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Distribution Loss
Reduction and
Efficiency
Improvement


In Unit 11, you have learnt about the measures that can be adopted by power
utilities for technical loss reduction. In this unit, we focus on reduction of
commercial losses. You will agree that the monitoring and reduction of
commercial losses is the key for commercial viability of the utility. Almost all
the commercial losses occur at the distribution stage and that is where action
has to be taken. Several steps need to be taken to reduce the commercial
losses in the Distribution System. This unit will help you in comprehending the
various measures, which can be taken for reduction of commercial losses. We
begin by explaining the reasons for commercial losses and then suggest
various measures for preventing them. In the next unit, we discuss the
metering and billing system required to curb these losses.


Upgrading the sub-transmission and distribution systems and bringing about
technical improvements can only reduce technical losses. The large amount of
commercial losses cannot, however, be reduced by strengthening of the
network. The need of the hour is to implement a separate programme of
action for reducing commercial losses. We summarise below the major
reasons for commercial losses:
Direct Tapping by Non-customers
Unscrupulous consumers extract energy illegally by bypassing the
energy meter or by connecting leads directly to the distribution lines. In
certain areas, direct tapping of power by non-customers is widely prevalent
(Fig. 12.1).











12.1 INTRODUCTION

12.2 REASONS FOR COMMERCIAL LOSSES


Fig. 12.1: Direct Tapping by Non-customers


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Commercial Loss
Reduction
This kind of power theft takes place mainly in domestic and agricultural
sectors. Geographical remoteness, mass basis for theft, poor law
enforcement capability and inaction on the part of utility are helping this
phenomenon. Direct theft is an insult and, thus, a challenge to the utility
engineer. It speaks volumes about the inefficient functioning of the
distribution utility. This should be tackled on a priority basis by the utility.
Pilferage and Theft of Energy by Existing Customers
In addition to the factors discussed above, theft of electrical energy by
existing consumers is causing an increase in revenue losses. Since it is
often not possible to find out culprit, the stolen energy cannot be
measured and, therefore, cannot be charged to any one. Stolen energy is,
therefore, considered as a part of losses.
Theft by the existing consumers through tampering of meters is a
predominant cause of loss of revenue to the electrical utilities. Almost all
categories of consumers are involved in power theft (Fig. 12.2).









Fig. 12.2: Stealing of Electricity from DTR Secondary
However, emphasis can be given on inspecting high value services for
more effective and immediate gains. There are umpteen methods for
tampering the meter. New methods are being constantly evolved. The
thief is always ahead of the utility (refer to Unit 10).
Defective Metering, Billing and Collection
In addition to the external factors discussed above, commercial losses are
also caused by some deficiencies in commercial functions of the utility viz.
metering, billing and collection. These losses are not due to any deliberate
action of the customers. They are due to internal shortcomings of the
utility and, hence, are that much easier to tackle. They thrive due to the
fact that the erstwhile Boards did not function on commercial lines though
they were supposed to do so. Some of these factors are given in
Box 12.1.

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Distribution Loss
Reduction and
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Box 12.1: Factors that Affect Commercial Losses





























a) What is the level of overall losses in your utility? Assuming the
technical losses to be equal to maximum acceptable level given in
previous unit, determine the level of commercial losses.

.
b) Identify and list the causes of commercial losses in your utility.
.
.
SAQ 1: Reasons for commercial losses
Inaccurate metering system installed on outgoing radial feeders and
DTs (inaccurate meters can result in errors in loss assessment).
Slow or defective meters at consumer premises.
Errors in the CT/PT ratios (in case incorrect ratios are considered in
billing).
Errors in assessment of consumption by un-metered consumers (like
agricultural supplies, where billing is based on a normative kWh/HP
rate which may not be truly representative of the consumption).
Errors in computing provisional consumption for consumers with
defective meters or for consumers whose meters have not been read.
Pilferage of energy by hooking or by illegal connections.
Meter tampering by
wilful burning of meters;
bypassing the meter;
changing the sequence of terminal wiring;
planting external device inside/outside meter or metering
equipments;
tampering the meter readings by mechanical jerks, placement of
powerful magnets or disturbing the disc rotation with foreign
matters;
tampering the seals of meters;
reversing reading, which is a common practice in many urban cities
where skilled persons/employees reverse the readings recorded by
the domestic meters.
Wrong readings and Data frauds: In many utilities the meters readers in
connivance with the consumers bring lower reading than the actual
reading recorded the meter. This is of even more concern if the
consumer belongs to the HT (LIP/SIP) category.
Non payment by consumers, where utility does not have a method for
timely disconnection.

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Commercial Loss
Reduction

The measures for reducing commercial losses depend on the factors that
cause them and we discuss these separately.
12.3.1 Measures for Controlling Direct Tapping by Non-customers
and Customers
Stopping Theft by Direct Tapping
Various measures can be taken by the electricity supply authorities to stop
theft of energy by direct tapping (Box 12.2).
Box 12.2: Stopping Theft by Direct Tapping










Use of Aerial Bunched Cables/ Partial Insulated LT Lines
Use of modern and effective equipment, like Aerial Bunched Cables/partial
insulated LT lines in theft prone areas along with HVDS can prove to be an
effective deterrent to theft. Since the cables are insulated, it becomes very
difficult to tap energy. The AB cables can be erected on the same poles as
are used for street lighting and telecommunication circuits. This would
save considerable investment and also avoid associated problems of
communication.
Public Relation and Awareness Campaigns by the Utility
Some change in the value system of the society is also needed. The
opinion makers and social leaders should be involved to effectively
tackle this massive social evil (See Units 2 and 3, Block 1, BEE-003).
Some amount of public relations work by the utility is needed to tackle
this menace. It is to be widely publicized that theft will increase the
12.3 MEASURES FOR COMMERCIAL LOSS
REDUCTION
Setting up of Vigilance Squads (where these have not been set up).
Carrying out surprise inspections by Vigilance Squads.
Periodic inspection of LT feeders by the special Vigilance Squads
for tracing unauthorized consumers and direct tapping from line.
Prosecution proceedings against persons indulging in theft of
energy to secure convictions in the Court. The Electricity Act, 2003
is emphatic on incriminating material. Therefore, the materials, wire
and equipment may be preserved and provided at the time of court
hearing to prove the crime.
Imposition of heavy fines on consumers found committing theft of
energy.
Starting a drive for regularizing unauthorized connections and
simplifying procedure for release of new connections to consumers.

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Distribution Loss
Reduction and
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Improvement
tariff for the genuine consumers, result in poor voltages, burnt motors,
failed transformers and dried crops. The scarce resources of the State,
meant for social welfare, are diverted to feed these power thieves.




12.3.2 Measures for Controlling Pilferage of Energy by Existing
Customers
The following steps can be taken to reduce such commercial losses:
The energy meter should be housed in a separate box sealed and made
inaccessible to the consumers. The fuse cut-outs are provided after the
meter.
Multi-core PVC cables should be used as service mains instead of single
core wires.
Severe penalties may be imposed for tampering with metering seals, etc.
Theft of electricity should be publicised as a social and economic crime
and people should be informed of the provisions in electricity laws in this
regard.
Extensive checking of connections for accuracy and detection of
tampering/by passing should be undertaken.
Planning and laying of HT/LT network with HVDS (LT less) and HVDS
should be undertaken for all categories of consumers.
Schemes for classification of consumers based on ABC analysis should
be formulated and action should be undertaken for high value consumers
in the first instance.
Consumers meters can be shifted outside consumer premises.
Potential link should be provided inside the body of the energy meter
rather than inside thermal cover. This prevents the potential link to be
disconnected by the consumer.
Energy variation in consumption must be regularly checked for all
categories of consumers and doubtful consumers should be kept under
watch through special checking.
Strict control over working of meter readers with close and continuous
monitoring should be ensured.
There should be provision of swapping of duties between meter readers
and ledger clerks.
Fig. 12.3: Create Public Awareness

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Commercial Loss
Reduction









12.3.3 Measures for Reducing Defective Metering
Utilities incur high commercial losses due to inadequate metering and data
collection system. The general defects observed in metering are:
stuck up meters;
no readings furnished by the meter reader, for a good number of services,
at times, continuously;
constant nil consumption cases reported without any comment;
progressive readings recorded in disconnected services;
no relation between the meter capacity and the load;
adoption of wrong multiplication factors (MF) for billing as the change in
MF is not intimated to the billing agency.
It goes without saying that utilities have to achieve the target of
100% metering of 11 kV feeders and consumers. At the national level, 96%
feeders have been metered as of now, as against 81% metered during 2001-
02. You may know that 100% feeder metering has been achieved in 18
States. During 2001-02, the consumer metering was at 78%. It has now
increased to 92% during 2005-06. The majority of un-metered consumers
belong to agricultural and flat rate categories. The distribution transformer
metering is a prerequisite for carrying out energy audits and identifies the high
loss areas in the LT system. The overall DTR metering in the country is still
low in most of the States. Meters should be provided on distribution
transformers in high loss areas.




Fig. 12.4: Reduce Revenue Losses Due to Defective Metering
Suggest suitable measures for reduction of commercial losses by theft and
pilferage of energy in your utility and give their relative priority.





SAQ 2: Reduction of commercial losses

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Distribution Loss
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Some methods to prevent revenue losses due to the consumer end metering
system and associated connections are given in Box 12.3.
Box 12.3: Preventing Commercial Losses












In addition to these measures, non-working and defective meters should be
identified and replaced. There are many services un-metered, which should
be immediately metered. Similarly, a large-scale drive is necessary for
bringing all unauthorized consumers on to the rolls.
The Electricity Act, 2003 contemplates metering of all the services within 2
years and visualizes action on the company and the individual officers
responsible for lapses. Utilities should purchase adequate quantity of meters
both for fresh services and for replacement of the defective meters in the
existing services. Metering facilities should be installed not only for measuring
the electricity sold to the consumers but also for monitoring the energy
consumption at different voltages.
The electromechanical meters tend to get sluggish over a period of time. Old
meters should be replaced in a phased manner by high accuracy static
meters, especially for high value services and at places where the load varies
substantially. Electromechanical meters should be replaced with electronic
meters having ultrasonic welding. CT meters should be adopted instead of
whole current meters for LT high value services. Advanced metering
technologies, viz. prepaid metering and remote meter readers should be used
(Sec. 11.2.2).
Inaccurate readings from the meters are another cause of losses and need to
be tackled so that the occurrence of human errors is eliminated. A meter
reading instrument (MRI) or hand held unit is a data collector that retrieves
Defining installation procedures and ensuring that installation check
points are tested / followed while installing meters.
Use of electronic meters with tamper and load survey logging features
for all categories of consumer.
Use of optical port for taking the reading for all categories of
consumers.
Sealing of meters with seals and having proper seal management
system.
Installation of CTs/PTs in sealed boxes so that terminals are not
exposed for tampering / bypassing.
Testing of the metering system as a whole to ensure accuracy.
Ensuring accuracy in meter reading and billing activities by generating
exception lists and following up on exceptions.
Carrying out regular energy audits covering the feeder DT and all end
consumers to ensure that there is no revenue leakage beyond the
permissible technical loss.


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Commercial Loss
Reduction
usage information from the meter using optical sensors (Fig. 12.2). The meter
reader takes this instrument to the customer site and connects it to the meter.
Data is transferred from the meter to the MRI. The data is downloaded from
MRI into the computer system for billing purposes. By using MRI there is less
scope for utility staff to fudge the readings.
12.3.4 Meter Installation
Meter installations have often been considered as a low skill, labour oriented
activity. The quality of installations must be given due importance to guard
against revenue loss. The installation practices should take into account
various classifications of meters (Box 12.4).
Box 12.4: Considerations for Meter Installation



















The major cause of loss of revenue has been due to lacunae in installations
practices that allowed tampering of the metering systems. Certain installation
practices to prevent this are given in Box 12.5.
Type of meter: These cover meters of different accuracy classes
used for domestic, commercial and industrial purpose. The
different types of meters are as follows:
1 phase meters,
3 phase 4 wire Whole Current meters,
3 phase 4 wire CT connected meters,
3 phase meters for HT supplies (CT/PT connected meters),
For the HT consumers meter with tamper logging features
should be used.
Nature of application: The metering applications can be
categorised under the following broad headings:
Tariff metering (for consumers),
Inter utility tariff metering, and
System metering (for feeders and DTs).
Location of meters
It is important to recognize that different applications need not
only different installation practices but also different functional
specifications for the meters. Taking care of the installation
practices alone without proper functional specifications will not
serve the purpose. The location of meters, i.e., type or nature of
site where meters are to be installed is important, as installation
practices differ as per the following types of site:
Indoor Installations,
Outdoor installations at/near transformers, and
Outdoor installations on poles.

Fig. 12.5: A Meter
Reading
Instrument


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Distribution Loss
Reduction and
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Improvement
Box 12.5: Installation Practices to Guard against Tampers










Installation of Meters with Tampers Logging Features
Electronic meters with tamper and load survey logging feature should be
installed for HT consumers and LT CT consumers. Installation of such meters
for high value 3 phase whole current consumers is also recommended. Having
meters with tamper logging features is not sufficient unless it is backed by a
process for regular data (i.e., tamper) analysis. Most utilities provide meters
with tamper logging features but they ignore the need for a regular data
analysis, and hence the purpose is not served. The presumption that in case
something adverse is observed a tamper data analysis will be carried out
makes the matter subjective. A regular data analysis for all such meters is
recommended.
The data analysis, apart from summarizing meters that are tampered, also
gives a record of other operational details like demand violation, poor power
factor, load utilization etc. The fact that all meters are being routinely analysed
becomes a deterring factor for consumers who might tamper with meters. In
addition, we have to care equally for the accuracy and installation aspects for
CT/PT installations to prevent revenue leakage. These aspects are:
Influence of CT& PT wire: In CT connected meters and CT & PT
connected HT meters installation the CT wire size and length, length and
cross section of PT wires play a major role in measurement accuracy.
Large voltage drop in undersized PT wire causes a lower energy to be
registered by the meter and hence loss in revenue.
Influence of VA burden: VA burden of both CTs and PTs need to be
carefully examined prior to installation. In case of CTs loop burden by
considering the CT, leads needs a quick calculation or test at site. The
operating burden must be such that these instrument transformers are not
over-burdened or under-burdened.
A Visually Traceable and joint free incoming cable, or shrink
wrapped sealed joint helps in preventing tampers.
Having clearly visible and accessible seals that can be subjected to
easy inspection
Mounting the meter and CTs inside a box with a clear window, where
the internals cannot be accessed without breaking through a seal
Ensuring height and location of the installation for easy readability of
meters
Locating meters in public domain An alternate location for the meter
can be on the poles from where service cables are laid out. With this
type of installation the meters are at a height in full public view and the
direct connections by unscrupulous customers bypassing the meter is
difficult.

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Commercial Loss
Reduction
Influence of errors in wiring and nameplate: In case of CTs, special caution
is needed to ensure
Correct polarity of wires
Correct phase association
Use of metering core and not protection core
One common source of error (or manipulation) is the nameplate for CTs.
Mismatch in what is written in the nameplate and the actual CT ratio can
cause revenue loss (very rarely one may gain revenue). Hence the ratio test
just prior to installation is needed.
All CT/PT meter installation deal with large amounts of energy and a small
error of even 1% is a significant loss in terms of revenue.
12.3.5 Measures for Improvement in Billing and Collection
Correct billing and timely delivery of bills will go a long way in improving the
collections. The normal complaints in the billing process are: non-receipt/ late
receipt of bills, receipt of wrong bills, wrong reading/ status, table readings
and wrong calculations. All these can be avoided in a single go by going for
computerized spot billing as is already done in some States. This can be
introduced in stages starting from cities. A thorough understanding by the
readers on the status of the meter is a sine qua non (main thing) for the
success of the system.


Fig. 12.6: Spot Billing Machine
Common billing software must be adopted to exercise meaningful control, for
review, storage and retrieval of the consumer database. Efforts have to be
made to minimize the bill processing time. Bill processing time is the average

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Distribution Loss
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Improvement
number of days that transpire from the meter read date until bill issuance.
Monthly billing should be achieved for the convenience of the consumer and
also for psychological reasons. Stringent checks must be adopted in the billing
process in order to plug the leaks. The billing department should detect the
majority of billing errors internally before a bill is issued (e.g., based on a
consumption reading that does not follow a customers billing history). In case
it is not detected, then errors can be reported by customers only.
In some Distribution Companies, bill delivery is problematic, particularly, in the
zones where power theft is prevalent. The utility must have an effective bill
delivery system with penal clauses for non-delivery of bills.
The power distribution companies have a unique advantage of contacting
millions of citizens at least once in a month. This is to be utilized fully to
explain the latest initiatives and seek the customers support in their own
interest and in the interest of the company.
Improvements in Collection
In most power distribution utilities, delays in payments or non-payment are the
major cause of revenue loss. Collection effectiveness refers to the Distribution
Companys ability to collect payment in a timely manner against the bills it
issues. Performance on this front is deteriorated due to the utilitys restricted
recourse for non-payment or delayed payment and inability to write-off bad
customer debts or negotiate payments with customers. The utilities should
have a system where defaulters are short-listed immediately after non-
payment within due date with amount and time, etc.
Special collection drives, coupled with intensive inspections, in the areas
where the payment history is bad, brings positive results. For recovery of
arrears, the utility should
list defaulting consumers;
send reminders / notices;
initiate legal proceedings; and
resort to disconnection, if need be.



Increased customer convenience should be the guiding factor for smooth
collections (Fig. 12.8). This can be done by introducing multiple payment
locations and not restricting them to a particular division/subdivision. Other
steps that can be taken are:
Provision of additional counters, depending upon the crowd, having
Flexible Timings.
Providing comfort to consumers, e.g., drinking water, toilet, sitting
arrangement at collection centres.

Fig. 12.7: Effective
collection
A must for
financial
viability
REMEMBER: Effective disconnection of defaulters should be a norm
rather than a chance occurrence.

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Commercial Loss
Reduction
Installation of electronic cash register machines for collection and counting
cash.
Drop box facilities and roping in more collection agencies to make the
lengthy queues vanish.







Fig. 12.8: Customer Convenience at Collection Centres is Important
E-seva centres are a relief to the customer as around 25 types of bills are
accepted in a cool atmosphere at convenient hours in the holidays too. These
types of centres can offer different services like:
payment of bill/ taxes, registration of complaints, providing information,
booking for connections, etc.
Online facilities like ICICI bill junction.
Bar coding facility, even when payment is made in person, for faster
payment.
Electronic payments, including direct debit payments.














12.3.6 Additional Measures
Utilities can adopt MIS and carry out energy accounting and audit for
preventing revenue losses. We discuss these, in brief.
Diagnose pitfalls and suggest remedial measures for internal deficiencies
in metering, billing and collection functions of your utility.





SAQ 3: Measures for reducing defective metering,
billing and collection

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Distribution Loss
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Improvement
Development of MIS
Effective use of IT (Information Technology) can play a major role in AT&C
loss reduction and ensure better management of distribution utilities.
Distribution utilities should institute an MIS (Management Information
System) for effective monitoring and control. The reports that can be
generated for MIS are given in Box 12.6.
Box 12.6: Reports to be Generated for MIS













The asset and consumer database of the Utilities often gets outdated over
a period of time and needs to be updated. It is therefore necessary to keep
the database updated on a regular basis. The outdated information of the
consumer such as contract demand, multiplication factor (CT/PT) can be a
source of revenue loss. The utility should also have detailed historical
information on consumers tampering their meter. This information is
available from the analysis of the meter. (MIS can be effectively used for
this purpose.)
Energy Accounting and Auditing
To tackle losses effectively it is necessary to compute the AT&C losses
accurately, identify high loss areas and segregate these losses into losses
due to commercial as well as technical factors. For this, utilities establish
an Energy Accounting System area-wise to establish the losses on a
continuous basis. Experience in many parts of the world demonstrates
that it is possible to reduce the revenue losses in a reasonably short
period of time by carrying out energy audits, prioritizing the results and
focusing on high loss areas. Energy accounting helps in devising a
Feeder-wise/Distribution Transformer-wise loss;
Equipment failure and interruption analyses for the feeder;
Consumer analyses (kWh/kW);
Realisation Index (Rs./kWh) for each category and feeder as a whole;
Consumption rise or drop by more than 20%;
Payment update;
Day-wise and amount-wise payments received from the consumers;
Communication with banks regarding payments realised;
Identifying the defaulters;
Recovery of arrears;
Listing of defaulting consumers;
Sending reminders/notices; and
Disconnections due.

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Commercial Loss
Reduction
systematic plan for handling the revenue loss in the system and in finding
out whether the purpose has been adequately served. Ignoring energy
audits is like driving in the dark.
Accounting and auditing in the electricity sector involves evolving
procedures and checks to account for energy from the generating stations
down to the consumer level (Refer to Units 2 and 3, Block 1, BEE-002). In
the present scenario, the focus should be from grid substations where
sub-transmission systems (66/33/11 kV) take off generally as a radial
system to supply power to consumers at different voltage levels. The
objective is to prepare an energy account so as to establish the energy
input and quantum consumed by/billed to various categories of
consumers. This leads to identification of high loss areas, which, in turn,
would help in evolving strategies and action plans for reduction of losses.
The accounting system should ensure that the energy made available at
substation/11 kV feeder/distribution transformer and units utilized by
consumers, respectively, is checked to see whether the difference
between the two is reasonable and within permissible limits.
For proper energy accounting, metering equipment both at the sending
end and receiving end has to be ensured. This activity should cover
review of the existing energy accounting system, replacement of defective
meters and installation of meters at appropriate locations for proper
energy accounting. Important services, feeders, distribution transformers
and towns should be taken up for this exercise.
Installation audits are a short-term measure for preventing revenue loss.
These audits cover the inspection of the site and a detailed testing.
Installation audits are needed to detect and correct any problems that may
have resulted from poor installation practice or by the concerted effort by
unscrupulous consumers.
During the installation audits, aspects such as accuracy of the meters,
accuracy of CTs and PTs, present load on the meter, fuses, ferruling of
wires, evidence of tampers, etc. are checked. In addition, the terminals are
opened to examine deposits and re-tightened. Thus, the installation audits
also cover the preventive maintenance aspects of a meter installation.
The periodicity of installation audits have to be decided on a scientific
basis based on sampled observation from the field and other data
generated through energy audits. Typically installation audits need to be
carried out on an annual basis for 3-phase or HT consumers and at least
once in 2 years for single phase consumers. Most Regulatory
Commissions have now specified the periodicity for meter testing.
12.3.7 Users Associations, Panchayats and Franchisees in
Billing and Collection
The Electricity Act, 2003, visualizes the role of Users Associations,
cooperatives, panchayats and franchisees in electricity distribution

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Distribution Loss
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Improvement
management especially in rural areas. The concept of payment for the power
consumed can be successfully inculcated if more people are involved in the
process and if a sense of belonging to and stake in the entity is created.
For rural consumers, the role of panchayats is significant for utilities.
Panchayats can be associated for bringing awareness amongst the rural
consumers for timely payment of bills. Panchayats can also be associated for
effective reading and delivery of bills. Incentive schemes can be launched for
villagers / panchayats where there are minimal or no losses and nil arrears.
The Franchisee System
As per the Electricity Act, 2003, a Franchisee means a person authorized
by a distribution licensee to distribute electricity on its behalf in a
particular area within its area of supply. The franchisees may take village
level, feeder level or cluster of villages as their areas of operation. There are
various models for the franchisee system, which we describe briefly.
Input-based Franchisee Model
The basic concept of input based franchisee is that the franchisee is
appointed for a particular feeder and the input energy of the feeder is
measured by the utility. A target for loss reduction is set based on units
collected as a percentage of input energy supplied to the consumer
beyond the point of metering. The franchisee is paid fixed returns for
carrying out meter reading, billing and collection. However, incentive is
paid only on achieving the loss reduction target.
Revenue Franchisee Model
In this model, the franchisee could be appointed for a particular Grama
Panchayat and is given a target for collection based on the average of
previous 6 months collection. The franchisee is paid a fixed percentage of
the collection on achieving base line collection. For non-achievement of
baseline collection, penalty is levied as a fixed percentage of the incentive
payable.
Other Models
The institutional design and structure of Franchisee models vary from
State to State. In Nagaland, the traditional structure of Village Council has
been used to form a sub-committee called Village Electricity
Management Board (VEMB) to function as a Franchisee. Electricity is
billed to VEMB on Single Point Metering (SPM) basis. In Karnataka, Gram
Panchayats have been involved to identify Grameen Vidyut Pratinidhi
(GVP) to function as Franchisee. The GVP is a local unemployed youth
from the same Panchayat. They are working as revenue franchisee and
there is a provision of commission on amount realized above baseline
targets apart from retainer-ship fee for achieving the baseline targets. In
Assam, the utility initiated the Single Point Supply Scheme (SPSS) and
appointed input based franchisees and collection franchisees at

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Commercial Loss
Reduction
distribution transformers. In West Bengal and Uttarakhand, women Self-
Help Groups (SHGs) have been engaged to function as Franchisee.
These are at present revenue franchisees. The franchisee and people
working with franchisee are mostly resident of the same locality.
Deployment of franchisee is in progress in other States like Uttar Pradesh,
Bihar, Haryana, Rajasthan, Madhya Pradesh, etc.
The key factors for the success of the franchisee system are the reliability,
availability and maintainability of power in the rural areas and upfront
payment of subsidies to the utilities. The utility has to ensure this, to make
it a viable proposition, by ensuring supply of power for a reasonable
number of hours. In this context, distributed decentralized generation
assumes importance to ensure reliable power supply. The success of the
franchisees also depends to a large extent on the ability of the franchisees
to reduce AT&C losses as they will have to account for energy input into
their system. Loss reduction again depends on many factors, the most
important being investment for system improvement and IT application for
improved commercial functioning. Theft of electricity is one of the major
issues, which contributes to losses of the utilities. Franchisees should be
given proper support by the local administration in detection and
prevention of theft of electricity.











In this section, we describe the vigilance and legal measures that can be
taken in accordance with the Electricity Act, 2003. The Electricity Act, 2003 is
being implemented now in respect of power theft and other irregularities. Theft
or pilferage of energy is a conscious and dishonest consumption of unmetered
energy. Electricity Act, 2003 has brought radical changes in all the facets of
the electricity sector. We consider its impact on power theft and assessment
and briefly describe the relevant sections here.
Describe the ways in which your utility can adopt the franchisee system to
increase its revenues.







SAQ 4: Franchisee system
12.4 LEGAL MEASURES


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Distribution Loss
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Improvement
Sec.55: This section contemplates compulsory metering of all the services
within 2 years. Concerned Electricity Regulatory Commission is to initiate
action on the defaulting company and person. It can extend this period if
necessary.
Sec.126: This pertains to the unauthorised use of electricity, which means
the usage of electricity for the purpose other than that for which the usage
of electricity was sanctioned, viz.:
domestic connection used for non-domestic or industrial purpose;
non-domestic connection used for industrial purpose;
agricultural connection used for domestic, non-domestic, industrial and
farm house purposes.
Earlier, the litigation could be prolonged endlessly. Further, there were
innumerable stages for appeal by the accused. Now, they are reduced to
just two.
Inspecting officer is himself/herself the provisional assessing officer
and acts as the final assessing officer too.
This section is non-criminal in nature.
Assessment is at one and a half times the normal rate.
The assessment is to be made for 3 months for domestic and
agricultural services and 6 months for other services.
The consumer could always say that she/he did not receive any notice
from the utility. Now the Act says that it could be served on any person
available.
Sec.127: There is only one appeal. It is to be made within 30 days after
making one-third payment. Earlier, there was protracted litigation without
any payment or with nominal payment. After such long periods, interest too
was not levied. This section specifies 16% half yearly compounded interest
after 30 days of order of assessment and not from the date of serving of
the notice. Further, the decision is final.
Sec.135: Criminal prosecution is to be launched on the person who
dishonestly taps energy, tampers or damages meters, etc.
3 years imprisonment or fine or both can be levied. For the first
offence, the fine is at 3 times the loss sustained by the utility. For the
second offence, it is at 6 times and if the connected load is more than
10 kW, imprisonment is from 6 months to 5 years.
The burden of proof rests on the consumer.
The inspecting officer can break open, seize and remove records.
However, the presence of one adult male member of the family is
necessary from 6 p. m. to 6 a. m.

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Reduction
Sec.138: Restoration during disconnection period, even if it is through the
meter, is a criminal act entailing 3 years imprisonment or fine of Rs.10,000
or both.
Sec.145: No civil court has jurisdiction.
Sec.150: The ruffians, including any utility official, can be prosecuted for
abetment of these offences even if it is against the provisions of Indian
Penal Code. The black sheep in the utility employees can be prosecuted
as abettors whenever they even just acquiesce.
Sec.151: The complaint can be lodged, inter alia, only by the employees of
the utility.
Sec.152: Compounding of the case is permitted at the specified rates.
Sec.153: It reads as follows:
Section 153: Constitution of Special Courts
1) The State Government may, for the purposes of providing
speedy trial of offences referred to in sections 135 to 139, by
notification in the Official Gazette, constitute as many Special
Courts as may be necessary for such area or areas, as may be
specified in the notification.
2) A Special Court shall consist of a single Judge who shall be
appointed by the State Government with the concurrence of the
High Court.
3) A person shall not be qualified for appointment as a Judge of a
Special Court unless he was, immediately before such
appointment, an Additional District and Sessions Judge.
4) Where the office of the Judge of a Special Court is vacant, or
such Judge is absent from the ordinary place of sitting of such
Special Court, or he is incapacitated by illness or otherwise for
the performance of his duties, any urgent business in the Special
Court shall be disposed of
a) by a Judge, if any, exercising jurisdiction in the Special
Court;
b) where there is no such other Judge available, in accordance
with the direction of District and Sessions Judge having
jurisdiction over the ordinary place of sitting of Special Court,
as notified under sub-section(1).
Thus, a Special Court shall be constituted for these cases with a judge of
the cadre of Additional District and Sessions Judge.

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Reduction and
Efficiency
Improvement
Sec.154: Offences punishable under sections 135 to 139 are triable only
by Special Court. Summary trial with punishment up to 5 years. Special
Court can also tender pardon under certain conditions. Civil liability in such
cases is not less than 2 times the assessment for 12 months.
Sec.156: Appeal to High Court.
Sec.157: Review by Special Court.
Sec.168: Protection for bonafide actions of assessing officer, public
servant, etc.
Sec.169: Assessing officers along with others are public servants.
Sec.170: Penalty considered as land revenue.
Sec.171: Notice can be served on the person available, or posted at a
prominent place.
It is the responsibility of the States and Distribution Utilities to ensure effective
implementation of these provisions and curb revenue loss due to power theft.
On this note, we end the unit and present its summary.



Priority attention is required to be given to reduction of commercial
losses.
Low level of collection is attributable to lack of employees accountability,
inadequate collection facilities, limited usage of advanced systems and
technology, billing errors, political/administrative interference, etc.
Reduction of non-technical losses can be achieved through legal,
institutional, administrative and policy measures.
Accurate metering, efficient billing and prompt collections can reduce
the commercial losses.
Technological aids available in the form of aerial bunched cables,
insulated/partially insulated LT lines, new metering technologies such as
remote metering, pre-paid metering, meters with recording features, etc.
should be adopted.
Gram panchayats, franchisees could be used for billing and collection.
Several legal measures can be taken in accordance with The Electricity
Act, 2003 to reduce commercial losses.
12.5 SUMMARY


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Commercial Loss
Reduction

1. Describe the various measures that can be taken for reducing commercial
losses.
2. How can you improve the billing and collection in your utility? Explain with
examples.
3. What are the different methods of theft and pilferage of energy?
4. Discuss the legal provisions as per the Electricity Act, 2003 for dealing with
theft/pilferage of energy.
5. Explain how franchisees can be used for commercial loss reduction.
12.6 TERMINAL QUESTIONS