India has one of the highest levels of aggregate technical and commercial (AT&C) losses in power distribution, averaging 30 percent of total power distributed. About 5 percent of this happens due to power theft in slum clusters, through practices like ‘hooking’ from open network cables.
Within the area served by Tata Power Delhi Distribution (TPDDL), there are more than 220 slums. Having managed to reduce AT&C losses from 53 percent in 2002 (at its inception) to 15 percent in 2009, TPDDL decided to focus on last-mile losses in slum clusters. This challenge was special and needed a sensitive approach. Committed by people without much money in their pockets, power theft in slums is mostly due to need and the lack of resources to pay.
A new business model was needed to provide affordable, legitimate electricity connections to slum dwellers. TPDDL set up a ‘special consumer group’ to address this issue.
The social innovation initiative began with a survey, conducted in partnership with Koreth Consultancy, to identify activities that could serve as bridges to the community, such as education and health care, along with the generation of livelihood opportunities that would enhance the capacity of community members to pay.
But the most innovative aspect of the plan was to involve community members as franchisees for metering and bill collection in the slum clusters, thereby introducing new livelihood and entrepreneurship opportunities.
The franchisee model was creatively used to encourage consumers to get legal connections, improve collections, motivate residents to take advantage of the socioeconomic improvement offers from TPDDL, and in acting as a bridge between the company and consumers for improved services and complaint redress.
In the first year itself about 1,200 community members took advantage of the vocational training courses for electricians, plumbers, beauticians, tailors and computer literacy. About 750 children, all students in government-run schools, benefited from scholarships and special tutorial classes, while about 540 women attended classes to improve their functional literacy. Arrangements were made for mobile dispensaries and special health camps. About 30 drug de-addiction camps were organised through 2010-11, benefiting more than 4,600 individuals.
Once interactions with community members had been established, the TPDDL team initiated discussions on safe, secure and affordable electricity connections. The company offered to waive outstanding dues and provide metered connections at vastly discounted rates, with simplified document requirements. New connections were provided within 24 hours of application. Endorsement letters from members of the legislative assembly were accepted as proof of identity and residence for each of the households in the slum clusters. Bill payment dates were synchronised with the residents’ paydays to make payments easier.
Alongside, through technical improvements that reduced options for ‘hooking’ onto power cables, TPDDL made the network safer.
The business model, based on social innovation, has created a win-win scenario. For TPDDL it has helped curtail losses, increase revenue and create a strong relationship with an important and large category of customers. For the community it has provided security of residence, access to an important service and opened up entrepreneurship opportunities.
While new connections in the slum clusters went up by 100,000 within three years, the collection rate is today more than 90 percent. Customer satisfaction levels have increased and the metering of power has led to energy conservation through more careful consumption. Doorstep services and spot billing have reduced the carbon footprint created by paper billing.
The ethos of mutual respect engendered by this innovative approach has reaped benefits for everyone involved.Tata Power Delhi Distribution was one of 12 award winners at the Tata Innovista 2012, the annually held celebration of creativity in the Tata group. Read about the other winners and the innovations that brought them to centre stage >>