It is estimated that power transmission losses cost the country between Rs 50,000 crore and Rs 1,00,000 crore annually. Power losses can be divided into two: technical losses and commercial losses.
Technical loss means loss in the transmission and distribution of power. Commercial loss means theft. Technical losses in India are estimated to be around 30% of all power transmitted, commercial around 10%. In toto, anywhere between 30-50% of power is supposed to disappear.
I was speaking, some years back, to the innovation czar of the earlier government, who had been tasked to improve the country’s electricity grid. I conveyed my suggestions to him, including ways to reduce power theft with smart meters. He instructed me to leave smart meters out of it.
I was left scratching my head, but on further reflection understood why. Electricity is stolen in any number of ways. Many people throw a hook (kunda) on the line between your local transformer and meter. This malpractice is considered common in slums, but theft is not just a slummy business. It is the rich and middle classes that are more often at fault.
Electricity prices are very high in India when compared to the US. They can account for up to 20% of a household’s monthly spend, perhaps even more. That’s what the annual family trek to Dubai can cost. Many households do have electronic meters now. But these are simple meters, just a step upgrade from the round spinning meters that are still prevalent all over the country.
Here’s how one scenario plays out: The meter reader comes to my house every month. I pay him off. He registers a faulty low reading. This behaviour goes on, unhindered, for months.
After a year or so, he informs his bosses that the meter needs to be checked and corrected. But these are the same bosses who are taking a hefty cut from him and funnelling it up to their neta-babu masters. So they are ever ready to comply. And the cycle goes on.
That’s possibly why the innovation czar disdained smart meters. Power is transmitted over metal wires. These may get corroded, but even then, electrons don’t get rerouted for technical losses to be to the tune of 30% or more. In the US, a utility typically recovers between 5-10% of its overall revenue as technical losses from the government.
Most utilities there report power theft as only between 1-3% of overall revenue. If you talk to almost any theft prevention head at a utility, she will scoff at that measly figure. She will disclose that theft can be up to 10%.
Why do American utilities underreport? First, any utility admitting that so many of its customers are crooked in a lily-white country that prides itself on its honesty would leave plenty of red faces.
Second, its shareholders will demand what is being done to rectify the situation. And third, many utilities aim to keep recovering the 5-10% line losses while clandestinely benefitting from the theft reduction capabilities of smart meters. Were they to reveal to the government how much theft they could actually mitigate, the government could wisen up and drastically reduce their line loss benefits.
Indian utilities (state electricity boards) constantly go into the red, then get their slate wiped clean by the government, and then promptly go back into the red. Only a few utilities have been privatised in the country. I know of only one among them that is trying to install smart meters, but its plans seem so grandiose that one wonders if they will trip even before they get started.
With theft levels so high in India, technologies such as smart meters could provide a payback period of less than three years. But utilities must be incentivised to raise, leave alone the expectations of their consumers, their own as well. The Electricity Reform Act of 2003 was a good beginning. But India’s power has been stalling for the most part ever since.
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