Tamil Nadu Power Sector Reform and Restructuring - A Case Study

Tamil Nadu Power Sector Reform and Restructuring - A Case Study J.Anitha Roseline Department of Electrical and Electronics Engineering SSN college of Engineering Chennai, India anithar@ssn.edu.in Dr.B.L.Mathur Department of Electrical and Electronics Engineering SSN college of Engineering Chennai, India blmathur@ssn.edu.in Abstract Electricity is backbone for almost all economic activities in present times and it is a proven fact that access of this precious perishable commodity to people bears direct impact on pace of development of the country. The country s development is measured in terms of per capita consumption of electricity which in turn depends on electricity generated. India has the fifth largest installed power capacity in the world (the first four are US, Japan, China and Russia in that order), and is one of the top power consumers. India has an installed power capacity of approximately 150 MW for the year 2009, which is 4% of the global capacity. The per capita power consumption (per year) in India has increased to 720 KWh (or units) from 15.6 kwh as on 31.03.2003, which is less than 5% of the per capita consumption in USA, and less than 20% than that of China. The global per capita consumption of power is about 2,340 KWh (or Units). The peak power shortage of 9.9% has been plaguing Indian power sector as on January 2010. As a result regulators worldwide are now implementing new regulating schemes and organizational reforms in an effort to improve the efficient operation of the electric utilities. Reforms and restructuring are taking place in the electricity sector by introducing competition in the electricity supply industry, wherever, it is technologically feasible and India is not exception to these reforms. In this paper, a case study of Tamil Nadu has been carried out, which is bordered on the north by the states of Andhra Pradesh and Karnataka and on the west by the state of Kerala. Kanyakumari, the southernmost tip of this land is the meeting point of the Bay of Bengal, the Arabian Sea and the Indian Ocean. In India, Tamil Nadu state ranks third in Electricity generation, Transmission and Distribution. Tamil Nadu is the first state in the country to achieve 100 % electrification of all villages as early as 1992. With the enactment of Electricity Act 2003, there has been tremendous improvement in the areas of transmission and distribution, tariff rationalization and in availability of power supply. Keywords Tamilnadu Electricity Board (TNEB), Tamilnadu Electricity regulatory Commission (TNERC), Energy Audit, Management Information System (MIS), sub-station (SS), restructuring, tariff rationalization, technical, transmission and distribution losses. EXPANSION OF ABBREVATIONS TNEB - Tamilnadu Electricity Board TNERC - Tamilnadu Electricity regulatory Commission MIS - Management Information System SS - sub-station MW - Mega watt SEBs - State Electricity Boards KW - Kilo- watt SCADA - Supervisor Control and Data Acquisition System PLCC - Power line Carrier Communication TRANTRANSCO - Tamil Nadu Transmission Corporation Ltd TANGEDCO - Tamil Nadu Generation and Distribution Corporation Ltd ADLS - Automatic Data Logger System DSM - Deman Side Management SRLDC - Southern regional Load Dispatch Centre T&D - Transmission and Distribution AT & C - Aggregate Technical and commercial losses MU - Million Unit HT - High Tension LT - Low tension I. INTRODUCTION The Electricity supply which was traditionally viewed as a natural monopoly developed dissatisfaction with limited incentives for efficient operation of a cost-of-service regulated or government owned electric utility [1]. As a result, new regulatory schemes and organizational reforms are now being implemented worldwide in an effort to improve the efficient operation of electric utilities. All these reforms are consistent with the view that competition should be introduced into the electricity supply industry wherever it is technologically feasible [2]. Only those portions which are most efficient and are being supplied by a single firm should remain regulated [3]-[5]. Power generation and public distribution started in Calcutta in April 1899, after which the Electricity Act, 1903 was brought into force. Subsequently this Act was replaced by 978-1-4577-0365-2/11/$26.00 2011 IEEE 1205

the Indian Electricity Act, 1910, which Act is still in force today, with quite a number of amendments. After 1 st Electricity Act, Government enacted the Electricity (supply) Act, 1948, the Indian Electricity Rules, 1956, the Electricity Regulatory Commissions Act, 1998. Recently Indian Electricity Act, 2003 was enacted to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and largely for taking measures conducive to development of electricity industry, promoting competition, protecting interest of consumers and supply of electricity to all areas, rationalization of electricity tariff, ensuring transparent policies regarding subsidies, and promoting of efficiency[6]- [7]. II. CASE STUDY OF TAMIL NADU Tamil Nadu is one of the most industrialized states in India with a high Human Development index. Chennai (formerly known as Madras), the capital city of Tamil Nadu, is the gateway of South India with an international airport, sea ports and rail and road network connectivity. The investment scenario in the State is very buoyant due to the transparent and proactive approach of the Government. The State has emerged as the front-runner in attracting new investments in manufacturing sector. The Tamil Nadu Electricity Board (TNEB) is a statutory body formed on 01.07.1957 under the Electricity Supply Act, 1948 as a successor to the erstwhile Electricity Department of the Government of Madras. The Board is responsible for the development of infrastructure and service relating to the state s growing need for electrical energy. Starting with a modest installed capacity of 156 MW (Mega Watt) at the dawn of independence, the Board s own generating capacity has grown by leaps and bounds to 11,631 MW as on 31.03.2010. The Board has an even mix of the various generating capacities such as 3220 MW of coal based four thermal stations, 1026.30 MW from the five Gas Turbine Stations and 2186 MW from 38 Hydro Stations. In addition, there is an infirm power of 4865.51 MW from Wind Farms and R.E.S. Besides, the Board has a share of 2825 MW from Central Generating Stations, 4270 MW of privately owned wind farms and 1180 MW of Independent Power projects. The peak reached is 10446 MW on 23.02.10 and the maximum daily consumption was 216.38 MU on 29.06.09. In fulfilling its obligations over the last five decades, the Board has also been an effective tool for the Government in implementing its policies and fulfilling social obligations relating to agriculture and other weaker sections of the society that require positive support and special attention of the Government. This approach was however not unique to Tamil Nadu alone but has been adopted in some states, with reduced tariff to certain consumer segments. The TNEB occupies third rank in the list of top three SEBs in the country, along with Maharashtra and Gujarat, in terms of the size of its operation gauged by the generating capacity at its command, the amount of energy sold and the number of consumers serviced. Tamil Nadu ranks sixth in terms of per capital electricity consumption among States. The technical performance/ efficiencies of TNEB measured by the plant load factor, system load factors (83) the transmission and distribution losses have normally been above the All-India average and among the top five to six SEBs. TNEB has been in the forefront of rural electrification too. Extending electricity to rural areas and promoting electrification of agricultural pumps have also been accorded top most priority in the TNEB's agenda. Achievements of TNEB 1. First cascading hydro-electric scheme Kundah in the Nilgiris. This cascading hydroelectric scheme consists of 5 power houses. It was developed with Canadian aid and was put into operation stage by stage from 1957 to 1964. 2. First Barrage type Power House - Four Barrage type Power Houses each 2 x 15 MW were developed and commissioned during the year 1987-1989 across Cauvery River between Mettur and Bhavani. The Power Houses are located in the river bed itself. 3. Kadamparai Pumped Storage Hydro Electric station (4 x100 MW). The Kadamparai Pumped Storage Hydro Electric station (4 x100 MW) in Coimbatore District was commissioned in the year 1986 and is the first of its kind in the country to operate both in operation and pumping mode since 1987. In this Power House the off peak energy is utilized to pump water to the upper reservoir and during peak hours the Power House is put in generation mode. 4. First Gas Insulated Substation - In 1998 the first 230 KV Gas Insulated switchgear substations in the country was commissioned at Mylapore, Chennai. This was supplied and erected by M/s Merlin Gerin, France 5. Commissioning of 230 KV Transmission line - In 1960 TNEB commissioned 173 km long Kundah salem 230 KV transmission which was the first 230 KV network in the country. 6. SCADA project - SCADA (Supervisor Control and Data Acquisition System) of Chennai Distribution Control Centre is the first in the country and it remotely controls 95 distribution substations in Chennai City. 7. Pre-stressed Concrete poles - The technology of prestressed concrete was developed in the 1960s. TNEB was a pioneer in setting up a PSC pole yard at Samayanallur near Madurai in 1970. 8. Power line Carrier Communication (PLCC) in Grid Operation - TNEB is the pioneer in India in introducing PLCC system for its own communication requirements. PLCC system utilizes 66/110/230/400 1206

KV transmission lines as the medium for communication. PLCC provides for limited channels for speech communication, low speed data communication (200 bps) and protection tripping. In 1960 PLCC sets and protection couplers of Brown Boveri Corporation, Switzerland make were put into service in 66 stations. 9. Tamil Nadu is a pioneer in introducing cogeneration in sugar mills and continues to lead with installed capacity of 466 MW of which exportable surplus is 266 MW, which is about 250% of installed capacity in India. The installed capacity from biomass is 147.5 MW. (includes waste to energy projects) The overall demand shortage is of the order 2.71 % to 12.47 %. The energy shortages were of the order 3.59 % to 9.04 %.The registered system peak demands, unrestricted demand and registered minimum demand during the year 2009-10 is 10446 (23rd Feb 10) 11356 (Mar 10) 5236 (Nov 09). Figure.1 Installed Capacity in Tamil Nadu (MW) III. ESTABLISHMENTS MADE FOR POWER SECTOR REFORM IN TAMIL NADU The Government of Tamil Nadu is committed to reform its Power Sector with a vision to achieve commercial viability and provide reliable and quality power at competitive prices to all consumers in the state. To achieve these objectives the following provisions have been made: A. Restructuring: Government of Tamil Nadu have accorded in- principle approval for the re-organisation of TNEB by way of establishment of a holding company, by the name TNEB Ltd and two subsidiary companies, namely Tamil Nadu Transmission Corporation Ltd (TANTRANSCO) and Tamil Nadu Generation and Distribution Corporation Ltd (TANGEDCO) with the stipulation that the aforementioned companies shall be fully owned by Government. The Govt. has also constituted a Steering Committee to finalise the transfer scheme for the re-organisation of Board under section 131 of the Electricity Act 2003. The Ministry of Power s (MOP s) Restructured Accelerated Power Development and Reforms Programme (R-APDRP) is being implemented in TNEB. The focus of this programme is on establishment of baseline data and fixation of accountability, besides reduction of Aggregate Technical & Commercial (AT & C) losses and adoption of information technology. B. Power generation : The total installed generation capacity of Tamil Nadu as on 31.03.2010 is 15,800 Mega Watts as detailed below and in Fig.1 and Fig.2: a. Hydel, Coal, oil based and conventional sources:- TNEB s own generating stations: 5690 MW (Hydel, Thermal, Gas and wind) Private Sector Power Plants (IPP): 1,180 MW Share from Central Sector generating stations: 2,825 MW External assistance: 305 MW Others (Captive Power Plants): 214 MW (Supply to TNEB) TOTAL: 10214 MW b. Renewable or Non-conventional energy sources:- Wind Mills (Private) (in-firm power):4889.765 MW Co-Generation: 559.5 MW; and Bio-mass: 137.05 MW Total (Renewable sources): 5586.315 MW Grand Total 15800.315 MW. There is an increase of 700 MW over last year. Besides the above 851 MW capacity of captive power plants are also available for their own use and sale. The maximum peak demand so far reached during 2009-10 is 10,180MW (on 19.03.2010). Highest daily consumption of 223.858 Million Units was recorded on 11.03.2010. Total energy consumption during 2009-10 as on 31.03.2010 has been 72987 Million Units. Figure.2 Installed Capacity sector wise c. Manpower Rationalization: The number of employees per million units of scale for the year 2007-08, 2008-09 and 2009-10 work out to 1.38, 1.40 and 1.35 which is lower than the norms, indicated by TNERC. d. Renewable Energy: Tamil Nadu has achieved tremendous success in harnessing renewable energy for generation of grid quality power. It has an installed capacity of 4790 MW from renewable sources as on 31.3.2009 against country's installed capacity of 14485 MW, which is about 33%. As a share of 1207

grid power, renewable energy with installed capacity of 4790 MW accounts for about 32% of TNEB's total grid capacity of about 15,100 MW while the national average is 9% only. Dividing the 2008-09, the total units generated in Tamil Nadu from Renewable energy sources are 7532 million units which is 11% of Tamil Nadu is grid consumption. Wind power: Tamil Nadu is No. 1state in India with an installed capacity of 4287 MW as on 30.3.2009, which is about 42% of the total installed capacity in India. The private investment in wind power exceeds Rs.18200 Crores. The power generation has exceeded 40 billion units (cumulative). South EDC. Linking of these ADLS with Centralised Monitoring Station at Coimbatore Circle has also been done and is under observation. Energy audit is being conducted internally and quarterly returns are being submitted to the TNERC. g. Metering of Energy: TNERC has accorded extension of time up to 1.10.2012 for installation of meters in hut services and agricultural service connections. TNEB has not yet furnished any roadmap for installation of meter in hut and agricultural services. h. Power Procurement: The TNERC has ordered TNEB to instruct all the Independent Power producers to swap/restructure the high cost rupee term loans to low cost rupee term loan and to hedge all the foreign currency to Indian currency loan. Figure.3 Growth of wind Power Solar: 25068 solar domestic lighting systems have been installed in Tamil Nadu with assistance from Government. 6095 Solar street lights have been installed in public places/streets mostly in village panchayats with Government assistance and active support and involvement of Rural Development Department. Solar water and air heating/drying systems have been installed for a collector area of 28791 sq. Biomass gasifiers with cumulative capacity of 5444 KW are in operation. 189 nos. of community and toilet linked biogas plants have been constructed in the State under subsidy scheme. e. Management information Systems: The slab wise consumption and revenue details are maintained and furnished for all categories such as domestics, place of worship, power loom and locally body consumers. 100% computerisations for all sections have been completed. f. Energy Audit: TNEB has an excellent record of billing and collection of CC charges from customers. It has around 98% level of collection efficiency which is the highest among the various power utilities in the country. The board has an effective meter replacement program wherein the defective meter replacement is carried out on a priority basis. Static meters have been installed at all the output points at each SS all 22/11 kv feeders (99.65%). Based on the energy accounting study is undertaken in different distribution circles at the rate of 2 Nos. HT feeders per SS, the No. of HT feeders having high line loss were identified as 1587. Improvement works have so far been carried out in 751 Nos. feeders. Monthly energy balance assessment is being carried out from 230 KV level to 11KV bus. A pilot scheme, Automatic Data Logger System (ADLS) has been commissioned in six substations of Coimbatore i. Demand Side Management (DSM): TNEB is taking various steps in implementing DSM measures and a separate division is constituted to look after the DSM aspects. The government of Tamil Nadu is implementing the scheme of replacing the existing pump sets with ISI energy efficient pumps sets in the agriculture sector by giving subsidy through the agricultural engineering department. Recently TNEB has approved the proposal for awarding the work of implementing lighting energy efficiency program under Bachat Lamp Yojana scheme in the domestic sector comprising 13 million domestic consumers in the state of Tamil Nadu. j. Transmission and Distribution losses: The transmission and distribution losses in Tamil Nadu have been estimated as 18% for the years shown in Fig.4. Figure.4 Transmission and Distribution losses TNEB is continuously carrying out the following improvement works to reduce the losses to the maximum extent possible. a. Reduction of HT: LT ratio by erecting more high tension lines and erecting new distribution transformers. b. Establishment of new sub-stations. c. Strengthening of HT line conductors d. Installations of HT shunt Capacitors at substation end. 1208

e. Erection of link lines. f. Re-routing of feeders k. Grid Discipline: Tamil Nadu falls in the Southern Region Load Dispatch Centre (SRLDC) with its headquarters at New Delhi. TNEB is maintaining grid discipline, complying with Indian Electricity Grid Code and carrying out the directions of the Regional Load Dispatch Centre. l. Computerized and online Billing: Tamil Nadu already has computerised billing for most of its consumers in the state. The collection through banks (on line), Any Time Payment (Kiosk) machine have been introduced in Chennai Metropolitan area. The collection through post offices is worked out and is likely to be materialised shortly. These efforts have improved the overall efficiency of the organization. IV. TRANSMISSION AND DISTRIBUTION LOSSES The transmission and distribution losses are the areas of major concern in any power utility in the country. Lot of energy generated and transmitted goes unmetered in the form of losses, pilferage and theft of energy. This area need to be addressed at the priority level. These losses cannot be reduced overnight. (a) Component of T and D Losses: Losses occur in the process of supplying electricity due to technical and commercial losses. The losses are due to: Overloading of existing lines and substation equipment Absence of up gradation of old lines and equipment Poor repair and Maintenance of equipment Non-installation of sufficient capacitors These technical losses are inherent in a system and can be reduced to an optimum level. The losses can be further sub divided depending upon the stage of power transformation & transmission system as transmission losses (400kV/220kV/132kV/66kV), as Sub transmission losses (33kV / l l kv) Distribution losses (l l kv/0.4kv). The commercial losses are caused due to: i. Low metering/billing/collection efficiency ii. Theft & Pilferage and tampering of meters iii. Low accountability of employees iv. Absence of Energy Accounting & Auditing (b) Barriers in private sector participation The lack of realistic estimates of T& D losses acts as a disincentive for private sector participation in power distribution as the party cannot have an idea of the realistic revenue potential of the area being privatized. (c) Aggregate Technical and commercial losses (AT&C): T&D loss is purely technical in nature and is assessed considering the energy fed in to the grid and the energy billed. The AT&C losses on the other hand is assessed considering the energy fed into the grid and the energy for which revenue realized which accounts for the collection efficiency TABLE I. AT and C Losses Data for AT & C Losses during 2008-2009 S.No ITEM UNIT 1 Self-Generation (ex-bus) MU 26731 2 Purchase MU 37983 3 Total input(ui)(1+2) MU 64714 4 Units traded with other utilities (UT) MU 566 5 Units traded with licensed area (3-4) (Utl) MU 64148 6 Units billed within utility licensed area MU 52499 7 Amount Billed within licensed Rs. utility area (Ab) Crores 15323 8 Amount realized within utility Rs. licensed area(ar) Crores 15294 9 Collection efficiency (CE=Ar/Ab x 100) % 99.81 10 Units realized (Ur) = (UbxCE)/100 MU 52399 11 AT&C losses Ui-Ur MU 12315 12 AT&C losses {(Utl - Ur/Utl)} x 100 % 18.31 TNERC has fixed the following year wise target of AT&C losses to be achieved by TNEB up to 2012 as shown in Fig.5. Figure.5 AT and C Losses in Tamil Nadu (d) Status of Transmission and Distribution Losses in Tamil Nadu: T & D losses in the State are at present among the lowest in the country, with latest TNERC Tariff Order assessing the losses at 18%. Most of the T & D losses are technical in nature. T & D losses are assessed as the difference between the energy input and the estimated sales. The various steps that are being undertaken by the Board like strengthening of lines, addition of distribution transformers, etc. an overall loss level of 18% has been considered for calculating the various components of the annual revenue requirement for the year. (e) Realization of outstanding dues: The current consumption charges arrears realised from the government for the local bodies and other government departments is shown: 1209

TABLE II. Outstanding Dues Year Rs. Crores 2004-2005 558.24 2005-2006 299.49 2006-2007 455.30 2007-2008 584.08 2008-2009 495.97 The accumulated arrears of local bodies as on 31.03.09 are Rs. 150.47 Crores. (f) Rating of power sector: ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional Investment Information and Credit Rating Agency. Tamil Nadu rank 5 th among all the states in INDIA as per the rating given by ICRA limited for the year 2005.A score of 50.94 has been assigned to the power sector in Tami Nadu. The distribution of marks against the parameters is shown: TABLE III. Scores assigned to the power Sector in Tamil Nadu S.No 1 Parameter State Government related parameters Maximum Score Score Assigned 17.00 6.21 2 SERC related parameters 15.00 8.75 4 Generation 6.00 4.00 5 Transmission and distribution 21.00 12.9 6 Financial risk analysis 20.00 11.63 7 others 5.00 3.25 8 Progress in attaining commercial viability 16.00 4.2 Total 100 50.94 V. CONCLUSION As a result of restructuring or enactment of Electricity Act 2003, the power scenario in Tamil Nadu in particular and all over India in general has improved significantly and hopefully will overcome the present grim power situation in future. The reduction in the losses occurs due to identification of the weakest areas in the distribution system and strengthening/improving them so as to draw the maximum benefits of the limited resources. Reactive power mismatch is the area which needs to be tackled on priority. The power quality and reliability of power supply in the state has also improved markedly. The computerization and implementation of information technology has resulted transparency in commercial business of power utility in state. REFERENCES [1]. A. Srivastava, M. Shahidehpour, "Restructuring choices for the Indian power sector", IEEE Power Engineering Review, Vol. 22, Issue 11, Nov. 2002, pp. 25-29. [2]. S. A. Khaparde, "Power sector reforms and restructuring in India", IEEE Power Engineering Society General Meeting, Vol. 2, 6-10 June 2004, pp. 2328-2335. [3]. R.J. Thomas, "Introduction: Electric power systems restructuring: Engineering, Economics and Policy Track", 40th Annual Hawaii International Conference on System Sciences, Jan. 2007, pp. 110-1 10 [4]. B. Cory, "Power system restructuring and deregulation: trading, performance and information technology", Power Engineering Journal, Vol. 16, Issue 1, Feb. 2002, pp. 22-22. [5]. J.T. Cain, "Power System Restructuring [Asian and Australian Power Policy]", IEEE Power Engineering Review, Vol. 16, Issue 2, Feb. 1996 pp. 9. [6]. Tripta Thakur, S.G. Deshmukh, S.C. Kaushik, Mukul Kulshrestha, "Impact assessment of the Electricity Act 2003 on the Indian power sector", Energy Policy 33, 1187-1198. [7]. Tripta Thakur, S.C. Kaushik, S.G. Deshmukh and S.C. Tripathi, "Indian Electricity Act 2003: Implications for the Generation, Transmission And Distribution Sectors", IEEE International Conference on Electric Utility Deregulation, Restructuring and Power Technologies (DRPT2004), April 2004 Hong Kong, pp. 54-59. [8]. O.P Rahi, Harish Kumar Thakur, and a.k. chandel, Power Sector reform in India: A Case Study, Power System Technology and IEEE Power India Conference, 2008. POWERCON 2008. Joint International Conference on 12-15 Oct. 2008, pages 1-4 [9]Tamil Nadu Energy Development agency. [www. teda.gov.in] [10] Tamil Nadu Regulatory Commission. [http://tnerc.tn.nic.in] [11]Tamil Nadu Electricity Board. [http://www.tneb.in] [12] Department of Evaluation & Applied Research. BIOGRAPHIES J.Anitha Roseline received her B.E. in Electrical and Electronics Engineering and M.E. Power Electronics and Drives from SSN College of Engineering in 2002 and 2006 respectively.currently she is pursuing Ph.D. degree in Anna University in the area of Restructured power system. She has been working in the teaching field for about 9 Years. She has published 4 papers in National conferences, 1 paper in referred International conferences in the area of power electronics & drives and restructured power systems. She is a life member in ISTE and member in IEEE. Dr.Badrilal Mathur is a Professor in SSN College of Engineering, Chennai. He obtained is M.Tech in Power Systems from IIT, Bombay in 1964.He completed his Ph.D. in 1979 from IISc, Bangalore. His Ph.D. thesis was adjudged as the best for application to industries in the year 1979 and awarded Sir Vitthal N. Chandavarkar Memorial Gold Medal. He has published 30 papers in National and International journals and 80 in National and International conferences. He has been working in the teaching field for about 44 Years. His area of interest includes Power systems, Power Electronics & Renewable energy sources. 1210