment, repair old ones and for other ‘hardware upgrades’ in the network.   These physical improvements are long over due and urgently needed.  For example, the conducting wires we see strung on electric poles outside our homes have a life of around 35 years.  But in many places, they have not been replaced since the formation of our state!  Similarly, investments are needed for other improvements to the network:  new and more efficient transformers for better voltage regulation, installation of intermediate electric poles so that the conducting wires do not fail even in heavy storms, replacement of faulty ceramic insulators (these are the white hubs we see on top of the electrical poles in the street), etc.

To give an illustration, let us consider the network covered by an 11 kV feeder.   Roughly speaking, it requires around Rs. 60-70 lakhs towards material upgrades in the network.  While this certainly is not a small figure, this investment into hardware/technical improvements lead to increased efficiency of the network i.e. wastage of electrical energy is reduced.  The power utilities (i.e. the transmission or the distribution companies), save money because the difference between energy procured and energy supplied/distributed will be reduced.  In this way, the investment over an 11kV feeder area can be paid back over a period of time.  After that, the utilities could even pass on the benefits to the consumers by providing them with stable or (possibly) even reduced electricity rates.  The consumer also enjoys a more immediate benefit in the form of improved service delivery i.e. reduced voltage fluctuations, fewer power interruptions, etc.  In other words, lesser chance of you missing the most exciting moments of the cricket match or even your favourite TV program.

Decentralization of operations and maintenance issues, especially at the lower levels of the distribution network, is necessary in a system like ours with a large number of small consumers.  Such a regime would create additional opportunities for the utilities to respond to their consumers’ interests and requirements.  This system should also provide for an appropriate level of participation of consumers in the management of the networks.   Empirical studies in our state have shown that increased consumer participation in the management of distribution networks, especially at the substation and feeder level, has resulted in better service delivery and improved satisfaction.  The good news is that decentralization, when properly carried out, has the potential to significantly improve the network performance but requires mostly non-monetary administrative inputs. Or else, we will continue to be at the mercy of rain and wind gods!

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