Cost and Profitability

The cost of per unit of energy is an extremely vital ingredient to determine the customer satisfaction. By the consumer is ready to pay little higher tariff but he sees the value for each penny spent on that. However Regulator does not permit any untoward cost and it eats the profit. The cost and profitability are in fact shaped through a combination of factors, involving O&M expenses, Technical and Commercial losses, and Collection efficiency.

Main Features

The major points associated to measuring and regulating cost and profitability are:

• The present loss level and trajectory to reduce the loss: per unit of cost delivered to the consumer is delivered through the quantum of prevalent loss level and the losses permitted through the regulator for that year. It is extremely significant to constantly monitor the loss and take corrective actions immediately through technological and/or administrative mechanism.

• Unaccounted Energy: The health of the metering system to be monitored constantly. Any meter out of circuit meaning not recording the correct energy should be replaced/rectified instantly or within the stipulated turn around time. The meters are not available across several utilities particularly for Rural, Domestic, Agriculture and Street Light connections.

It becomes more essential to describe a path to achieve the 100% metering status and till many time access the quantum of energy consumed in terms of the per unit connected load through sample study.

• Collection Efficiency: In this era of Information revolution, consumer needs better avenues for payment and their billing associated complaint redressal. The efforts should be directed towards facilitation to the consumer so in which they are motivated to make the payment and not harassed through standing in long queues. The collection efficiency ultimately decides both - the cost and profitability.

• Operating Expenses: i.e., the cost incurred through the Utility towards Operation and Maintenance to supply the energy. It is commonly expressed in per unit. This cost should be benchmarked against the international standards and efforts to be put to decrease it.

                                               Cost and Profitability - Proposed KPIs