Case Study on Loss Manegement in
Brazilian Utilities
Marcos Aurélio Madureira da Silva
Corporate Commercial Director
Sistema Cataguazes-Leopoldina
[email protected]
Agenda
 Brazilian
electricity market overview
 NTLs concepts
 SCL’s losses fighting history
 New challenges to reduce NTLs
 Revenue Intelligence case study in
SCL
BRAZIL OVERVIEW
Introdução
o motivo
da discussão
8,500,000 SQUARE KILOMETERS
 Identifique-se
 Informe
62 ELECTRIC UTILITIES
AROUND 180 MILLION INHABITANTS
AROUND 53 MILLION CUSTOMERS
Brazil – Electrical Sector

Electrical Companys
o
o
o

Generation (almost all State owned)
Trasmission(almost all state owned)
Distribuition (almost all privatized)
Regulatory and Control
o
o
ANEEL – Regulatory Agency
ONS – G and T
• Independent System Operator
o
CCCE – Energy Trading
• Contracts
• Energy Bids
• Spot Market
o
Free Customers
Sistema Cataguazes- Leopoldina
1905 - 2005
Área: 1.789 Km2
Costumers : 137 thousand
Inhabitants: 450 mil
Sistema Cataguazes
Market Share 2005
Northeast of Brazil
SAELPA
0,8% of Southeast
9,0% of Northeast
2,0% of Brasil
Área: 54.595 Km2
Costumers : 861 thousand
Inhabitants: : 3.000 mil
Brazil
Área: 17.419 Km2
Costumers : 455 thousand
Inhabitants: : 1.800 mil
Southeast of Brazil
Área: 17.331 Km2
Costumers : 390 thousand
Inhabitants: : 1.200 mil
REF:
2005mar
Sistema Cataguazes- Leopoldina
1905 - 2005
REVENUE PROTECTION IS PART
OF A PERMANENT FINANCIAL
POLICY
Cash-flow consequences of NTLs : Vicious cycle
Reduce EBITDA
Reduce CAPEX
Reduce Investment Capacity
and Operational Efficiency
NTLs reduce EVA
EBITDA - Earnings Before Interest, Tax, Depreciation and Amortization;
EVA - Economic Value Added;
CAPEX - CAPital EXpenditures.
SCL –Corporate Management Process
GOALS
BOD
NEGOTIATION
REPORTS
MONITORING
BUSINESS
MANAGEMENT
UNIT
PROJECTS
NEGOTIATION
ACTION PLANS
RELPORTS
MONITORING
DEPT.
MANAGER
NEGOTIATION
REPORTS
MONITORING
OPERATOR
SCL - Commercial Losses Main Activities and Results

Main Activities
o
o
o
o
o

Field Inspections
Fix Irregular connections
Fix Damaged Meters
Fix metering instalations
Fix bad registers
Results
o
+50% reduction of commercial losses since
2001 until 2004
• 9% 2001 December
• 4,3% 2004 December
Challenge : Reduce NTLs

PROFITABILY x AFFORDABLE SUPPLY RATES
o
o
o
Regulators push utilities to decrease commercial
losses (refusing to transfer NTLs to the tariffs)
Shareholders push top-management to achieve
positive EVA (profits greater than cost of capital)
Government, Regulators and Users push utilities
increase quality of energy while reducing rates
Challenge : How to Reduce NTLs

Lack of human and financial resources to
perform all necessary actions
o
o
o
Field investigation, service orders  to
reduce fraud / theft / commercial losses
Debt negotiation, consumer disconnection
(where permited by law)  to reduce
receivables losses
Internal process optimization and auditing
 to reduce administrative losses
Challenge : Reduce NTLs

There are new distribution solutions
Distribution solutions
Distribution solutions
Meters installed on the pole
Challenge : Reduce NTLs

There are new distribution solutions
o
But they are expensive…
 As
time goes by, frauds has became more
sophisticated
 Criminal organizations selling “energy theft
services”
 Endless mouse-cat game
New Challenges

We need to increase the search frauds process
efficiency
o
o
o

How much ?
Where?
How kind?
To optimize NTLs reducing process
o
o
o
o
What are the priorities?
How the actions must be doing?
What is the adequated solution?
How is the optimal mix (New installations X
Inspections)
Data analyses
o
We have a lot of data
•
•
•
•
•
•
o
o
o
Billing systems
Meter systems
Electrical Operation Measurement Systems
Distribuition Electrical System Manegement
Costumer Care system
Irregularities detected by meter readers
Those data are usually separated
We need to put them together
We have to think, plan and act with intelligence
Loss Reduction Strategies employed


Which technologies should be employed, in what
consumers ?
Limited financial resources  it is necessary to
optimize the resources
Universe of consumers
AMR with PLC
Anti-theft cables, meters and seals
Load balance up to transformers
Change of pattern for input and distribution
Which consumers should
be inspected ?
Graphs for productivity of inspections
Energy 
Recovered +
Aggregated
Optimal Point for
energy / cost
Increase of energy
with same cost
Productivity
with RI
Productivity
without RI
Cost
SAELPA – Revenue Intelligence results
 Recovered
o
o
o
Energy (MWhR)
MWhR (May/03-Dec/03)  7.591 before RI
MWhR (May/04-Dec/04)  12.680 after RI
Increasing  67,05%
 Aggregated
o
o
o
Energy (MWhA)
MWhA per Inspection
0,028 MWh/month 0,048 MWh/month
Increasing  71%
Revenue Intelligence - SAELPA
Company
SAELPA
Annual
sales
2.280 GWh
Recovered
energy
annual
increasing
7,63 GWh
Aggregated
energy
annual
increasing
11,98 GWh
Total
energy
annual
increasing
% of
increasing
in relation
to annual
sales
Annual
estimative
of required
energy
reduction
19,61 GWh
0,86%
3,6 GWh
Summary of Results in SCL-SAELPA

Results of RI in SCL (one year after implementation):
o
o
o
o
o
Find NTL, uncover unknown NTL
Productivity increased (energy recoveried / inspections)
more then 67%, forecasting 0,86% annual increasing in
total revenue
Increased efficiency of investigation team up to 36%
(average); some rules already achieved 73% efficiency
Creation of a NTL Reduction Intelligence Dept. to reduce
NTL and keep it low
Auditable results and statistics to demonstrate
benefits to Management and Stockholders.
Marcos Aurélio Madureira da Silva
Corporate Commercial Director
[email protected]
55-83-2106-7002
www.scl.com.br