Factors Contributing to High Commercial Losses

Commercial losses in our country occur mainly due to the following reasons:

• incorrect assessment of the energy consumed;

• pilferage of energy; and

• human errors.

Improvement

You may be wondering: How can these losses be overcome ? For this, you need to know the factors that contribute to these losses (Box).

Box : Factors Contributing to High Commercial Losses 

Theft/pilferage of power by existing consumers.

Illegal connection from distribution line by non-customers.

Incorrect estimation of energy consumption in respect of un-metered connections.

Defective metering.

Meter reading errors.

Tardy billing and poor revenue collection.

Lack of accountability.

We now describe each one of these, in brief.

Theft/ Pilferage of Power by the Existing Customers
Power theft by the existing consumers is the predominant cause of loss of revenue to the electrical utilities. Almost all categories of consumers are involved in this. It is almost the single cause of all ailments afflicting power utilities. Transformer failures, breakdowns, poor collection of revenue,financial losses, widespread customer dissatisfaction, recurring crises in summer crop period, poor creditworthiness resulting in the inability to raise funds needed for the required growth, increased technical losses and the
corroded integrity of employees are all manifestations of power theft. Theft of power is being committed by

•Totally bypassing the meter

The meter is not tampered. The tapping is made from the supply lines and part or full load is fed from that (Fig.).

Power Theft from Supply Lines

This kind of power theft can be proved only when it is observed at the time of inspection. The consumer can erase all traces of theft if the inspection is known in advance. This is a burning problem in many parts of our country.

•Tampering the meter
There are numerous methods of tampering the meter. New methods are being constantly evolved and detection of tampering is becoming a
major challenge for distribution utilities. Some of them are given in Box .

Box : Some Methods Used for Meter Tampering

•Spiders − small holes are drilled into the meters and live spiders or spiders' eggs crammed into them. The spiders' webs slow down the
metering mechanism, giving a false reading.

• Needles − pins are inserted into a hole, slowing down the meter's recording wheel to give a flash reading or even a zero usage.

• Magnets − small magnets attached to the outside of the meter casing will stop the meter from registering, or slow it down.

• Chewing gum − gum is often used to stop the meter completely but it is taken out just before the meter reading is taken.

• Bypass − meters are removed and power sourced illegally from underground cables and overhead wires.

Direct Tapping by Non-customers

Direct tapping of power by non-customers is widely prevalent. This is mainly in domestic and agricultural categories. Geographical remoteness,mass basis for theft, poor law enforcement capability and inaction on the part of utility are helping this phenomenon.

Unmetered Connections

In many States, power supply to the agricultural sector and some categories of domestic consumers are not metered and charged on a flat
rate basis. This poses problems in arriving at reasonably correct estimates of consumption in these categories resulting in losses.

Defective Metering

Tampered, slow running, stalled, damaged meters are a cause of huge losses to the utility .The electromechanical meters tend to get sluggish over a period of time and record much less consumption than actual. Many stuck up and damaged meters are allowed for years causing losses to the utility.

Meter Reading Errors

Readings are inadvertently noted wrongly. For a good number of services, the meter reader, at times, continuously reports nil consumption without any comment. Meter reader furnishes no readings in some cases or furnishes table readings. Sometimes wrong multiplication factors are adopted.

Tardy Billing and Poor Revenue Collection

Normal complaints in the billing process are shown in Fig

Some Billing Complaints

Prolonged disputes, lack of consumer friendly policies, connivance,incorrect identification of category, fictitious billing (of non-existent consumers), lack of reconciliation and continuous provisional billing are causes for poor revenue collections. Delay in collections may be caused by late receipt of bill, customer inconvenience, wrong billing, non-receipt of bill, etc.

Lack of Accountability

In large, complex and widespread ST&D networks such as ours, the following factors pose problems in arriving at reasonable estimate of
losses:

− absence of properly functioning energy meters in the distribution substations;

− deficiencies in metering at consumer premises including non-provision of meters; and

− lack of proper energy accounting system.

Identification of areas having high non-technical/commercial losses and initiating remedial action is also not possible due to these reasons. This has led to a situation of lack of accountability across the utility.

The field level engineers have not been made responsible or accountable for the energy input to their areas, the energy billed or the revenuecollected. This has resulted in increased theft and pilferage in the system leading to increased commercial losses.There are also losses on account of maintaining non-operative collection accounts and delays in remittances by the banks, non-reconciliation of remittances, embezzlement, misappropriation of funds by employees, etc.Instances of undue political interference in recovery are also seen.

The main issue in Sub-transmission and Distribution systems or rather the issue confronting the power sector as a whole, is the reduction of Aggregate Technical and Commercial losses to acceptable minimum levels . Upgrading the sub-transmission and distribution system and technical improvements will reduce technical losses. Proper and adequate metering will reduce metering losses described in this section. However,the large amount of commercial losses cannot be reduced by upgrading the network.

An urgent and separate programme of action comprising legislative changes, strict vigilance, enforcement of punitive measures, enhanced accountability at the field level of utility, etc. is essential to be implemented to reduce commercial losses. The main source of revenue of utilities is from sale of energy to consumers, which require prompt and correct billing and realization. This is particularly important since, in the power sector,consumers pay after availing the service. Apart from energy losses,deficiencies in proper billing and revenue collection for the energy used seriously affect the financial health of utilities. It is all along recognized that the performance in this segment is much below the desired level and the situation is often aggravated by political interference.

From the discussion so far, we may conclude that the revenue raising segment of the utilities suffers from basic deficiencies in terms of high energy losses and poor billing, revenue collection and financial management. From the consumer’s perspective, power supply is characterised by poor voltage and frequent interruptions in supply. The strategy for improvement should, therefore, be aimed at rectifying these deficiencies to ensure that the ST&D systems operate at optimum levels of technical, commercial and financial efficiency. We now end the discussion and present its summary.