Do energy audits to reduce distribution losses, not innovations and reforms

In an earlier post on my reflections about international development, I had written, 

... in development, the big challenges are more often than not, not about radical paradigm shifts or spectacular innovations, but plain simple good governance and straight-forward implementation of plain vanilla programs and public services.

The point is that in this age of tech-glitz and innovation-mania, doing the simple things right is somehow not chic or aspirational. Every one wants to innovate or do something different or new, out-of-the-box as they are called. It is almost as though smart people have to be seen to be doing something innovative or different. Doing the simple things are for the un-smart and ordinary. 

The suggestions for fixing the problems in electricity distribution from a new paper should be considered in this backdrop,

What is the way out? We offer a taxonomy of reform in four areas: explicit subsidy reform, changing social norms, better technology, and privatization.

This is a prescription for places like Bihar, where distribution losses are in the high-twenties, perhaps even thirties, and have been so for years! These are places with rampant theft, extremely weak state capacity, and hostile political environments. 

This is another example of a paper which misses the wood for the trees. 

Some observations

1. As any practitioner in the field will tell, given the very high commercial losses (the non-technical losses), the most obvious and simplest thing to do is plain simple rigorous feeder-wise energy audits. This can be prioritised by focusing on feeders with the highest energy distribution. I have blogged about this here.

In fact the graphic below has so many answers on the lower hanging fruits.

One, massive suppression of readings below 100 units consumption, most likely to stay within the lower tariff rate slab. Two, it is not the politically sensitive constituency of poor (or some large electoral constituency) consumers who are the biggest defaulters, but the highest consumption connections who are also likely to form a very small proportion of total consumer base. Both point to straight-forward governance failures. 

Neither does addressing them require innovation or reform, nor will any help. It calls for bureaucratic commitment at the highest levels and rigorous reviews of feeders every month at all levels on simple Excel sheets and enforce follow-up. It is about painstaking and persistent reviews. State capacity weakness is easily glossed over.

2. And it is not as though these insights are not well-known to the insiders. All the southern and western states which have lowered T&D losses, some even to single-digits, have done it not on the back of any of these "reforms" or technology solutions like GIS mapping or smart metering. They have done it by plain simple good governance involving painstaking feeder-wise energy audits. They have just excelled in the 'grunt' work.

3. This is especially true in cases where we are trying to move the system from a very low level of performance to an average level, and not from good to great. While the latter would need many of these "reforms", the former, most often (and especially so in this case), demands just doing the basic things right. 

4. Instead, the researchers jump into the most complex of solutions like subsidy-reform or behaviour change or technology or privatisation. This is a cautionary note on the use of technology, and this is the real story behind the "success" of privatisation in Delhi. We all know about the challenges with the first two.

In fact, each one of these "reforms" demand a level of state capacity, which if available, would not have left the discoms in this situation and necessitated such reforms. If the discom had the capability to effectively manage  behaviour change or privatisation, it is most likely that it would have done the simple energy audits and managed to reduce losses.

5. Related point is the less-discussed challenge of scaling apparently good ideas. How do we scale feeder incentivisation in systems where even simple energy audits are not being done?

In many respects, international development is an accountability-free space. People use public resources to research and engage on ideas with little regard for whether it can be implemented or not. No wonder that the landscape is littered with failed ideas or ideas which are still struggling to take root even after decades of trials.

6. Opinion formers don't talk about strengthening state capability, but go on about using nudges, incentives, IT, machine learning, blockchains and so on to address persistent development challenges. This chorus of opinion from the outside to do new things, glossing over the plain simple good governance aspects, has an unintended perverse effect. It relieves the government - politicians and bureaucratic leaders - from focusing on the plumbing and instead encourages them to try out some of these "reforms", especially the technology stuff. 

It serves their purpose well. For one, they know that "trying out something new" is good optics. Most often, as the perceptive ones will already know, little will come out of such efforts. This also means that vested interests too are happy. But the ribbon-cutting is very good 'progressive' politics and good for the bureaucrats image. For another, it helps them evade doing the simplest thing - whipping the system up into doing the basics right. That is painstaking and hard work. The CMD of the discom does not get an award for doing the simple things right. Further, such "reforms" also sets off procurements and the associated gravy train, from which everyone benefits. 

Btw, the paper itself has several first-order problems. All that can be said in brief is that it is a gross simplification to attribute the problems of electricity sector to "treating electricity as a right". In one sweep, it glosses over several other factors like the political economy surrounding free farm power, corruption, weak state capacity etc.