Performance benchmarking of electricity distribution companies in India
Student name: Ms Prasad Shalini Surendra
Guide: Dr Subir Sen
Year of completion: 2012
Host Organisation: SN Power Markets Pvt. Ltd.
Supervisor (Host Organisation): Dr Gaurav Bhatiani
Abstract: Power distribution companies‟ efficiency has been one of the most important concerns in the
electricity sector during recent times. Power distribution continues to be the weakest link in
the power sector. Losses of distribution companies have increased from INR 27,101 crore in
2006-07 to about INR 60,000 crores in 2010-11.The Thirteenth Finance Commission has
projected the losses in the distribution sector to be over INR 1, 16,000 crore in 2014-15.
There exist around 52 power distribution utilities in India. For the purpose of study we have
included all states where distribution function is unbundled and data is available in public
domain. List includes states like West Bengal, Assam, Delhi, Haryana, Rajasthan, Uttar
Pradesh, Andhra Pradesh, Karnataka, Chhattisgarh, Gujarat, Madhya Pradesh and
Maharashtra.
Peer evaluation can be helpful to generate competition among the players existing in the
industry. The management and regulators can review their status in comparison to each
other‟s inputs and outputs. Benchmarking thus provides an important tool for comparing
performances. The results from benchmarking form an input to policy making, regulatory
decisions and management of the company.
This research work provides a DEA approach for performance benchmarking of power
distribution companies in India. For the study of Indian scenario in all 33 distribution
companies with four input and output parameters are taken into consideration; they are
operational expenses and capital expenditure as inputs and profit after tax per kWh and kilo
watt hour sold as outputs. A review of their performances and peer evaluation is done. They
are awarded efficiency scores as well as ranks which provides a fair idea about their
performances. Moreover their inefficiencies are also assessed via calculations of slack and
surpluses. The results lead us to identification of better managed distribution utilities and
guidance for the regulators, corporates and policy makers to assess them.
