New Audit Norms for Indian Electricity Distribution Companies to Reduce Transmission and Distribution Losses

India has released new energy audit norms for electricity distribution companies to better measure and track their transmission and distribution (T&D) losses.

The Bureau of Energy Efficiency (BEE) notified its latest regulation, dated October 2021, regarding the “Manner and Intervals for Conduct of Energy Audit in Electricity Distribution Companies”. This is expected to ensure better measurement and tracking of the transmission and distribution (T&D) losses of electricity distribution companies (discoms).

India’s electricity market and FDI pitch

India is the third-largest producer and second-largest consumer of electricity in the world, with an installed power capacity of 384.11 GW, as of June 2021. With expansion in industrial and manufacturing activity, India’s power consumption is projected to intensify. This power consumption is estimated to reach 1,894.7-terawatt hour (TWh) in 2022, driven by population growth along with increasing electrification and per capita usage.

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The Indian government is pushing for massive investment in the sector with 100 percent FDI policy support, along with several other schemes like Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY), and Integrated Power Development Scheme (IPDS) to support the sector. Simultaneously, the government has been pushing for reforms within the sector to plug its repetitive losses. The new audit regulations aim to be a coherent step in this direction.

Why have the new audit norms been prescribed?

India intends to reduce the aggregate technical and commercial (AT&C) losses of power distribution companies, which is why special attention is being paid to the transmission and distribution losses that form a major part of the AT&C losses.

Currently, despite Central Electricity Authority guidelines, most discoms adopt varying methodologies to calculate AT&C losses – without stating the underlying assumptions and data. This difference in methodology can create a difference in the AT&C reporting by up to four percentage points, thereby making their measurement and tracking difficult. It must be noted that the average AT&C losses reported by electricity distribution companies range from 22 to 25 percent.

The new energy audit regulations prescribed by BEE will change this situation to bring uniformity in the reporting methods. Additionally, in 2020, the BEE had notified that all discoms are now ‘Designated Consumers’ under the Energy Conservation Act, 2001, obliging them to conduct periodic energy audits and undertake energy conservation measures.

What do these energy audit regulations prescribe?

Intervals of time for conduct of annual energy audit

Discoms are required to submit energy accounting reports every quarter and an audited energy report every year to the BEE in prescribed formats. This includes data on energy input and consumption at each voltage level by all users, including discoms’ consumers, open access and captive users, as well as distribution franchises. This enables a better estimation of T&D losses based on the actual energy handled by the system.

The indicative structure for the energy audit report is prescribed in the second schedule of the regulations.

Pre-requisites for annual energy audit and periodic energy accounting

The recent regulations prescribe a set of pre-conditions to be met for the annual energy audit and periodic energy accounting before the start of the relevant financial year. They include:

• Identification and mapping of all of the electrical network assets.
• Identification and mapping of high tension and low-tension consumers.
• Development and implementation of information technology enabled energy accounting and audit system, including associated software.
• The electricity distribution company shall ensure the installation of functional meters for all consumers, transformers and feeders.
• All distribution transformers (other than high voltage distribution system up to 25 kilovolt ampere (kVA) and other distribution system below 25 kVA) shall be metered with communicable meters.
• The electricity distribution company shall establish an information technology enabled system to create energy accounting reports without any manual interference.
• Creation of a centralized energy accounting and audit cell by the discoms, comprising of a nodal officer, energy manager, information technology manager, and financial manager.

Intervals of time for conduct of periodic energy accounting

The discoms must ensure that all feeder wise, circle wise, and division wise periodic energy accounting shall be conducted for each quarter of the financial year and such periodic energy accounting report must be submitted to the BEE and respective State Designated Agency. Such report must also be made available on the website of the discom/electricity distribution company within 45 days from the date of the periodic energy accounting.

Manner of annual energy audit and periodic energy accounting

Every annual energy audit and periodic energy accounting under these regulations shall be conducted in the following manner:

• Verification of existing pattern of energy distribution across periphery of electricity distribution company.
• Verification of accounted energy flow submitted by electricity distribution company at all applicable voltage levels of the distribution network:
  1. Energy flow between transmission and 66 kV/33 kV/11 kV incoming distribution feeders.
  2. Energy flow between 66 kV/33 kV outgoing and 11 kV/6.6 kV incoming feeders.
  3. Energy flow between 11 kV/6.6 kV feeders and distribution transformers, or high voltage distribution system.
  4. Energy flow between distribution transformer, or high voltage distribution system to end consumer, including ring main system.
  5. Energy flow between Feeder to end-consumer.
  6. Energy flow between 66 kV /33 kV /11 kV directly to consumer.

• The accredited energy auditor will not only collect data on energy received and distributed covered within the scope of energy audit but also verify the accuracy of the data collected. The auditor can also give recommendations to facilitate energy accounting and improve energy efficiency.

What are the targets set for functional meters?

Feeder metering

• FY 2022-23: 98.5 percent
• FY 2023-24: 99.5 percent
• FY 2024-25: 99.5 percent

Distribution transformer metering

• FY 2022-23: 90 percent
• FY 2023-24: 95 percent
• FY 2024-25: 98 percent

Consumer metering

• FY 2022-23: 93 percent
• FY 2023-24: 96 percent
• FY 2024-25: 98 percent

What timelines do the regulations prescribe?

The BEE regulations specify clear timelines for discoms to upgrade their metering infrastructure at the feeder, distribution transformer, and consumer levels. All the feeders are required to have functional communicable meters by December 2022 whereas all the distribution transformers should be metered by December 2025. Furthermore, discoms are required to provide status of the metering infrastructure in the annual energy audit reports.

Timeline for metering – First Schedule

Below is the timeline for metering, as provided in the First Schedule of the regulations:

• 100 percent communicable feeder metering integrated with advanced metering infrastructure, by December 31, 2022 along with replacement of existing non-communicable feeder meters.
• All distribution transformers (other than HVDS distribution transformers up to 25kVA and other distribution transformers below 25 kVA) shall be metered with communicable meters. Communicable distribution transformer metering for the following areas must be completed by December 2023 and in remaining areas by December 2025:
• All electricity divisions of 500 AMRUT cities, with AT&C Losses greater than 15 percent
• All Union Territories (for areas with technical difficulty, non-communicable meters may be installed)
• All industrial and commercial consumers
• All government offices at block level and above
• Other high loss areas including rural areas with losses more than 25 percent and urban areas with losses more than 15 percent.

Further, existing non-communicable distribution transformer meters are to be replaced with communicable meters integrated with advanced metering infrastructure, within the timelines applicable to the respective areas.

• Prepaid smart consumer metering to be completed for all directly connected meters and AMR in case of other meters, by December 2023 in the following areas:
  • All electricity divisions of 500 AMRUT cities, with AT&C losses greater than 15 percent
  • All Union Territories (for areas with technical difficulty, prepaid meters to be installed)
  • All industrial and commercial consumers
  • All government offices at block level and above
  • Other high loss areas, which include rural areas with losses more than 25 percent and urban areas with losses more than 15 percent

The remaining areas and consumers may be taken up in a phased manner subsequently. However, electricity distribution companies can additionally cover any other areas as well as agricultural consumers, at their option, by December 2023. Further, in rural / hilly areas with connectivity or communication issues, wherein installation of smart meters may not be feasible, prepaid meters may be opted for.

• Consumer metering:
  • 98 percent by financial year 2022-23
  • 99 percent by financial year 2023-24

Low cost of non-compliance and legacy inefficiencies obstruct power sector reforms

According to the Energy Conservation Act, 2001, non-compliance with these regulations can attract a penalty of up to INR 1 million (US$13499.02) with INR 10,000 (US$135) per additional day of non-compliance. However, industry watchers feel that such a miniscule penalty amount will not be deterrent enough for giant discoms whose annual revenues are in billions.

Furthermore, apprehension is also cast on the BEE’s resource capability to track and deter non-compliance. The Ministry of Power, which is its parent organization, needs to strengthen the BEE with higher allocation of resources.

These regulations have the potential to substantially curb the long-standing problem of high transmission and distribution losses plaguing the Indian power sector. However, it will require synergies and efforts from all stakeholders to make it a success.

Meanwhile, the coal dependent Indian energy sector, which experienced unprecedented power crises in October and triggered by massive supply and demand side disruptions, needs to undergo a holistic revamp characterized by critical forward-looking reforms.

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