Smart Metering – An Indian Approach
Let me start with Machiavelli’s quote for the affairs of state “At the beginning, a disease is easy to cure but difficult to diagnose: but as time passes, not having been treated or recognized at the outset, it becomes easy to diagnose but difficult to cure”.
Indian power distribution sector is somewhere in between what Machiavelli mentioned and requires immediate attention. After almost 2 decades of interventions and liquidity infusion, distribution sector will still have an accumulated debt worth INR 4.5 trillion [1]by the end of 2020-21, an increase of 30 per cent over last year. Therefore, it is now clear that the perennial and oldest issue of the financial health of the discoms can’t be solved by usual liquidity support, or possible debt relief. It’s time for real radical reforms in the sector and any delay will only escalate these issues..
It is important to understand that results in any institution are driven by skilled people, robust processes and appropriate technology taken together. An analysis of these three dimensions will always determine the most effective areas for intervention.
Also, unexpected occurrence of Covid – 19 pandemic is a situation for which no one, especially power distribution sector, was ready. The pandemic is causing distress not only due to reduced demand and sales but also because of higher costs for cleaning supplies, health care, testing and temperature checks, personal protection equipment, and supplies to enable employees to work. The pandemic has also increased other costs like uncollectible or bad-debt and associated working capital expense caused by some customers’ inability to pay bills. But at the same time discoms need to modernize and upgrade their infrastructure today more than ever—they need to future-proof themselves and ensure enhanced operational efficiencies and improved resilience.
However, demand uncertainty/softening and weakening finances are likely to impact the discom’s ability to undertake investments in modernization initiatives. Therefore, Government of India’s’ idea of inviting private sector participation to invest and improve distribution sector is an apt step towards structural reforms.
Ministry of Power, Government of India has paved the way for the reforms through electricity amendment bill 2020 and amendments to tariff policy where it was clearly indicated at many instances that reforms to improve the operational efficiency and reduce AT&C losses would entail:
- Implementation of smart prepaid metering
- Rationalization of tariffs
- Reduction in cross subsidies
- Promotion of open access
- Direct benefit transfer of subsidies
All the above mentioned reforms could be derivative of intelligence drawn from the huge amount of timely data collection achieved through smart prepaid metering and its right implementation.
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[1] As per Crisil Ratings report.