Managing the electricity theft menace

India has world’s fifth largest installed capacity for power generation, but more than 300 million people in the country still do not have any access to electricity. One significant contributing factor to this insufficiency is the staggering network loss, exceeding 30 percent. Such a huge loss in transmission and distribution (T&D) further raises the demand and places increasing pressure on the installed capacity.

Though it is difficult to quantify the proportion of electricity theft in T&D losses, it is undoubtedly a major contributor. As a consequence, utility organizations have been running huge losses, resulting in increased power tariff for the end user.

Power theft results in a situation where all the stakeholders, including those responsible for the pilferage in the first place, get affected. While stronger vigilance and better technology can address the issue to an extent, I believe there is a greater need for awareness among people and having greater focus on building the overall infrastructure. While, citizens must have access to such an essential element of modern day life, they should not expect it for free either. What do you think?

This is contributed by Jeby Cherian, Strategy Leader of IBM India/South Asia

Jeby Cherian

Jeby Cherian is the Strategy Leader of IBM in India and South Asia, and also serves on the India Leadership Team. He provides guidance to IBM’s Corporate Development team in India, leads and positions IBM’s Security solutions portfolio to the Government of India, and provides executive sponsorship for growing the High End Server business in India. Before this, Cherian worked in Bangalore with IBM’s Global Solutions Delivery Center and with PricewaterhouseCoopers (PwC) in Finance Transformation services. Cherian is a CPA with a Master’s degree in Accounting from the University of Illinois and an MBA from the University of Chicago.

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  • June 6, 2012

    Partha Tripathi

    You are absolutely right. The pilferage is one of the main reason for Higher T&D losses. The technology and infrastructure arrangement should be such that theft does not depend upon individual value system. This are the few options which will help in reducing and improving the cashflow.
    1. Covered cables as a backbone of last mile distribution.
    2. Smart pre paid metering.
    3. On demand utility connection which should not take more than few days to provide connection to the estalishment.
    4. internet enabled payment system.

    • July 15, 2012

      Jeby Cherian

      Partha…good points. I think # 4, already exists. Covered cables in the last mile is a good idea. But would it really solve the problem? Wouldn’t it just shift the pilfered connection from the post to the meter? I also think that a analytics model that helps identify theft based on predictive usage patterns will also help.

  • June 7, 2012

    Anil Danti

    So true. T&D loss is causing unnecessary wastage. We need to bring in operation efficiency to reduce such losses. Firstly, this needs infrastructure change for electricity department to be able control this. This is one of the major issue which needs immediate attention and is also easier to implement. We can replicate from the other countries who are managing this better. From end user perspective, experience needs to be improved. It should be made easy to get a connection and also payment process should be streamlined. Agree with Partha…those four bullet points should bring in better control to the system.

    • July 15, 2012

      Jeby Cherian

      Anil, thanks for the post. I agree with Partha’s suggestions. I think in addition to what Partha indicated, we should use analytics in a big way to identify leakages.

  • June 8, 2012

    Achal Sangal

    Hi Jeby, Well the problem raised is very pertinent, but i think we as a country is still fumbling for solutions to prevent this colossial loss of power in T&D. Countries like Brazil, Europe seem to be covering large landmasses (in kms) for their power T&D , yet the losses are minimal. I sometime believe that, do we a country of 1 billion and famous for our technological prowess need to invent completely new solutions or make use of technologies already being used in developed countries (albiet with some customization). Although we cannot completely eliminate corruption (which has not become endemic to system but our inherent nature)…atleast with use of technology , we can reduce th scope of corruption & losses arising out of it !!!

    • July 15, 2012

      Jeby Cherian

      Achal – I do not think this is a case of lack of technology. We need the willingness to drive the program in an accelerated manner. Power is a key pillar on which our Country’s growth depends on and yet, we are quite ambivalent about it. The good news is that there are several projects that are going on now both in increasing capacity and decreasing T&D losses. I only wish we did this on a war footing. Any ideas on how to do it? Would a scorecard at the country level with appropriate incentives help?

  • June 11, 2012

    Hardik Thaker

    Very well said in you last line. We, the people should not expect such essentials for free or even at discounted rates as ultimately its going to hit the pockets of someone like us only. I think not only T&D loss but the entire sector needs major reforms post its first phase of reforms initiated by segregating the generation, transmission & distribution companies.

    Though I agree with all the above comments, I think technology is not the only solution to this problem, we need a mindset change and strong willpower both of government & people to overcome this. Today, how many times we as people have reported power theft incidents? Forget reporting, I can bet more than 80% people would also not know how to report such incidents. We need technology and digital metering upto last mile to box-in the origins of power thefts. Also, we need stricter punishments for those who get caught in scenarios of power theft.

    Apart from implementing technologies solution like Partha mentioned above, we need to think out of box to bring accountability. One of the genius enlightened me with a wonderful example in this area. For industries (major consumer of electricity), consumption of electricity can be directly proportional to output of the goods/services they offer. These goods/services quantum which they manufacture is always reported in their excise/service tax filing. Can’t we use analytic engines on the past data available to derive this equation and monitor on monthly/quarterly basis, the electricity consumption. We can right? We just need appropriate linkages between data available with two different government agencies.

    Another aspect to the mounting theft are power tariff. People only steal things which are costlier. Political parties are sabotaging the power balance for petty political gains. Just because the agriculture forms backbone of your country doesn’t mean it should be cheap power to gain popular votes. We need strict action by State ERCs to ensure that every power is not provided below cost price. But unfortunately, State ERC boards are appointed at will & mercy of these political parties and thus they are mostly helpless to these proposals.

    Lastly, we need to use technology for generating complex billing structures for rewarding those who,
    – use electricity in off-peak hours
    – use sanctioned loads
    – use rated instruments
    and punish the violators.

    Yes, I agree, the road ahead is challenging in country like India, where people lacks responsibility towards society, but with strong will power of few, use to innovative thinking and applying right set of technologies, we can definitely take a step closer to achieve balanced electricity consumption.

    • July 15, 2012

      Jeby Cherian

      Hardik – What a thoughtful and powerful post. A few comments – linking electricity to units of output will work only if there is a linear relationship between output and power used. Usually the economies of scale and scope will set in and reduce the power consumption for every incremental unit, until dis economies set in. Besides, using analytics in this case will only open it for further subjective discretion. We can measure exactly how much power is being used, so we should charge for exact quantities consumed. One thing we could do is to make it mandatory for industrial companies to pay by automatic debits.

      On agriculture, could not agree more. Two points – One we should segment the users differently – urban users vs agriculture users. We should also charge them differently. Urban users will be willing to pay differentiated rates for predictable, consistent, uninterrupted power.

      Second point – providing of subsidized power to agriculture users also has a negative impact on water. Because power is free, people do not have an incentive to use it judiciously…in the process we end up flood irrigating the fields with another scarce resource – Water!

  • June 11, 2012

    Mohit Saini

    Agree with Jeby Cheiran. In fact to counter this issues, we developed a system called ‘Power Theft Detection System’. This system can be installed in a distribution area. Once installed, it can detect the amount of electricity theft done by any consumer (or non-consumer), the time and amount of theft which is done and exactly at which place theft can be done. It also has added advantages of online meter reading, variable billing according to peak and non-peak loads, real time analytics of electricity distribution of electricity usage.

    • I remember that more than 10 years ago MSEB, the electricity distribution company in Maharashtra, had started putting meters on the distribution poles and had put in place a system to detect any possible theft of electricity. The system mentioned by Mohit seems to be similar or is the same. Not sure but it certainly will help. It then needs to be backed by strong will to punish the offenders, quick mechanism to do so and if someone / some group as has happened in the past, hampers the same in the name of protection of citizen’s interests, an extremely strong deterrent for doing so. If the theft /loss decreases, one can reasonably expect the price to come down.

    • July 15, 2012

      Jeby Cherian

      Mohit…any proof points? Actually to solve the theft problem in urban areas is quite simple. The electricity board needs to inspect every pole in the city and start disconnecting all the unauthorized lines. Do it consistently and make the consequences pretty steep and you will find a steep drop. What we need is the willingness to do this.

  • June 11, 2012

    Bhupesh

    Common people has understanding that most of the theft happens in Small and Medium Industries/Enterprise, where lot of easy money change hands. It will be good to know how much of electricity get consumed by SMEs and how much by households and theft and loss in each of these segments. Use this data for action and if there is case then to change perception of households consumer.

  • June 15, 2012

    Saurabh Jain

    Jeby has brought out a very relevant point. In a country like India where millions are without power and there is power shortage is most of the urban areas, it should be our endeavour to minimize the distribution losses. Power thefts as well as increasing the efficiency of the distribution system should be the focus. India should strive to achieve one of the world’s minimum electricity theft levels. Sadly we are far from that at the moment. But we can definitely aim to reach the target within the next 5-10 years. Technology can play an important role in helping achieving this target.

    • July 15, 2012

      Jeby Cherian

      Shalabh…I know you live this everyday with customers. As I mentioned earlier, power is a key pillar on which our growth depends. It is extremely important we solve this…all the way from fuel for the generation companies to minimizing T&D losses to faster billing and collection. Each part of the value chain can be improved. It must be for the future of our country.

  • June 15, 2012

    Tushar Mithra

    I agree with Jerby. Due to the electricity theft most of the people donot get electricity at home. Due to the theft enormous money is lost daily by the power companies. Theft not only takes place in the rural area but also in the urban area. Theft also includes where people slow down there eelctric meters due to which they have to pay less of what they actually consumed. This is in turn leads to increase in the cost of the electricity. Technology can definately plays its part in reducing the electricity theft.

  • June 21, 2012

    Vishal Kumar

    Sadly, all the power thefts are mainly Govt employees sponsored. This may be general opinion and may be wrong too. All electric meters of private homes, small huts should be away from their premises and located in well shown areas only accessible to the guy taking meter readings etc. Like Internet lines, if some technology can be developed based on UID/PWD or prepaid based, would help to stop thefts to some extent. Not sure, if such thing already exists. Also, easy access to tap such wires should not be allowed.

    Similar to resolve other issues in out country, power sector should be handed over to private sector. Like Reliance Power running Mumbai, state wise, private companies should take over power sector.

    State Electricity Boards should either be dissolved or should be limited only to power generation and distribution should be with Private sector. Maintenance of equipments, wires etc should be done as per standards matching the international standards. FDI should also be allowed as maximum of that money is our own money.

    LEAN should be applied in this sector / industry.

  • June 24, 2012

    Arun Panigrahi

    There are ways to control such electricity theft menace. I believe I have something in my mind, which can certainly help the electricity distribution companies to come out of this electricity theft problems. T&D losses specially at distribution level will automatically come down once the overloading of sub-stations(11KV) is avoided by removing this theft component of the total load.

    Jeby: Can you connect me to the team currently working on this initiative.

    • July 15, 2012

      Jeby Cherian

      Arun…please connect with Shalabh Jain. He is our E&U leader.

  • June 28, 2012

    Suvina Mathur

    I agree with it. Electricity theft is a major problem. Much of the power is wasted in distribution and the people who pays are the sufferers.
    Now a days, electricity theft has become a common practice. Even in open field marriages, same practice is followed most of the times.
    Firstly , the government officials should efficiently use electricity even though they are not charged for the electricity.
    Secondly , Private companies should be allocated the charge of managing the power sector ensuring fair competition among the private sector companies.
    Thirdly, the commercial use of electricity should be fairly managed.
    Lastly, alternate source of energy like the wind power , solar energy should be majorly advertised so as to overcome the electricity menace.

  • June 28, 2012

    Kumar Ramaswamy

    Hi,
    Electricity theft is a menace is which is prevalent almost everywhere in India. Power generation companies are producing the electricity and selling it.

    Let me talk about the revenue loss. In an ideal situation, the state electricity boards or the ones responsible for distribution should be running on profit and not at all on loss.

    I believe, we have a very strong process for the electricity distribution and collection of the charges. However, the process is not all followed. One of the major causes of revenue loss is that the electricity meters installed in the premises are faulty or it did not work at all. I know places where the electricity meters did not work for years. Even after repeated complaints to the concerned, it never gets addressed.

    Another reason is that the users did not pay the electricity charges and no one bothers.

    To address this, I believe, we need to supply power on a PRE PAID mode, which will cut the leakage at the root itself. Irrespective of the type of users, power should be distributed on prepaid only.

    Regards
    Kumar

  • June 29, 2012

    Sachin Aggarwal

    Generate electricity within every City/village

    To generate electricity within every City/village, we have possibility to install small generators with main water supply pipelines which will generate some amount of electricity and can easily distribute with in the local area.
    This will also save the amount of electricity wasted (almost 40%) while distributing from other sources like Dam which are far away.
    This will also reduce the costing to consumer and increase the availability of electricity.

    • July 15, 2012

      Jeby Cherian

      Sachin…interesting thought. How will this work? Are you suggesting local hydo generators on water lines? Hmmmm….

  • July 5, 2012

    Santosh Kumar

    Good discussion on the electricity pilferages & other losses. However I strongly feel Solar Electricity generation suiting all daily requirements of house hold usage would fetch the Ultimate Objective of Smarter Plannet. With the rising trend of global temparatures particulary in India, I strongly feel its high time to have Solar Electricity equipments at lower costs. IBM should participate in developing this technology.
    This would definetly reduce T&D costs & respective losses around it and various other benefits.

  • July 6, 2012

    Kunal Gharal

    Very true. End user in particulalry Tax Payers always suffer in a situation where Govt fails to track the loss. Govt can simply divide the areas in sub-areas. Let each sub-area be accountable to the power consumption in its own area. Failing to achieve the recovery from customers, simply cut the power. May be sub-areas are controlled in public-private partnership. Awareness can be spread through different medias. Infrastructure can be managed by IBM. India is no more less in its labour power. So additionally we have created employment. One more point rightly said by you, there should be nothing for free.. All(let it be Farmers) needs to be part of contributing Indias growth. Yes..to help farmers, Govt can give subsidies but plz not FREE…

  • July 11, 2012

    Mihir Tunga

    I agree to your point. Besides, I also do not understand why we donot have a Uniform Power Tariff policy across the country! Just like Petrol or LPG. Electricity today is the most essential energy resource and why different consumer category have to pay at different rate for the same damn thing!

  • July 23, 2012

    Anjali Sinha

    I believe, curbing electricity thefts require social as well as political will power with technology help. In my view, a frequent load profile analysis Vis a Vis revenue collection, anti tampering meters, along with social inspection squads like RWAs apart from discom inspections. A stringent and swift penalty along with disconnection will also deter people from second time thefts. However all of these measures will be needed to be taken together and with coordination.

    A strong analytics framework will help discoms to monitor real time usage Vs collection graph and could be first step towards putting together an execution plan for city and sub areas.

  • July 28, 2012

    Calm

    Why are the distribution companies facing losses and the consumer suffering from lack of power supply or inflated bills or allegations of theft.Can an individual citizen have access to the electricity lines .Have never roped in transmission agencies.The losses are caused during transmission and distribution and not distribution alone.The transmission authorities are the ones who have the reins.

  • December 7, 2012

    Balan Vinod

    Its quite some time since some one responded, and I dont know if this is still active…

    Power theft is a major issue and there are multiple dimensions to it, and many of them related to public governance.
    We working for a technology company should really think in terms of solving the problem using technology.
    Related to power theft, is, loss of power due to inefficient power transmission management. One area where technology can come into picture is in the distribution of power. Be it on the larger transmission lines, or at the street level networks.

    1. Is there a smart system that will advise on, when to switch off a network for maintenance, repair? So that there is minimum financial and power loss. Or would that electricity engineer switch it off when a consumer approaches him with a problem.
    2. Is there a system that can advise, or literally prevent some one from the electricity company to switch off a power line at will?
    3. Do utility companies maintain some statistics for loss due to unplanned human network disruption?

    Points to think about….

    • January 20, 2013

      Sreenivasan

      The smart grid is still in infancy.The concept is good.
      Power utilities now a days maintain all data since the same has to be presented before Regulators annually

  • December 21, 2012

    Vikram Verma

    Interesting results from google –

    (a) There are gangs which re-caliberate electricity meters

    (b) At least in one state (may be others too), there is the provision for penalty – quoting verbatim – “domestic users have to pay Rs 500 per kw for up to 3 kw of stolen power. The penalty jumps to Rs 1,000 if pilferage exceeds 3 kw. For commercial users, the fine is Rs 1,000 per kw for up to 20 kw. The penalty shoots to Rs 2,000 per kw for 20 to 100 kw of stolen power. At Rs 2,500 per kw, the penalty is highest for commercial power thieves guilty of pilfering above 100 kw.

    Industrial consumers with small power (SP), medium supply (MS) and large supply (LS) connections currently have to spit out Rs 1,000 per kw, Rs 2,000 and Rs 3,000 per kw as penalty for power theft, respectively.”

    (c)Penalty is feared by some as “opportunity” for corruption.

    At least (a) and (c) can be solved with technology. Hopefully (b) will then do its work…

  • January 4, 2013

    Satish K Dubey

    It’s long time since blog post was created so I am not sure if anyone is still watching it. I feel there is a clue in TV set-top box to solving the electricity theft.

    It is a well known fact that the wires transmitting electricity can also transfer data (many companies are experiementing, I believe). Why not try out small, intelligent boxes (meters) that can be used for turning on/off power from a control room. The ideal system would be one where electricity won’t flow in a cable unless there is an intelligent box at the end. These boxes would be always connected to the control room (or a server) that will monitor the use and will switch on/off power.

  • January 20, 2013

    Sreenivasan

    The concept is already materialized at many places

  • March 29, 2013

    Mohit Garg

    Avoiding power theft is a big challenge at the same time adding capacity to the system using non conventional sources of energy. How about installing micro turbines at the end of City Sewage line working synchronously over a common shaft and running a large generator. The challenge would be to remove the sludge from the water. The power generated could be used to run ETP and other similar projects. It can also help in electrifying near by villages, for irrigation purpose, etc. It will also help in reducing power pilferage.

  • April 14, 2013

    Pradeepkumar singh

    I develop a project to detect electricity theft within 10 sec on supply line. it working fine with demo model.

    • April 24, 2013

      Nitesh

      Great to have details about ur project in a Separate blog. Pl. provide link here

  • October 23, 2013

    B N Dash

    Power theft, transmission loss, power outage etc can be addressed by implementing Automatic meter reading system, GIS , SCADA etc at strategic locations of the power transmission and distribution network. This have been implemented by the private as well as public utilities in their area of operation. There are few leading companies in this sector to provide single window solution for implementing this in the field. It is the information that helps us to devise a response, so primary job is to get the inputs from the critical part of the network which will help the management to plan for a suitable response. e.g monitor distribution point which is connected to a set of users on regular interval be it hourly, daily, weekly, monthly basis.
    Basics that are required to do this
    a) communication link (wireless preferred)
    b) hardware to support communication from the remote location to central server
    c) Application to collect data from various types of field meters thru the data transmitting units
    d) Application to analyse the collected data and generate various types of reports for action
    e) Willingness of the management to implement and operate such systems at any cost.
    These system not only help the utilities to reduce their losses but also help them to optimise their performances in terms of better power procurement management , demand side management, distaster management, customer care, billing , Operation and mantenance etc.
    This system once in place can give the consumer the rights to know, decide and plan his power consumption
    a) when he needs power and when does not (peak and off peak requirment)
    b) which equipment or appliances are most power consuming and can be replaced so that he can save in his power bill
    c) Remote control on the equipments
    Similarly the utilities can have control on their users so that they can
    a) icentivise those users who plan their consumption during the off peak hour
    b) can cut off power supply to the habitual non payers even after giving repeated reminders
    We have this solution working at various locations in India.

  • Hi Jeby,
    As you rightly pointed,Its high time our power infrastructure gets updated and use smart metering solutions,Unfortunately we lack metrics to demonstrate how much is needed, how much is used, where , when and how. Unless we streamline and measure the consumption,
    we have to rely on Gut and Wild decisions than Smarter decisions.

    We should adapt technology and solutions that cater not just today , but smarter tomorrow, before that tomorrow comes in unexpected way.

  • September 23, 2014

    Promod Sharma

    The three Delhi Discoms, two from Reliance and one from Tata, have reduced the AT&C losses from 52% to sub 18% in last 12 years of privatisation. Delhi PPP model is highly successful and appreciated by all stakeholders.

    Many initiatives had been taken since 2002 onward in areas like business processes and its automation to reduce the losses. Reliance companies have:
    1. 100% consumer meter reading downloaded
    2. Payment gateways like credit card, kiosks, drop boxes, third party collection system over internet, electronic wallet and own counters, etc.
    3. Consumer interface like billing & no supply complains, new connections, load enhancement, duplicate bills, etc. through website; SMS, email, IVR.
    4. Door step service for new connections and load enhancement using tablets.
    5. SAP ISU is implemented with large number of legacy applications for processes not available in IS-U/CCS.
    6. The 350+ offices in state of Delhi for BSES are interconnected with central servers with complete data security.

    Technology is the prime factor for success of any power distribution company. I am heading the IT function of BSES as Vice President.