 DRUM Pilot Programs
The DRUM project is focused on power distribution reform and the role of the “last mile” to the success of the entire electricity sector. DRUM’s goal is to demonstrate commercially viable electricity systems that provide reliable power of sufficient quality to consumers and to establish a commercial framework and a replicable methodology adopted by Indian financial institutions for providing non-recourse financing for DRUM activities and programs.
DRUM has defined the best practice model company and will by implement it in two urban and two rural pilot sites. The acid test of commercial success — good cash flow and high quality service — is a key result synonymous with bankable companies. These are central to the project objectives to:
- Establish the framework, institutional capacity and project development functions at the central and states levels, and
- Enable implementation of several full-scale, commercially replicable distribution initiatives in key reform states in India.
PA Consulting’s team provides project leadership, coordination of the project and integration of results as well as specialized skills in electricity reform, finance, rural electrification and commercialization.
The conceptual approach was rooted in an examination of key results from the perspective of customers. Based on our experience with the power sector, we believe the key ingredients of customer satisfaction with electricity supply are grounded in the universal definition of the mission of an electric company, i.e. to provide adequate supplies of reliable electricity at an affordable cost. Thus, availability , reliability and cost (ARC) are the three basic pillars of customer satisfaction. But there is a fourth pillar that will become increasingly important in the future, namely good customer relations. At a minimum, customers want to be treated courteously, but good customer relations goes well beyond that and includes a broad range of elements from prompt responsiveness to outages and trouble calls, to good information and an emphasis on providing customer solutions. Our work has also taught us that these ingredients can be measured, if the proper measurement systems are in place, and managed.
The DRUM Project methodology is to implement our conceptual approach through the following activities:
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Define the key result areas for a Discom from a customer perspective
- Identify the major business processes for a Discom
- Define the “model” Discom with India-specific KPIs for results and benchmarks for processes
- Develop candidate projects to create a model of excellence
- Collect and analyze data to:
- Identify high-impact pilots
- Establish baselines for measurement
- Evaluate pilot project feasibility on an empirical basis
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Assess the costs and benefits of each
- Establish a link between the pilots, the major Discom processes and key result areas
- Design pilot programs to demonstrate the feasibility of creating “bankable” companies
- Promulgate lessons learned.
As of December 31, 2005, Detailed Project Reports for the four counterpart companies were completed through a collaborative process with each. The process included the definition of the model electric distribution company (based on the People-Process-Technology taxonomy) and the identification of “best practices” tailored to the conditions at each site. Together, these served as the basis for conducting an “As Is” assessment to identify the gaps that needed to be addressed. Specific projects were then proposed to bring the pilot site from the “As Is” to the Best Practice condition. Additionally, key performance indicators (KPIs) were developed and each company specified the target values they would achieve. Upon completion of the DRUM Project, “centers of excellence” will have been created in two urban and two rural sites. These will embody the “best practices” adapted for each site in the Indian context and they will serve as models for others to see. The goal is to create a model of excellence that can be replicated. The highest standard of success will be to see the model distribution company and its best practices promulgated throughout the host companies and then adopted by other electric distribution companies throughout India.
Electric system reliability depends in part on the adequacy of supply, or “availability” of the Availability, Reliability and Cost (ARC) paradigm. Availability refers to the ability of the electric system to supply the aggregate electrical demand and energy requirements of customers at all times, taking into account scheduled and unscheduled outages of system facilities. Availability is principally a function of generation and, to a lesser extent, transmission capabilities.
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