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Performance Evaluation of Electric Supply Utilities in India
Title Performance Evaluation of Electric Supply Utilities in India
Publisher/ Author India Core Publishing/ Dr Tripta Thakur, Dr S.C. Kaushik, Dr S.G. Deshmukh
Year Published 2009
Format Paperback
Pages Pp 270
Delivery Indian as well as International Orders & Deliveries accepted
Product Code IPPR-122
Price in INR (for Indian Orders)

Special Rate for SERCs, SEBs & Educational Institutions- Rs 2500

Price in USD (for International Orders) 200

Book Details

The Report focuses on evaluation of the performances of the Electric utilities in India. The work is particularly significant in the context of the ongoing reforms in the Indian electricity sector. Unfortunately, the concept of efficiency in the delivery of power services has been historically alien in the Indian context (even outside India, efficiency measurement studies have been relatively scarce in developing countries), and it is now being realized that efficiency evaluation is an integral component of any comprehensive reforms program.

The efficiency evaluation is also necessary for generating competition in the sector and for sector regulation and scientific tariff setting. Hence, it is vital for the success of any reforms program to review the performance of existing utilities. Based on the productivity and efficiency analysis, benchmarks can be set, and targets for improvement may be identified.

The Report is coming at a crucial time when the Indian government has initiated measures that promise to revamp the sector. The work presented in the Report is a pioneer study on evaluation of performances in the Indian power sector, as so far no known study has attempted such comprehensive sector measurement by employing advanced benchmarking technique such as the Data Envelopment Analysis (DEA) employed in the present analysis.

Such a study can be regarded useful from the following viewpoint:

  1. The study provides the efficiency scores of SOEUs & distribution utilities so that they can rank themselves, identify their shortcomings, set targets, and try to achieve these targets
  2. The model can be extended for use by regulatory commissions for tariff setting, and as a tool for developing a monitoring system.
  3. The analysis can have future application in the form of X-factor calculations under the incentive based regulation
  4. The results can be used for preferential funds allotment under various government schemes such as the allocation of the Accelerated Power Development and Reforms Program (ARDRP)
  5. Such a study can help create awareness and competition amongst the SOEUs, for sustained improvements in the distribution sector.

  6. About the Authors
  • Dr Tripta Thakur is Assistant Professor, Department of Electrical Engineering, National Institute of Technology, MANIT-Bhopal, India
  • Dr S.C. Kaushik is Professor and Head, Centre for Energy Studies, Indian Institute of Technology, New Delhi, India
  • Dr S.G. Deshmukh is the Director, Indian Institute of Information Technology & Management (ABIIITM), Gwalior, India

Objectives and Scope of the Report

The objective of this report is to evolve a framework that may be applied for evaluating efficiencies of the Indian electric supply utilities in the Pre and Post Electricity Act 2003 periods. The work also aims to discuss some of the related policy issues for the sector in the context of sector sustainability.

More specifically, the scope of the work presented in this report comprises the following

  • To review the Indian electricity sector, and the related reforms program.
  • To establish the need for evolving performance appraisals of the power supply utilities in India in the current context
  • To carry out an impact assessment of the newly enacted Electricity Act 2003.
  • To study the distribution sector critically and identify the major inefficiencies prevalent
  • To measure efficiencies and productivities of utilities in the Pre and Post Electricity Act, 2003 era, and to examine results in the policy context to suggest possible sector improvement

The work will be particularly useful to various stakeholders in the power industry including the government and the public bodies, regulatory authorities, funding institutions, development institutions, power producers, utilities and the consumers. The results of the study can provide a common basis for informed policy debate and decisions, and can facilitate in initiating a dialogue between stakeholders.



Page Number



Chapter 1. Introduction

Ch-1-1 to Ch-1-15



1.1. Reforms in Developing Countries




1.2. The Case of India




1.3. Need for the Performance Analysis in the Indian Electricity Sector




1.4. The Advantages of Measuring Performances




1.5. The contribution of this Report




1.5.1. Objectives and Scope of the Report




1.5.2. Outline of the Report




Chapter 2. Indian Electricity Sector: A Critical Review of Organizational Structure, Reforms and their Impact Assessment

Ch-2-1 to Ch-2-42



2.1 Introduction

Ch. 2—1



2.2 Organizational Structure of Electricity Supply Industry In India

Ch. 2—3



2.3 Review of Performance of the Indian Electricity sector

Ch. 2—6



2.4 Background of the Electricity Reforms

Ch. 2—8



2.4.1. The Case of India

Ch. 2—9



2.4.2 Major Legislative Initiatives in India

Ch. 2—10



2.5 The Electricity Act 2003: What it Entails

Ch. 2—12



2.5.1. Impact Analysis of the Electricity Act 2003

Ch. 2—16



2.5.2. Implementation of Open Access: Core Issues

Ch. 2—25



2.5.3. Trading: A New Policy Perspective

Ch. 2—27



2.5.4. Role of the Regulator

Ch. 2—28



2.5.5. The Electricity Act and Rural Electrification

Ch. 2—31



2.5.6. The National Electricity Plan-2004

Ch. 2—33



2.5.7. Consumer Protection

Ch. 2—35



2.5.8. Environmental Concerns

Ch. 2—36



2.5.9. Shortfalls and Limitations of Electricity Act 2003

Ch. 2—38



2.6 Summary

Ch. 2—42



Chapter 3. Distribution Sector Reforms in India

Ch-3-1 to Ch-3-37



3.1 Introduction




3.2 Need for Distribution Sector Reforms




3.3 Distribution Reforms in India




3.3.1. Reforms Initiatives in the Distribution Sector




3.1.2 Status of Distribution Reforms in India




3.1.3. Reform Initiatives in Rural Electrification




3.2. The Tasks Ahead: A Roadmap to Success




3.2.1. Strengthening the Role of Regulatory Commissions




3.2.2. Implementation of Multi-Year Tariff (MYT) Framework




3.2.3. Ensuring Universal Metering and Initiating Proper Billing Practices




3.2.4. Reorganizing the Distribution Sector




3.2.5. Benchmarking of Indian Power Distribution Utilities: The need forPerformance Appraisal




3.2.6 Privatization of DISCOMs




3.3 Summary




Chapter 4. Efficiency Evaluation Framework: A Study of Literature and Methodology Employed in the Analysis

Ch-4-1 to Ch-4-27



4.1 Introduction




4.2 Performance Measurement and Analysis: the Need




4.3 Stakeholders That Require Efficiency Analysis




4.4 Benchmarking Methodology Employed




4.4.1 Data Envelopment Analysis




4.4.2. Total Factor Productivity (TFP) Analysis




4.5 Efficiency Evaluation Studies in Various Sectors




4.5.1. Review of Literature for DEA Applications




4.5.2. Review of Literature for TFP Applications




Chapter 5. Productivity and Benchmarking Studies for the IndianEelectric Utilities in the Pre-“Electricity Act, 2003” Era

Ch-5-1 to Ch-5-55



5.1 Introduction to Indian Electric Utilities in the Pre-“ElectricityAct, 2003” Era

Ch. 5—1


5.2. Productivity Analysis of the Indian SEBs

Ch. 5—4



5.2.1. Scope

Ch. 5—4



5.2.2. Data and Methodology

Ch. 5—5



5.2.3. Results and Discussion for the Productivity Analysis

Ch. 5—8



5.2.4. Concluding Remarks on the Productivity Analysis

Ch. 5—17



5.3. Efficiency Measurements for the Indian SEBs

Ch. 5—18



5.3.1. Review of Literature for Efficiency Evaluation of the Indian SEBs

Ch. 5—20



5.3.2. Selection of Input and Output Variables

Ch. 5—22



5.3.3. Preliminary Data Exploration

Ch. 5—24



5.3.4. Results, Discussions and the Policy Implications of the EfficiencyAnalysis

Ch. 5—31



5.3.5. Concluding Remarks on Efficiency Evaluation

Ch. 5—53



Chapter 6. DEA Based Benchmarking Studies for the Indian Electric Distribution Utilities in the Post-“Electricity Act, 2003” Era

Ch-6-1 to Ch-6-37



6.1. Introduction

Ch. 6—1



6.2. Need for Unbundling

Ch. 6—3



6.3. Performance Evaluation of Electricity Distribution

Ch. 6—4



6.3.1. The Case of India

Ch. 6—7



6.4 Private Distribution Companies in India

Ch. 6—9



6.5 Methodology and Data Analysis

Ch. 6—12



6.5.1 Methodology

Ch. 6—12



6.5.2 Data Source

Ch. 6—13



6.5.3 Input and Output Selection

Ch. 6—15



6.5.4 Preliminary Data Exploration

Ch. 6—16



6.6. Results, Discussions and the Policy Implications

Ch. 6—19



6.6.1 Model 1 (Input: Total Cost (Totex)

Ch. 6—19



6.6.2 Model 2 (Input: Operating Cost (Opex)

Ch. 6—23



6.6.3 Observations on the Performances of Private Utilities

Ch. 6—26



6.6.4 Observations about the State Owned Utilities

Ch. 6—29



6.6.5 Sensitivity Analysis

Ch. 6—30



6.7. Concluding Remarks

Ch. 6—35



Chapter 7. Summary and Conclusions

Ch-7-1 to Ch-7-12



7.1 General

Ch. 7—1



7.2 Main Conclusions

Ch. 7—1



7.3 Limitations of the Analysis

Ch. 7—8



7.4 Scope for Undertaking Further Studies

Ch. 7—10




R-1 to R-24



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