Note on Loss Reduction Pathways

Loss Reduction Pathways for UPPCL

Aggregate Technical and Commercial (AT&C) losses represent a critical measure of the
efficiency of power distribution systems. These losses encompass both technical losses,
which occur due to the inherent inefficiencies in electricity transmission and distribution,
and commercial losses, which arise from factors such as billing inaccuracies, meter
tampering, and non-payment of bills by consumers. The formula for calculating AT&C
losses is:

AT&C Losses = 1 − (Billing Efficiency × Collection Efficiency)

Where:

• Billing Efficiency is defined as the ratio of energy billed to the total energy input:

Billing Efficiency=Billed Energy/Input Energy

• Collection Efficiency measures the proportion of revenue collected against the

amount billed:

Collection Efficiency=Revenue Collected / Billed Amount

Bucketing of losses
AT&C losses can be categorized mainly into two main components i.e., billing-related
losses and collection-related losses.

1. Billing-Related Losses: These losses could be attributable to one or all of

following:

a) No or Faulty Meters: Inaccurate or non-functional meters lead to incorrect or

under reporting of consumption.

b) Meter Tampering: Deliberate manipulation of meters or bypassing the meters

by the consumers results in underreporting of consumption.

c) Power Theft: Unauthorized tapping into the distribution network significantly

contributes to revenue loss.

d) Technical Losses: These include energy losses due to resistance in electrical

components like transformers and transmission lines.

e) Improper Functioning of MBC Teams: Inefficiencies in Metering, Billing, and

Collection (MBC) teams such as punching meter reading without even visiting
the meter location, getting influence by the consumers for entering lower
consumption, frequent estimated billing to the consumers, delays between
meter reading and bill issuance, etc. can lead to billing related losses to the
DISCOMs.

2. Collection-Related Losses: These losses could be attributable to one or all of

following:

a) Consumer Unawareness: Many consumers may not fully understand their

electricity bills or the concept of electricity as a paid service. Some consumers
may assume that electricity should be free or undervalue its cost.

b) Local Resistance: Some local leaders/politicians may encourage the

consumers for non-payment of their electricity bills or delay the payments.

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c) Peer Comparison: If neighbours do not pay their bills, individuals may feel
justified in withholding payment.

Approach to Reducing Losses: To effectively tackle AT&C losses, utilities can leverage
a combination of following instruments or avenues:

1. Smart Metering: Implementing smart meters helps improve billing accuracy and
reduces errors associated with manual readings. Smart meters also facilitate real-
time monitoring of energy consumption. It enables DISCOMs to perform advance
analytics to identify and rectify issues in real time.

2. Data Analytics: Utilizing advanced data analytics can help identify patterns of
energy theft and billing discrepancies, allowing for targeted interventions.
Additionally, with progression of maturity on availability, quality and adequacy of
data, DISCOMs can identify various use cases for data analytics over time, tailored
to their specific challenges and experiences.

3. Infrastructure Upgrades: Investing in modernizing the distribution network can

significantly reduce technical losses. This includes replacing old transformers and
enhancing line capacities.

4. Capacitor Placement: Strategic placement of capacitors within the distribution

network can improve voltage regulation and reduce reactive power losses.

5. Feeder segregation: Separating consumers (e.g., agricultural and non-

agricultural) onto dedicated feeder lines can also contribute to containment of
distribution losses. This practice minimizes overloading, improves load
management, theft prevention, enhances voltage stability, and ultimately results
in a reduction of losses.

6. Consumer Awareness Programs: Educating consumers about their electricity

usage and the importance of timely payments can improve collection efficiency and
continuously engaging them through social activities for building good relations
with them.

7. Regular Audits: Conducting regular audits of metering and billing processes can
help identify inefficiencies and areas for improvement. Digitization of the auditing
processes can further enhance its effectiveness.

Loss Reduction works in Uttar Pradesh:

Uttar Pradesh Power Corporation Limited (UPPCL) is working on a comprehensive loss
reduction strategy aimed at significantly decreasing technical and commercial losses in its
distribution network under Revamped Distribution Sector Scheme (RDSS), which
mandates a reduction in Aggregate Technical and Commercial (AT&C) losses from over
29% to 12-15% and ACS-ARR gap to Zero by 2024-25.

Key Components of the Loss Reduction Strategy

• Investment in Infrastructure: The Ministry of Power (MoP) has sanctioned Rs.

40,971 crores to Uttar Pradesh for various projects under the Revamped
Distribution Sector Scheme (RDSS) aimed at strengthening the power distribution
network. In response, the Uttar Pradesh Power Corporation Limited (UPPCL) has
awarded contracts worth Rs. 42,796 crores. The total Government Budgetary
Support (GBS) sanctioned for Uttar Pradesh stands at Rs. 17,093 crores, with Rs.
3,953 crores already released for loss reduction initiatives. This includes upgrading

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infrastructure and installing smart meters with objective to enhance billing accuracy
and reduce theft.

• Improving Collection Efficiency: UPPCL enhanced its collection efficiency from

the 85.91% in FY22 to 99.94% in FY25, which is corroboration of a mix of LR works
and realization of past arrears.

• Technological Advancements: The deployment of smart meters and advanced

monitoring systems will help UPPCL better track consumption patterns and identify
areas of power theft, thereby facilitating timely interventions. As of December
2024, DISCOMs have successfully installed approximately 4.65 Lakh smart meters,
achieving 100.79% feeder metering, 1.15% distribution transformer (DT)
metering, and 1.58% consumer metering based on the sanctioned projects. This
advancement positions Uttar Pradesh at the forefront of the initiative, which aims
to reduce Aggregate Technical and Commercial (AT&C) losses.

• Public-Private Partnerships (PPP): To address high-loss regions, UPPCL is

considering involving private players through PPP models, particularly in districts
like Varanasi and Agra, where losses are notably high.

• Government Support: The central government has approved substantial financial

assistance for loss reduction initiatives, emphasizing the importance of achieving
these targets for continued funding.

By focusing on these strategies, UPPCL aims to enhance operational efficiency, recover

costs more effectively, and ultimately achieve financial sustainability while improving the
reliability of electricity supply across Uttar Pradesh.

Case Study: Madhya Pradesh

Madhya Pradesh's distribution companies (DISCOMs) have undertaken a significant digital
transformation to enhance service delivery, improve consumer experience, and reduce
losses. Key initiatives include introduction of an online process for new service connections,
instant billing systems, and the electrification of unauthorized colonies. These initiatives
contributed to a significant reduction in AT&C losses from 41.55% to 20.32%. The ACS-
ARR gap decreased from Rs. 1.23/kWh to Rs. 0.52/kWh.

1. Online Service Connection Process: Madhya Pradesh DISCOMs launched a web

portal and mobile application to facilitate the online application process for new
service connections. The process requires only two documents: a demand note
based on self-declaration, enabling new low-tension (LT) connections in urban areas
within just 3 days.

2. Instant Billing System: An instant billing system was implemented, resulting in

annual savings of approximately Rs.136 crore through paperless billing. The
introduction of GIS-based QR coding for all meters has streamlined the billing
process and enhanced accuracy.

3. Automated Meter Reading: Meter readings are now conducted without human
intervention through photo meter reading, self-meter reading, Automatic Meter
Reading (AMR), and smart metering technologies. This automation has led to a
53% reduction in billing-related complaints and an average improvement of Rs.300
per bill.

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4. Electrification of Unauthorized Colonies: To address the issue of illegal

colonies, regulations were amended to allow electrification. Previously, these areas
faced higher tariffs due to temporary connections and were prone to power theft.

5. Enhanced Consumer Experience: DISCOMs enhanced consumer experience

through various digital platforms, including WhatsApp, chat-bots, voice-bots, SMS
notifications, social media engagement, and customer-centric mobile apps. AI/ML-
based consumer facilitation has enabled advanced outage notifications and a
consolidated bill payment system.

6. Digital Payment Facilities: Digital payment facility was introduced, leading to

annual savings of nearly Rs.75 crore in bank charges.

7. Data Analytics for Vigilance: Smart meters and data analytics have enabled the
detection of anomalies, identifying ~ 16,000 cases that led to recoveries amounting
to Rs.15 crore. An additional Rs. 5 crore was recovered against maximum demand
exceeding sanctioned loads and penalties for not maintaining power factor (80%).

Case Study: TPDDL

Tata Power Delhi Distribution Limited (TPDDL) serves as an exemplary case study in
reducing AT&C losses. By implementing a multi-faceted approach, TPDDL successfully
lowered its AT&C losses from around 50% in 2002 to approximately 8% by 2021.

Key Initiatives by TPDDL:

1. Investment in Technology: TPDDL invested heavily in smart metering and

automated data collection systems that improved billing accuracy and reduced
human error.

2. Infrastructure Development: The company upgraded its distribution network,

including the installation of underground cables to minimize theft and enhance
reliability.

3. Consumer Engagement: TPDDL initiated programs to engage consumers

actively, providing them with insights into their consumption patterns and
encouraging timely payments.

4. Robust Theft Detection Mechanisms: The utility implemented advanced

monitoring systems that quickly identified discrepancies in energy usage, enabling
prompt action against theft.

Through these initiatives, TPDDL not only improved its financial health but also enhanced
customer satisfaction by providing reliable electricity supply and transparent billing
practices. In conclusion, addressing AT&C losses is crucial for enhancing the efficiency of
power distribution systems. By adopting comprehensive strategies similar to those
employed by TPDDL, utilities can significantly reduce these losses, thereby improving their
financial sustainability and service delivery.

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