Assesses the degree of productivity and efficiency of the transmission and distribution systems and it is analyzed to design a plan to improve the technical and non-technical (commercial) losses.
This tool facilitates comparing the performance of an individual utility with the database of utilities in the Latin America and Caribbean region. The users can enter their individual performance on the indicator and the chart will display its performance against the database.
For more information regarding the financial management and sustainability, please consult the Case Studies:
Data and statistics from the energy sector, including indicators on electricity losses can be found at the IDB energy hub.
The energy hub is constantly updated with new information.
This activity assesses the degree of productivity and efficiency of the transmission and distribution systems of the utility. It analyzes indicators and benchmarks and introduces best practices when designing a comprehensive plan to improve the technical and non-technical (commercial) electricity losses.
Electricity losses usually converge to the difference between the amount of electricity that enters the network and the amount that exits the network (final demand consumption and/or energy delivered to other networks). In the case of a utility that it is vertically integrated, the losses represent the difference between its generation injected into the grid and the amount consumed by the final demand. In a few cases, it may include the electricity billed to consumers but not collected after a reasonable amount of time (usually 180 days). Electricity losses can be divided in two parts:
* Technical losses: correspond to all the energy dissipated in the transport of electrical current in conductors, equipment, and connections due to resistance in the distribution network. Technical losses can be further divided into: (i) fixed technical losses (caused by physical inefficiencies such as hysteresis, Eddy Currents losses in the iron core of transformers, and the corona effect in transmission lines) and (ii) variable technical losses (which can happen when power current flows through the lines, cables, and transformers of the network. These are also called load losses, or series losses).
* Non-technical losses or commercial losses are those usually associated with the sale of energy supplied to the end user. There is a part of the energy that is produced, transported, and supplied; however, it is not invoiced. These losses can be caused by internal or administrative problems (such as errors in measurement, accounting or record keeping) but they are usually associated with the consumer's own illegal intervention, such as thefts, fraud, alteration of meters, or unmetered supply (when the consumer is responsible).
In this context, the reduction in electricity losses brings important financial benefit to the distribution utility but they cannot be an isolated activity. The reduction of losses is usually part of a strategic transformation of the utility with other performance improvement activities as it requires prioritization of investments and allocation of resources. These are described later in the best practice section.
International experience in the management and reduction of electricity losses indicates that a company must have a “holistic view” of this activity since it integrates several units, and the results have a large impact on its financial and operational results. The LAC region has implemented successful electricity loss programs, and these are illustrated in the next section of references. Considering the indicators calculated for this company compared to external references, and the good practices described below, it is possible to establish an action plan with the activities to reduce electricity losses.
For each practice, the main “insights” found in companies that have been successful in this field are listed. These insights are not authoritative, since each company must adapt the practices to its reality, however they serve as general guidelines to assist the company to advance its respective good practice.
The practices of electricity losses are organized in 10 items across three main groups which are presented next: (i) public actions and State leadership; (ii) operations, commercial, and financial practices part of a distributing company (core part of the activities of a distribution utility), and (iii) social and equity considerations.
Data and statistics from the energy sector, including indicators on electricity losses can be found at the IDB energy hub.
The energy hub is constantly updated with new information.
Public Actions and State Leadership
National and State political support
How much support the utility has from the national authorities to introduce a comprehensive loss reduction program? Is this program fully articulated with the authorities and does the utility has their commitment towards implementation?
Engagement with local authorities
How engaged is the utility with law enforcement authorities such as local police on matters of electricity theft? Is this collaboration clearly understood by everyone, publicly available, and described in a transparent manner?
Regulatory and normative aspects
Does the regulatory framework contemplate proper incentives to reduce electricity losses? Are these incentives designed as rewards or penalties? How is the tariff calculation impacted by electricity losses?
Operations, Commercial and Financial
Baseline and master plan
Does the utility have a baseline study calculating the technical and non-technical electricity losses, and a roadmap establishing the priority activities to reduce losses in a comprehensive plan? How updated is this baseline plan?
Organization
Does the utility have a unit dedicated to reducing electricity losses? What is the governance and authority level of this unit?
Investment technologies
Has the utility identified the proper technologies and business intelligent tools to efficiently reduce electricity losses? Have these technologies been included in the investment plan?
Commercial systems
Does the utility have a commercial system that is well managed with control mechanisms, and proper governance with clearly defined user access rules? How is this access reviewed over time?
Infrastructure plan
Has the utility developed an infrastructure investment plan and identified financing options to implement the loss reduction program? How is this investment plan in losses aligned with other investments and expansions in transmission and distribution networks?
Social and Equity Considerations
Community Engagement and Social Considerations
Has the utility engaged the communities identifying affordability considerations and facilitating access to credit and ability to pay? How often doe the utility meet with representants of the community?
Ecosystem of services and providers
Has the utility established a training program with contracted crews and partnerships with inspection companies with incentives to reduce electricity loss?