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IT-driven power distribution
With the winds of liberalisation blowing across India’s power distribution
sector, the need is for an integrated strategy that ensures that information
technology is used as a strategic tool for the electricity distribution business,
says Arijit Mitra
Information technology has long outgrown the traditional role of automating
processes and delivering productivity improvements. As information systems have
evolved over a period of time, the quality of information generated by systems
has appreciated to an extent where organisations expect these systems to provide
a competitive advantage.
In the specific context of electricity distribution in India, information technology
has found application, to varying degrees, in the following key processes:
- New applications
- Billing and collection
- Consumer service
- Financial management
- Network Management
The advent of a regulator has signalled a paradigm shift in the business of
electricity distribution in India, as has happened elsewhere. The regulator
has taken upon the mantle of licensor, licence enforcer, tariff setter, dispute
resolver and most importantly, guardian of consumer rights. Utilities today
have a clear accountability to meet service standards through practice documentation
and process measurements. It has become necessary for utilities to furnish to
the regulatory authority on a periodic basis forward estimates of demand and
cost, as well as investment plans, thus requiring a higher degree of process
automation to compile engineering, billing and financial data.
Distribution reforms are now being driven by new investments in capacity augmentation
to meet burgeoning demand, management initiatives that implement best practices
in the areas of metering, billing, collection and customer service, application
of technology for process and system automation, and innovative practices in
the field of energy conservation and demand management.
Best practices
Implementation of information systems has been structured so that it offers
an opportunity to make a re-assessment of the processes being focused upon.
Mapping of business processes together with inputs regarding industry best practices
help identify and eliminate non-value adding process steps, resulting in rationalised
business processes through which data can flow seamlessly across functions and
create information that aids fact-based management.
Because of the initial focus on process automation and the absence of a holistic
approach, software development has traditionally grown out of requirements of
individual functions, such as billing, finance, operations, etc. This has necessarily
resulted in compartmentalised systems mimicking the functions they represent,
which are vertical by nature, as opposed to processes, which are horizontal
by nature, travelling across functions to deliver value to the intended customer,
whether internal or external.
The pitfalls of having such standalone, non-interactive software deployment
are duplication of data and consequent data mismatch, which can result in hold-ups
in delivery of customer service, revenue loss, as also wastage of resources.
Common examples are customers not getting billed for months, sometimes years,
because information from the Application Processing System or the Meter Information
System has not moved to the billing system, or the extent of resources that
are invested in reconciling collection records of billing and financial systems
at the time of annual closing of accounts. These standalone systems also do
not allow exploring synergies that may help rationalise processes. The nature
of such a deployment is illustrated in Figure 1.
As parameterised software products have gradually gained precedence over custom-built
legacy systems, the focus has shifted to integrated information systems, which
are more process-centric than traditional approaches towards software development.
Systems such as Enterprise Resource Planning (ERP) rely on back-end integration
of data to ensure consistency of data, obviating duplication of data entry.
As modules targeted at specific functions draw from the same pool of data, the
flow of data appears to be seamless to users. The structured methodology of
modern information systems ensures that processes are mapped and evaluated,
so that redundant processes can be eliminated. Organisations also have the opportunity
to embrace industry best practices that are incorporated in globally accepted
systems.
Figure 2 illustrates how various functions can derive benefit from an integrated
IS architecture. The apparent simplicity of the concept is belied by the fact
that there is no single software solution that can address all aspects of electricity
distribution in India, and hence translating integration of information systems
to reality becomes a challenge in itself. This paper suggests one of the roads
that may lead to such a solution.
Using information systems
As a customer travels along the value chain of an electricity utility, the following
information systems come into play:
- Application Processing System
- Billing system
- Collection and payment follow-through system
- Complaint handling system
The systems mentioned above account for a bulk of the information captured regarding
transactions with customers during the life cycle of a customer in a distribution
system. When information remains distributed among disparate systems, the Customer
Information System remains a nebulous entity, which is difficult to manage.
However, when data is shared among systems, it becomes possible to collate information
that most Customer Relationship Management Systems use to keep track of transactions
with customers, derive business intelligence from the data and in the end deliver
better customer service and retain customer loyalty. For such integration to
take place, modelling of data assumes crucial importance.
The integrated scheme of Customer Management Modules is represented below in
Figure 3.
Unfortunately, there are few software products available that can address in
totality the requirements of application processing, billing, collection and
receivables management in the context of electricity distribution in India.
Most utilities have relied on custom-built software solutions to meet their
specific needs in the absence of parameterised products with a track record
of proven success. However, in case of Financial Management Systems, the choice
is wider with a number of ERP solutions vying for the market. While the products
available have their own strengths and are targeted at specific segments, the
experience of Noida Power Company has shown that the following ERP modules constitute
the bare minimum that an electricity distribution utility may need:
- Projects
- Purchasing
- Inventory
- Payables
- General Ledger
- Assets
Apart from the modules mentioned, an organisation may opt for any number of
additional modules such as Payroll, Cash Management, Material Requirement Planning,
etc., depending on the nature of requirement.
The flow of data across modules in case of capital projects resulting in asset
creation demonstrates succinctly the value of having an integrated Financial
Management System. Figure 4 shows how the Fixed Assets Register of a distribution
utility can be updated with accurate details that are captured right from the
stage of creation of a capital expenditure job.
While the software solutions discussed so far address customer management and
financial management issues, the other key issue of network management calls
for a different breed of solutions. The network solutions can be as follows:
- Supervisory Control and Data Acquisition (SCADA) systems
- Automated Mapping / Facilities Management / Geographic Information System
(AM/FM/GIS) solutions
SCADA systems assist utilities to carry out real-time monitoring and operation
of the network from a remote location. By employing intelligent devices to sense
network parameters and transmit data to remotely located SCADA operators, the
system ensures that all essential network information is available at real-time
at a central location for monitoring and analysis. Remote operation of the circuit
from SCADA stations ensures that the network can be managed centrally, thus
reducing hazards of manual errors.
AM/FM/GIS solutions can be utilised to carry out facilities management, network
analysis, network planning and design and trouble call management. Electrical
Network Analysis Engines are also available, which have ready interfaces with
most leading AM/FM/GIS software and can import network data from the facilities
database and carry out analysis. Using these network analysis tools, the following
studies can be carried out:
- Load Flow Analysis
- Short Circuit Studies
- Network Reconfiguration
- Network Reconductoring
- Optimal Capacitor Placement
- Optimal Voltage Regulator Placement
- Transformer Tap Setting Optimisation
- Optimal Distribution Substation Location
By combining results of network studies with cost records and other relevant
data, it is possible to determine financial viability of projects for network
optimisation. This provides an excellent opportunity to derive, in the short
term, return on investment made in implementation of AM/FM/GIS systems.
Summary
By employing an integrated strategy, information technology can thus be used
as a strategic tool for the electricity distribution business for achieving
the key objectives of incorporating best practices, improving process efficiencies
and delivering superior customer service. This has become especially relevant
under the new regulatory regime driving distribution reforms in the country,
which requires utilities to be agile and responsive towards the challenges posed
by the new environment. The current approach is gravitating towards developing
an integrated Distribution Management Platform, where Customer Information Systems,
Network Management Systems and Financial Management Systems can share data,
helping processes to bridge functions to deliver service to customers, internal
and external.
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| Figure 1 |
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| Figure 2 |
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| Figure 3 |
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| Figure 4 |
The author works with the Noida Power Company, based in Noida, UP
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