Webinar: Market, Customer and Investment Intelligence on Ujjain for Distribution Franchisee Bidders

Webinar 10th Feb 2012

Copyright (c) pManifold. Electric Utility/EUCOPS/Ujjain
Market, Customer and
Investment Intelligence on
Ujjain for Distribution
Franchisee Bidders

Catalyzing emerging business models through

STAKEHOLDER ENGAGEMENT | CONSULTING | RESEARCH

Agenda

• RFP analysis
– Quick MP Bids characterization
– DF attractiveness matrix
– Load growth & customer segmentation

• Socio-Economic analysis
– Key socio-economic factors that interrelates with load growth
• EUCOPS©
– DF CAPEX Drivers
– Measurement framework
– Localization of PQR issues across customer segments
– Priority matrix
• Bid Investment Analysis
– Important bidding parameters & sensitivity analysis
• Conclusion
– Leveraging EUCOPS results for technical DD and validating capex/opex estimations
– EUCOPS Report

2/10/2012 www.pManifold.com 2

3
www.pManifold.com
RFP ANALYSIS

2/10/2012

MP bids quick characterization
What to choose between - Volume vs. Opportunity from ATC reduction vs. Investment size?

Bidding KPIs
(bubble size indicate mandated CAPEX in Rs. crores)

1400.00
Input Energy (MUs/year)

1200.00 Gwalior
(Area 174 sq. km.)
1000.00 Capex - 170 cr.
800.00 1.84 lacs cusomers

600.00 Ujjain
(Area 93 sq. km.) Sagar
400.00
Capex - 70 cr. (Area 205 sq.km.)
200.00 95K customers Capex - 30 cr.
54K customers
0.00
0.00%
-200.00 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%
AT&C losses (%)


DF Attractiveness Matrix
Ujjain offers highest customer density, lowest AT&C losses and low capital risk. Opposite trend of
reducing LT and HT consumptions per customer. LT to HT sales ratio in industrial segment is higher
than in Gwalior.
Revised RFPs @ town level % Deviation from old RFPs
@ Districit level Ujjain
East Central West East Central West
Parameters • Smallest area and highest
Sagar Gwalior Ujjain Sagar Gwalior Ujjain
Geographical Area (Sq. Kms.) 204 174 92.68 -98% -97% -98%
customer density amongst 3
population

Regional

bid areas
area &

POPULATION (2011) 309000 1045000 663000 -85% -49% -61%
DENSITY (2011)(Population per 1514.71 6005.75 7153.65
Sq.km)
668% 1442% 2448% • Avg. 70% reduction in number
No. of Electricity Consumers (Total) 54,641 184,680 95,893 of electricity consumers,
-81% -30% -71%
consumers
Electricity

in 2011 connected load and also
LT 54,634 184,553 95,834 -81% -30% -71%
HT 7 127 59 -83% -32% -37%
Electricity sales (with RFP
Consumer Density (per sq.km) 267.85 1061.38 1034.67 872% 1989% 1786% scope revision from District to
Connected Load (KW) in 2011 59,971 361,909 134,113 -74% -28% -68% town level)
LT 57,374 325,100 120,747 -73% -28% -70%
• Opposite trend of reducing LT
Connected Load

HT 2,597 36,809 13,366 -80% -25% -47%
Connected Load Density (KW/sq.km)
293.98 2079.94 1447.05
1219% 2056% 1985% and HT consumptions per
Average Connected Load per LT 1.05 1.76 1.26 customer as compared to
37% 3% 6%
connection (KW) Gwalior and Sagar
Average Connected Load per HT 371.00 289.83 226.54 (kWh/consumer/month)
19% 10% -16%
connection (KW)
Electricity Sales (LU) in 2011 955 5,423 2,382 -77% -31% -72% • 3% increase in distribution
Electricity Sales

LT 849 6,432 2,052 -77% 0% -73% losses inspite of significant
HT 106 1,403 330 -74% 0% -56%
Average consumption by LT 129 290 178 area reduction
19% 43% -8%
(kWh/consumer/month) • 6% improvement in collection
Average consumption by HT 126,488 92,051 46,627
(kWh/consumer/month)
50% 48% -31% efficiency
Distribution Losses (%) 41.63% 47.42% 38.71% -2% 4% 3% • 90% and 35% reduction in
Losses

Collection Efficiency (%) 93.95% 89.21% 96.56% 2% 7% 6%
45.16% 53.09% 40.82%
number of DTCs and
AT&C Losses 1% -3% -1%
transformer failure rate
Transformer Failure rate % 3.78% 8.95% 5.77% -45% -28% -35%
respectively
Transformer

Transformer Capacity (sum of all
397 4146 1420 -93% -49% -90%
divisions)(kVA)
Transformer Failure 15 371 82 -96% -64% -94%
2/10/2012
No. of DTCs 397 4146 1420
www.pManifold.com
-93% -49% -90% Source: pManifold Analysis 5

% Load Consumption (LUs)

Load Growth & Customer Segmentation 9%
14%

47%
Domestic
Commercial
Industrial (LT)
2%
HT & Commercial growth has picked up well with higher sales growth rate compared to 13%
Irrigation
Others

Gwalior. Growth is consistent with indication of lower theft as compared to Gwalior. 15%
HT

CAGR Ujjain town (2006-2011)
LT HT Overall
Domestic Commercial Industrial Irrigation Others Total LT Total HT Overall (LT + HT)
Number of consumers 2.35% 1.51% 2.26% -14.48% 21.87% 2.15% 7.61% 2.16%

For Ujjain

Connected Load (kW) 3.46% 6.52% 3.67% -7.05% 10.86% 4.25% 10.49% 4.79%
Electricity Sales (LUs) 8.95% 12.09% 2.37% -2.61% 18.63% 8.85% 15.56% 9.67%
Revenue Billed (Rs. Lacs) 15.22% 12.53% 5.19% 23.94% 15.61% 13.12% 17.79% 13.74%
Revenue Collected (Rs. Lacs) - - - - - 13.58% 18.24% 14.20%
Average billed Tariff (Rs./kWh) 5.75% 0.39% 2.76% 27.25% -2.54% 3.92% 1.93% 3.71%
Average realised Tariff (Rs./kWh) - - - - - 4.34% 2.32% 4.13%
Collection Efficiency (%) - - - - - 0.41% 0.38% 0.41%
Tariff Rates (Rs./kWh) 11.10% 2.01% 4.14% 8.37% 4.00% 5.51% 1.56% -
Source: pManifold

• Domestic: Higher sales growth rate than number of • LT Industrial: Revenue billed is lowest in LT
customers and connected load. This is indication of industrial customer segment. (LT industrial is bigger
higher consumption and sophistication as than HT)
compared to Gwalior.
• Agri: Agri consumption growth rate is smallest.
• Commercial: High electricity sales growth rate in However revenue billing rate shows highest
commercial. Connected load growth rate is 4 times progress (Potential good progress made in metering
higher than growth in number of customers. This agri customers)
indicates unused capacity and potential good future
growth rate of this segment. • HT: HT growth rate is high with steady collection. HT
Tariff growth rate is also the smallest.


7
SOCIO-ECONOMIC ANALYSIS

www.pManifold.com
2/10/2012

Socio-Economic trends for Ujjain District
Ujjain has higher DDP growth rate and workforce participation as compared to Gwalior. Also highest
literacy rate, and net sown area in MP. Higher urban slum rate, but lowest ST population in MP.

Economic Indicators Social Indicators
• 11.88% growth rate of District Domestic product • 0.626 HDI (Ujjain ranks 6th in MP)
(DDP) • 33.9% Female workforce participation is highest

• 8.1% Per capita income growth rate in MP
• 44.11% Total workforce participation rate • 19.1km road network per 100 sq. km. (against
(Ujjain ranks highest in MP) national avg. of 35)
• Increasing Rs. 22654/ha Agri land productivity • 2.45% urban slum population
(Ujjain ranks 2nd in MP) • 28.5% ST population (lowest in MP)
• 80.3% net sown area (which is highest in MP). • 71.18% literacy (highest in MP)
42% of net sown area is under irrigation. • Number of Industrial areas is 4 (highest in MP)
• 37.16% & 29.41% respectively Urban & rural BPL
families
• 20.69% of HH’s involved in NGREGS

Human Development Index (HDI)

Economic growth Load Growth
700000 6000
600000
5000
Electricity Sales (LUs)

500000
DDP (Rs. Lacs)

4000
400000
Sagar Sagar
300000 3000
Gwalior Gwalior
200000
2000
Ujjain Ujjain
100000
1000
0
0
2006-07 2007-08 2008-09 2009-10 2010-11
Electricity Consumption per Capita (kWh)


EUCOPS – Electric Utility Customer Opinion, Preferences & Satisfaction

A MEASURE OF UTILITY
PERFORMANCE


Distribution Franchisee Capex Drivers
What are the major Capex component drivers? What utility performance they target to improve?

Sample Capex distribution (First 2 years) Avg. Capex distribution (First 2 ye
11/0.4 kV DTC 16% PQR 16%

Consumer Metering (Replacement & New) 15% MBP 15%
Services & IT Expenses 12% CS, Com, IARH 12%
Critical Success Factors (CSFs) for utility
DTR Metering & EHV 11% MBP 11%
• PQR- Power Quality & Reliability
33/11kV Sub stn. 11% PQR 11%
• MBP – Meter Billing & Payment
3-phase 4 wire meters(AG) 7% MBP 7%
• CS – Customer Services
11kV Overhead Lines 5% PQR 5%
PQR, Price
• Com -5%Communications
Conversion of LT OH to UG 5%
PQR • IARH4%Information Access & Records
–
Transformer & DTC Box 4%
Handling
LT Lines Overhead 0.4 KV PQR 3%
3%
PQR, Price
• Price
3%
UG Cable HT/LT 3%
PQR 2%
33kV Overhead Lines 2%
PQR, Price 2%
RMU/LT Crimping/33Kv Capacitor Bank 2%
PQR, Price 1%
11 KV HT Pole Mounted Capacitor Bank 1%
MBP 0%
AMR HT Consumers and GIS 0%
Source: pManifold PQR 0%
Aditional Bay 11 KV 0%

How to ‘independently’ measure utility’s performance against the CSFs?
How to allot and ‘roll-out’ capex against each CSFs across different ‘revenue customers’ (both in time
and space)?

Electric Utility Customer Opinions, Preferences and Satisfaction
(EUCOPS) Study Framework
Further breakdown of CSFs into 27 attributes. They in turn drives to create a
‘functional role’ & ‘performance’ based DF organization
1. Unplanned Outages
2. Planned Outages
3. Voltage Stability

4. Safety & Maintenance
5. Local Electricity Infrastructure 7. Ease of New Meter
6. Breakdown Restoration Power Quality & 8. Resolution Meter Complaints
Reliability 9. Resolution Billing Complaints
10. Customer Service Response Time
11. Staff Behavior
27. Capability Customer 12. Access to customer service
Company Image Service
28. Community Engagement

CS
13. Advance notice about disruption
14. Advance notice about public work
25. Complaints Traceability 15. Awareness- Energy Efficiency
26. Online Accessibility of Information 16. Awareness- Customer Rights
Access & Record Communication 17. Communication Modes
Records Handling

18. Meter Accuracy
23. Fairness of Price 19. Bill Receipt on Time
24. Value for money Meter Billing 20. Billing Accuracy
Price
and Payment 21. Easy bill understanding
22. Modes of Payment

© pManifold

Customer Satisfaction Index (CSI) Ranking
Ujjain ranks lower than Gwalior with dissatisfaction across most attributes

SAGAR UJJAIN GWALIOR

1 100

50% 17% 33%

50 67

Dissatisfied (CSI < 50)
OK (50 < CSI < 67)
Satisfied (CSI > 67)

Copyright (c) pManifold. Electric
2/10/2012 12
Utility/CSAT/Gwalior

Critical Dissatisfaction across almost all attributes
Does ‘customer’ expectations varies across different consumer categories?
Factors Attributes Residential Commercial Industrial Agri
Unplanned Outages 29.70 24.44 42.22 35.56  By Category:
Planned Outgaes 22.42 48.89 24.44 15.56  Commercial Customers
Voltage Stability 46.67 37.78 40.00 37.78 indicating better CSI scores
Power Quality &
Safety & Maintenance 31.52 26.67 40.00 31.11 than other Customers
Reliability
Local Electricity Infrastructure 37.58 26.67 33.33 28.89  ‘Industrial’ & ‘Agri’ Customers
Breakdown Restoration 28.48 35.56 24.44 33.33 are dissatisfied with almost All

Average 32.73 33.33 34.07 30.37 Attributes
Ease of New Meter 31.25 27.27 33.33 20.00
Resolution Meter Complaints 26.67 30.95 24.44 17.78
Resolution Billing Complaints 21.82 28.89 31.11 33.33
Customer Service Service Response Time 25.45 24.44 22.22 20.00
Staff Behavior 27.27 40.48 22.22 22.22  Most Dissatisfaction
Access to customer service 22.73 30.56 33.33 28.89
Average 25.86 30.43 27.78 23.70
(Attributes)
Advance notice about disruption 30.30 28.89 22.22 13.33  Planned Outages
Advance notice about public work 27.88 17.78 20.00 26.67  Resolution Meter Complaints
Awareness- Energy Efficiency 20.00 26.67 22.22 13.33  Resolution Billing Complaints
Communications
Awareness- Consumer Rights 21.82 35.56 28.89 17.78  Advance notice about public
Communication Modes 27.27 44.44 28.89 15.56 work
Average 25.45 30.67 24.44 17.33  Awareness Energy Efficiency
Meter Accuracy 38.79 40.00 24.44 28.89
 Service Response Time
Bill Receipt on Time 55.76 71.11 48.89 44.44
Meter, Billing & Billing Accuracy 35.15 55.56 33.33 31.11
Payments Easy bill understanding 56.36 62.22 44.44 42.22
Modes of Payment 47.27 60.00 40.00 46.67
Average 46.67 57.78 38.22 38.67
Fairness of Price 29.25 51.28 35.71 46.67
Price Value for money 32.67 26.19 21.43 28.89
Agri Industrial Overall Residential Commercial

Average 30.96 38.74 28.57 37.78
1 100
Complaints Records handling 31.88 28.21 27.78 19.44
Information Systems Online Accessibility to records 23.33 27.78 33.33 28.21
50% 17% 33%

Average 27.61 27.99 30.56 23.82 50 67

Capability 23.13 20.51 26.19 25.00
Company Image Community Engagement 31.78 39.39 30.30 18.18
Average 27.46 29.95 28.25 21.59


Localization of service delivery issues
Category-wise & geographical localization of PQR issues - Outages, Breakdown restoration &
Maintenance are key issues affecting all customer categories including revenued ones.
PQR - Power Quality & Reliability
Planned Outages % Dissatisfied customers with PQR
100% 93%
89% 87% 87%
90%
80% 80% 80% 80%

76%
80% 73% 73% 73%
67% 67% 67% 67% 67% 67% 67% 67%
70%
60% 58%
60% 53%
47%
50%
40%
30%
20%
10%
0%
Unplanned Outages Planned Outgaes Voltage Stability Safety & Maintenance Local Electricity Breakdown Restoration
Infrastructure

Residential Commercial Industrial Agri

Overall ‘satisfaction’ levels for PQR

Breakdown Restoration

Local Electricity…
Source: pManifold
Safety & Maintenance
Agri Voltage Stability
Industrial
Planned Outgaes
Commercial
Unplanned Outages
Residential
0% 20% 40% 60% 80% 100%
0% 20% 40% 60% 80% 100%
VS S DS VDS NA
2/10/2012 VS S DS VDS NA www.pManifold.com 14

Capex investment Priority Matrix for Ujjain
How to design and validate DF Capex plan to quick win customer satisfaction and faster ROI?
Improving PQR and Customer Services should be the focus for initial capex deployment.

Importance HIGH

Voltage Stability

Planned Outgaes

Copyright (c) pManifold. Electric Utility/CSAT/Ujjain
Unplanned Outages

Value for money

Communication Modes Meter Accuracy

Satisfaction HIGH
Satisfaction LOW

Advance notice about Safety & Maintenance
public work Bill Receipt on Time
Advance notice about disruption
Resolution Billing Complaints Ease of New Meter
Resolution Meter Complaints
Local Electricity Infrastructure Billing Accuracy Easy bill understanding
Awareness- Energy Efficiency
Awareness- Consumer Rights
Capability
Service Response Time Staff Behavior Modes of Payment
Access to customer service Breakdown Restoration
Fairness of Price
Importance HIGH

For Gwalior Planned Outgaes
Unplanned Outages

Bill Receipt on Time
Value for money

Advance notice about

Copyright (c) pManifold. Electric Utility/CSAT/Gwalior
Fairness of Price

Complaints Records handling
Breakdown Restoration

Satisfaction HIGH
public work

Satisfaction LOW
Capability
Meter Accuracy Advance notice about disruption
Voltage Stability Access to customer service
Complaints Records handling
Billing Accuracy Modes of Payment
Staff Behavior
Resolution Billing Complaints Easy bill understanding
Resolution Meter Complaints
Community Engagement

Online Accessibility Service Response Time

Online Accessibility
Safety & Maintenance

Awareness- Energy Efficiency
Awareness- Consumer Rights
Communication Modes

Local Electricity Infrastructure

to records
to records

Ease of New Meter

30.00 35.00 40.00 45.00 50.00 55.00 60.00 65.00

Community Engagement Importance LOW

10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 55.00 60.00

Importance LOW
2/10/2012 www.pManifold.com Source: pManifold 15

Some top findings from pManifold’s DF Excel Financial Model

BID INVESTMENT ANALYSIS


Input Bid price trend analysis
Required minimum ratio of ‘Minimum to Maximum input price’ is 0.70. Also
subsequent years bid price should be higher than previous year quotes.

5
4.5
Bid price trend Min/Max = 0.8
LIP = 3.52 Rs./kWh
4

LIP = 3.25 Rs./kWh
3.5
3
LIP = 2.11 Rs./kWh
2.5
LIP = 1.95 Rs./kWh
2
1.5
Min/Max = 0.66
1
0.5
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

• Previous DF winning bids at • Severe competition seen in
Nagpur, Aurangabad and Jalgaon previous bids, with 2nd ranking
has seen delta of less than Re. 1 bid loose by around 10 paisa in
between Min and Max bid price. LIP

LIP = Levelised Input price

Sample Investment return from Ujjain DF – one
sample simulation run
Results Key assumptions
• Capex:
• Equity IRR = 8.79% – Capex Rs. 70 cr. (distributed as per sample capex distribution in
previous slide)

– 100% refund of depreciated terminal value

•
• Equity payback = 9 years Opex:
– 60 paisa per unit employee cost (80% of O&M costs)

• Input price:
– Bid price curve with LIP of Rs. 3.52 (previous slide top green curve)
• Avg. DSCR = 1.02
• Loss Reduction:
– Technical Loss reduction rate of 16% per year (cap 6%)
– Non-Technical Loss reduction rate of 20% per year (cap 4%)

• Tariff Indexation ratio ranges from • Growth:
1.03 to 1.64 in 15 years –
–
Avg. Tariff growth rate of 3%
Avg. Load growth rate of 7%

• Investments:
– Equity 30%
– Term Loan Interest rate 13%

• Taxes:
– Tax rate 33.22%
– MAT 19.93%


19
www.pManifold.com
CONCLUSION

2/10/2012

EUCOPS help validate ‘Capex’ interventions & roll-out plan
How to use ‘customer derived intelligence’ into strengthening bid estimation?

37.78
PQR: Voltage
Stability
• What are the causes of

CS: Customer
Service dissatisfaction in
24.44
MBP: Easy Bill
Response Time different revenue
Understanding
PQR: Outages customer categories?
Where?
44.44 29.70
• What intervention
PQR: Safety and
Maintenance
required to address
Ujjain town 31.52
them?
• What capex and opex
PQR:
26.67 Local Electricity Infrastructure implications?
Residential Commercial Industrial Agri

Dissatisfied (CSI < 50)
CSI Scale
OK (50 < CSI < 67)
Satisfied (CSI > 67)


Augment your MP bidding intelligence with our
EUCOPS© reports
Fuel your on-site due diligence efforts and challenge your bidding assumptions
with our detailed analytics. All 3 MP regions reports (100+ slides each) available.

DF = DISCOM + ATC Loss Reduction + Opex optimization + Customer Satisfaction

1. On-site technical due
1. EUCOPS (Customers) diligence (Bidder-
2. Consumption (RFP) Technical)
3. Socio-Economic 2. Investment Analysis
trends (2° research) (Bidder- Mgmt.)

pManifold ©

Informed &
Rational
Bidding
(increase win prep)


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Articles, technical notes.

India (Main office) USA (Liaison Office)
Power Distribution True
Distributed
Generation
Crystal Plaza, Level 2 2020 Calamos Ct.,
276 Central Bazaar Road, Suite 209
Franchisee
AT&C
Efficiencies

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Distribution Ramdaspeth, Nagpur - 10 Naperville,
Community of Interest Franchisee

Maharashtra, INDIA IL 60653, USA

http://www.pmanifold.com Mr. Dinesh Jain
+1 630-853-3520
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Webinar: Market, Customer and Investment Intelligence on Ujjain for Distribution Franchisee Bidders

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