Energy Conservation,

Audit and Accounting

In Unit 1, you have studied about various aspects of energy conservation

including the measures that can be taken to reduce energy consumption, and
strategies for ensuring energy security for all. These measures form an
integral part of a sound energy management strategy. The fundamental goal
of energy management and conservation is to produce goods and provide
services at the maximum energy efficiency, least cost and least adverse
environmental impact. Good energy management can lead to reduced
consumption, reduction in local pollution and lower CO2 levels.

Energy accounting is an integral part of energy management and

conservation since it measures and accounts for energy inputs, energy
consumption and energy losses. In the power sector, energy accounting
enables the quantification of losses in different segments of the system from
generating stations to the consumer end. Therefore, in this unit, we discuss
the concept of energy accounting, its need, objectives and functions in relation
to the power distribution sector. In order to understand energy accounting in
the power sector, you must know about various forms of energy and units of
energy. This is what we explain in the beginning. Next, we describe the
energy accounting procedure, in brief. You will also learn about some
advanced technological interventions for energy accounting. The idea is not to
train you in implementing the energy accounting procedure per se. We would
like to sensitise you to its importance so that you can appreciate the need for
energy accounting in a power utility.

Energy accounting and energy auditing go hand-in-hand and help in

identifying measures suitable for reduction of T&D losses. Energy auditing
provides the means to identify the areas of leakage, wastage or inefficient use
and prevent energy loss. Therefore, in the next unit you will study about
energy audit.

You need to know certain basic concepts and terminology related to energy
for understanding energy accounting, viz., different forms of energy, the
units for measuring energy and their conversion. This is what we discuss in
this section.

It is not unusual to hear colleagues, friends or family members say “I’ve

The word “work” got no energy today” when they don’t feel up to completing an
here, to a scientist or assignment, playing games or washing dishes! This everyday expression
engineer, has a is pretty close to the scientific definition of energy, which is given below:
specific meaning
rather than simply
going to the office or
factory!

38
We use energy for everything we do in our lives – right from using our muscles Energy
to lighting up our homes, travelling to work, running machines, building Accounting
houses, and so on (Fig. 2.1).

Fig. 2.1: Use of Energy for Diverse Purposes (a)

In the power generation sector, energy is needed to run turbines that move the
electric generators. For example, in thermal power plants, coal is burnt to heat
water and produce steam, which, in turn, moves the turbine. In hydropower
plants, the mechanical energy of water is used to move turbines. The turbine
is connected to a generator that produces electricity. The electricity is
transmitted to our homes and is used to run appliances that provide us light
and heat. All these are different forms of energy.

2.2.1 Forms of Energy

Energy exists in different forms: mechanical, thermal, chemical, electrical,

electromagnetic energy (e.g., light, X-rays, radio waves, etc.), sound,
nuclear energy, etc. You will also come across the terms kinetic energy and
potential energy (Fig. 2.2). We now explain these terms with the help of
specific examples relevant to the power sector. (b)

The kinetic energy of an object is the energy possessed by it due to its

Fig. 2.2: Potential and
motion. All material bodies in motion, for example, waves, wind, water in a
Kinetic Energy
stream, and the steam turning the turbine in a power plant possess kinetic
energy.

The potential energy of an object is the energy possessed by an object

due to its position or the arrangement of its parts. For example, water The potential energy of
stored in a dam possesses potential energy; charges stored in a capacitor water stored in a dam
possess potential energy. is gravitational
potential energy; the
potential energy of
In Fig. 2.2 (a), the box possesses potential energy by virtue of its position at a
charges stored in a
certain height above the ground. If the rope is cut and the box falls down as capacitor is electrical
shown in Fig. 2.2 (b), its potential energy is converted into its kinetic energy. In potential energy.
Table 2.1, we explain the different forms of energy and give examples relevant
to the power sector. 39
Energy Conservation, Table 2.1: Different Forms of Energy
Audit and Accounting
Form of Energy Explanation Examples
Mechanical Energy The energy possessed by Water stored in a dam has
an object due to its gravitational potential energy,
motion (kinetic) and due which is essentially
to its position or its mechanical energy. Water
configuration (potential). falling from the top of the dam
as well as water flowing in a
stream possesses kinetic
energy.
Thermal Energy The energy possessed by Steam in a thermal power
an object due to the plant has thermal energy.
random motion or Other examples are
vibration of the atoms or geothermal energy and solar
molecules (the building thermal energy.
blocks) it is made up of. It
is also called heat energy.
Chemical Energy The energy stored in the Coal, petroleum, biomass,
bonds of atoms or natural gas, batteries have
molecules of an object. chemical energy stored in
them. Our food is also a
storehouse of chemical
energy.
Gravitational Energy The energy possessed by All objects in the universe
an object due to the force possess gravitational energy.
of gravitation − the force
of attraction between all
objects.

At the microscopic Electrical Energy The energy stored in an Electricity, energy stored in
level, all matter is electric field, the potential capacitors and solar
composed of atoms
energy of a charged photovoltaic cells.
and molecules that
are bonded to each particle in an electric field
other in various or the energy available
ways. Atoms due to the flow of charged
themselves are made
up of nuclei particles.
surrounded by
Electromagnetic The energy stored in Light, radio waves, X-rays,
electrons. Electricity
that powers our Energy electromagnetic radiation. gamma rays, etc.
homes is a form of
energy available due Nuclear Energy The energy stored in the Energy in the Sun and stars,
to the flow of atomic nucleus. It results and energy in the atomic
electrons in metal from the force between nuclei.
wires.
the particles in the
nucleus.

We show examples of various forms of energy relevant to the power sector in

40 Fig. 2.3.
 Energy
Accounting

"

Fig. 2.3: Examples of Different Forms of Energy

You may like to identify the examples given in Fig. 2.3. Attempt the following
SAQ.

# $% & '

Identify the examples of various forms of energy given in Fig. 2.3.

Describe each one of them briefly beneath each picture shown in the
figure. For example, you should write combustion of coal and
geothermal energy beneath their pictures shown with thermal energy.
……………………………………………………………………………………
……………………………………………………………………………………
41
Energy Conservation, In relation to energy, you also need to understand that energy can neither be
Audit and Accounting created nor destroyed. It is a law of nature that the total amount of
energy in the universe remains constant.

Our experience makes it seem that energy has been ‘consumed’ or ‘lost’ in a
process. For example, when a battery runs out, or a gas cylinder is used up,
what happens is that energy is converted or transformed from one form to
another. For instance, the chemical energy of batteries is converted into
electrical energy. This, in turn, gets converted into light and heat energy
of the torch bulb, which is transferred to the surroundings. Thus, the
chemical energy stored in the battery gets transformed to other forms of
energy and is ultimately radiated into the environment. It exists there but we
can no longer make use of it. We then say that it is ‘lost’ to the system of ‘torch
and battery’. Let us take another example: In a hydropower plant, the
potential energy of water stored in a dam is converted into the kinetic
energy of falling water, which is transferred to the turbine. The kinetic energy
of the turbine, in turn, is transformed into electrical energy by a generator.
When we talk about “generation” and “consumption” of energy, what we are
actually describing is the conversion of one form of energy to another. In
Fig. 2.4, we show how energy is transformed from one form to another at
various stages beginning from power generation in a thermal power plant to its
Note that the more transmission, distribution and a specific end-use. Notice that the chemical
the number of energy of coal gets converted through combustion into thermal energy,
conversion stages, which is used to produce steam. The kinetic energy of steam is transferred to
the lesser would be
the overall energy the turbine. The turbine is connected to a generator, which produces
efficiency. electricity. Depending on the end-use, electrical energy is transformed into
heat, light or mechanical energy of machines and appliances.

Electrical
Chemical Waste Energy Heat
Energy Heat Energy

Meter

Thermal Kinetic Electrical

Energy Energy Energy
Primary Delivered Useful
Energy Power Station Energy Energy

Fig. 2.4: Energy Transformation Chain from Primary Energy to Power Generation in
a Thermal Plant to its End-use, in which the Electrical Energy is getting
converted into Heat

You may like to work out the energy transformation process for electricity
generation from a hydropower plant right up to the end-use of lighting up a
room. Attempt the following exercise.
42
 Energy
# $ &' Accounting

Suppose the power plant in Fig. 2.4 were a hydropower plant and the end-use was
lighting up a room. Fill in the blanks below to record the energy transformations that
would take place in the process. Use the words given in the box below.

…………… energy of stored water in the dam is converted into ………..

energy of falling water;
Falling water turns the …………..;
Turbine turns an electric …………….;
Generator produces …………………;
Electricity is used to …………… bulbs;
Bulb gives off ……….. and ……………

( ! )* ) )+ )" , )! )

You should also know the units used for measuring energy to be able to
understand the discussion on energy accounting.

Units of Energy
Note that we tend to
focus on the form of
There are many ways of measuring energy. We will talk about the ones energy we want (e.g.,
relevant to our discussion. Most electrical appliances have a certain power light from the bulb)
rating, for example, a 60 W light bulb or a 1 kW room heater. It is, therefore, and regard the other
form as wasted (e.g.,
very common to measure electrical energy consumption in terms of power and
heat from the bulb),
time. as it cannot be used,
and so we neglect or
Power is the rate at which energy is used: overlook it. This can
be an expensive
Power = Energy / Time mistake. Energy
conservation efforts
or Energy = Power × Time pay a lot of attention
to reducing the size
The unit of energy relevant for you at the moment is kilowatt-hour (kWh). of this waste.
It is the energy consumed in one hour by an electrical equipment of
1 kW (1000 W) rating. This is one unit of electrical energy measured by
the meter.

The usage of energy units varies from industry to industry and one equipment
Here the symbol W
manufacturer to another. Table 2.1 gives conversions of some energy units. stands for watt, a unit
of power.
Table 2.1: Conversion of Energy Units

1 MW (Megawatt) 1,000 kW
1 kW 1,000 W
1 kWh 3,412 Btu (British Thermal Units)
1,000 Btu 0.293 kWh
1 therm 100,000 Btu
1 Horsepower 746 W or 0.746 kW
43
Energy Conservation, Before we end this section, we would like to emphasise that the term Energy
Audit and Accounting Accounting applies to all forms of energy derived from various sources, e.g.,
from Natural Gas, Other Fuels, Water, Sewer, Solid Waste, etc. For instance,
you could keep an account of your car petrol consumption and compare it with
the standard consumption to establish the maintenance practice for your car.

However, in this unit we will focus on energy accounting for the electricity
sector. We now introduce the concept of energy accounting.

- $

You must be familiar with financial accounting. You may perhaps be

maintaining your household accounts! Energy accounting is just like financial
accounting, except that instead of money, we account for energy.
You know that financial accounting has the function of balancing and
controlling the flow of money. The practices in financial accounting enable
proper accounting of funds to detect the leakages, misappropriation,
fraudulent transactions, etc. and contribute in improving the financial
performance of the organization. In the same way, energy accounting helps in
balancing the flow of energy and related costs, and determining the magnitude
of energy losses.
The underlying idea is to treat One Energy Unit (kWh) as a unit of electrical
money and develop a system for accounting each unit, which is the same as
the procedure followed in financial accounting and auditing.

Energy accounting is a system to record, analyze and report

energy consumption and cost on a regular basis.
In the power sector, energy accounting involves preparation of a
“balance sheet” of energy, i.e., the preparation of accounts of

• the energy flow to various segments,

• energy consumption by various categories of consumers,
• energy losses including both technical and commercial losses at
various stages, and
• energy required for meeting the technical requirements of the
system out of the total quantum of energy available over a
specified time period.
This helps in an accurate accounting of the energy generated,
energy consumed, energy lost, revenue realised and revenue
losses at each level of power generation, transmission and
distribution.
44
For example, an energy accounting system (Fig. 2.5) at the distribution level Energy
should Accounting

account for the energy made available at substation/11kV

feeder/Distribution transformer,
compare it with the quantum of units consumed by end-users,
determine the difference between the two which gives the energy losses,
and check whether these are reasonable and within permissible limits.

This exercise will help the utility in estimating the revenue realised and the
revenue losses. This comparison will enable it to ensure that all energy is
billed and the revenue realized in an effective manner.

Energy accounting helps in establishing the energy input and

quantum consumed by/billed to various categories of
consumers, identifying high loss areas, and evolving strategies
and action plans for reduction of losses.

Energy accounting is as fundamental to energy management as cost

accounting is to financial management. It can be one of the most cost-effective
tools that an organization can use to cut energy costs and conserve energy.

You should understand that energy accounting by itself does not reduce
energy demand or costs. However, it is the basis to identify weaknesses and
to select and prioritize appropriate measures for the improvement of the
energy system. For example, energy accounting can raise the awareness
about reducing energy demand and help in energy conservation efforts. In Fig. 2.5: The
fact, there are many more reasons why your utility should go in for energy Process of
Energy
accounting. Let us explain them in the context of the power sector.
Accounting

2.3.1 Need for Energy Accounting

You know that power is a critical infrastructure for the growth of our economy.
The power sector has to be financially and commercially viable and be able to
attract fresh investments in order to spur our country’s economic growth.
However, you have studied in Unit 1 of the course BEE-001 (and Unit 3 of the
course BEE-003) that the financial health of most of the power utilities is a
matter of grave concern and their AT&C losses have reached an alarming
level.
Energy is a business
For a country like India, which generates over one lakh MW of power, even a expense that should
small percentage of loss translates into a very large amount of power in be minimized by any
absolute terms. Preventing this loss would effectively serve as capacity organization to
maximize profits.
addition, thereby reducing the demand-supply gap and improving supply.
Even 1% reduction in AT&C losses would provide substantial financial benefits
to the utilities. 45
Energy Conservation, Technical losses can be reduced through system improvement, e.g., by
Audit and Accounting reducing overloading of lines and transformers, improvement of voltage
profile, etc. But these measures require large capital investments. However,
commercial losses can be reduced at a comparatively lesser cost and in a
shorter time frame through administrative and legislative action with greater
financial gains. We need to find out the quantum of such losses and take
action to reduce them.

There are many other reasons why power utilities should undertake energy
accounting. We list some of these here.

A comprehensive energy accounting system would enable the utility

to quantify losses in different segments of the system and pinpoint
the areas that lead to high commercial losses.

Energy auditing, about which you will study in the next unit, would provide
the means to identify the areas of leakage, wastage or inefficient use. This
would help in identifying measures suitable for reduction of T&D losses.

Thus the first and foremost reason for energy accounting in a power utility
is to record the available energy and attribute energy consumption
and losses in the power generation, transmission and distribution
system. Energy costs depend on the amount of energy consumed and its
price.

Energy accounting will make it possible to compare energy use and

cost among the various components of the power supply system and
to monitor how energy use changes over time. This information will
help those responsible for managing energy costs − maintenance staff,
site managers, and others − to get feedback on how well their utility is
performing.

Energy problems and billing errors could be identified and tackled.

By consistently tracking energy use, you can identify problems in the
system. A sudden unexplained increase in energy consumption, for
instance, would require investigation of the cause. Billing errors can also
be caught.

Energy accounting would provide a basis for prioritizing energy

capital investments and preparing a more accurate budget. You could
identify operations or segments in which the utility incurs the highest
energy costs and consider targeting them for energy management and
cost reduction efforts.

With the help of energy accounting, power utilities could evaluate the
success of their energy conservation and management efforts. Did
they save as much energy as they thought they would from their energy
conservation efforts?

Such questions can be answered only through energy accounting.

46
 Energy
Utilities could create incentives for energy management. Energy Accounting
management is still not a priority for a majority of the utilities. There is
apparently little incentive to take on this task. But if the power distribution
utilities realise the benefits of increasing energy savings and reducing
energy costs, they can appreciate the need for energy management.
Energy accounting makes it possible to set quantifiable energy cost
reduction goals, which could be used to augment the budget.

You may like to apply this information to your context. Why don’t you attempt
the following SAQ?

# -$ .' "

Imagine that you have to convince the management of your utility that it
should adopt suitable measures for energy accounting. What arguments
would you present to support your case?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

For any organisation, it is important to be clear about how it will use the
energy accounting information to serve its broad goals of

managing energy costs;

promoting energy and environmental awareness; and
managing resource costs.

This will require a clear statement of specific objectives, which would

determine the functions of energy accounting. HOW CAN YOUR
UTILITY TAKE
2.3.2 Objectives and Functions of Energy Accounting ADVANTAGE OF
For power distribution utilities, the specific objectives of energy accounting ENERGY
could be to: ACCOUNTING?

prepare an energy account on each feeder to record the quantum of

energy received and the quantum of energy supplied to various customers;
segregate losses into technical/non-technical losses;
identify areas of mismatch between billing and revenue collection;
improve metering, billing and collection;
identify high loss areas and remedial steps for reduction of both technical
and commercial losses;
prepare benchmarks of actual system losses with the standards;
continuously review the progress made in the remedial action initiated
earlier. 47
Energy Conservation, These objectives translate into certain functions of energy accounting.
Audit and Accounting
ENERGY ACCOUNTING FUNCTIONS

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these functions in
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some detail in the
tele-conferencing • 3 ' . . &&0
session on this
topic. • ! + 0

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Utilities can also provide energy accounting as a service to its

consumers and play an important role in energy conservation.

So far we have introduced the concept of energy accounting and discussed

the need for it as well as its objectives and functions as applicable to power
distribution utilities. You have learnt that one of the objectives of energy
accounting is to segregate losses into technical and non-technical losses. For
this, you should also know about the losses in the power system, which occur
as electrical power flows from the power generating station to the end-user.

You will learn about the causes of these losses and how to manage them in
detail in Block 4 of the course BEE-001. At the moment, we are concerned
with a basic understanding of what these are for incorporating them into the
energy accounting procedure. You will learn about their segregation in
Sec. 2.4, when you study the energy accounting procedure.

2.3.3 AT&C Losses in the Power Distribution Network

The term AT&C loss covers technical losses and commercial losses that
together contribute to revenue losses and hence need attention from the
energy accounting point of view.

As electric current flows from the power plant through the transmission lines to
the distribution segment, every element in the power system (e.g., a line or a
transformer, etc.) offers resistance to it and the electrical energy is converted
to heat energy, which is lost to the system. The cumulative energy lost by all
the elements in a power system is classified as Technical Loss.

You will learn about the reasons for these technical losses in detail in Block 4
48 of the course BEE-001. Here we state them briefly.
 Energy
Technical losses in the network occur on account of: Accounting

• losses in conductors due to the conversion of electrical energy to heat

energy (technically termed the copper losses or I2R losses);
• transformer losses;
• overloading of existing lines and substation equipment;
• poor maintenance and repair of equipment;
• inadequate reactive compensation;
• lack of modernisation of old lines and equipment;
• low HT: LT ratio, etc.

Low capital investment is also a major reason for increase in technical losses
in the power distribution sector.

Commercial losses in the network occur due to:

• non performing, underperforming and defective meters;

• erroneous multiplying factors;
• defects in circuitry;
• non-reading of meters;
• pilferage by manipulating or by-passing of meters;
• tampering of meter reading by mechanical jerks, placement of powerful
magnets or disturbing the disc rotation by foreign materials; and
• theft by direct tapping.

These are all due to non-metering of actual consumption. Besides these

factors, low accountability of employees, absence of energy accounting and
auditing mechanisms also contribute to these losses. The sum total of
“Technical” and “Commercial” losses is termed as T&D loss. It is the
difference between the units input and units for which bills are raised.

T&D loss does not capture revenue losses on account of factors such as
non realization of payment for the billed units due to reasons such as
non-billing, defective billing and poor collection.

The aggregate of T&D loss and revenue loss is termed as the “AT&C loss”
(Aggregate Technical and Commercial loss). It is the difference between
the units input into the system and units for which the payment is
collected (payment realised).

AT&C losses to the utility are the sum total of technical losses,
commercial losses and losses due to non-realisation of total billed
demand.

49
Energy Conservation, Let us take an example to explain this point.
Audit and Accounting

Example 1: Estimating AT&C losses

1. Units input 100 MU 4. Suppose revenue collection with

reference to billed demand is 90%

2. Units billed 70 MU 5. This means that out of 70 MU

billed, payment is realised for
90% of 70 MU, i.e., for 63 MU

3. T & D Losses 30 MU 6. AT&C losses = 100 MU − 63 MU = 37 MU

So far you have learnt that energy accounting is quite similar to financial
accounting: In the case of financial accounting, we measure the flow of funds
by various ledgers and account books. In energy accounting, we measure the
flow of energy at various points and maintain a record. Thus, for proper
understanding of the energy accounting mechanism you must also grasp the
fundamentals of the metering, billing and collection system in the power
distribution sector.

2.3.4 Metering, Billing and Collection: The Key to Understanding

Energy Accounting

You have studied that metering is required for energy measurement. Bills
should correctly reflect the cost of actual energy used by the consumer.
Energy accounting can tell you how accurate the billing is and whether the
collections match the cost of energy supplied at the input. The difference
gives us an estimate of the losses. We discuss each of these aspects briefly.

Metering: Meters should be placed at appropriate points in the electricity

distribution network for proper measurement of the energy input and output at
those points (You may like to see Fig. 2.7 to understand meter placements).
The absence of meters at any point in the distribution network signifies loss of
revenue to the utility since energy flow at that point is not accounted for.

It is unfortunate that many services in the power distribution segment are still
not metered. A large scale drive is necessary to bring all unauthorized
consumers on to the rolls. Such a drive in Andhra Pradesh during a single
month (June, 2000) resulted in the metering of 20 lakh new consumers and
regularization of 2.57 lakh agricultural services. The Electricity Act, 2003
contemplates metering of all the services and visualizes action on the
company and the individual officers responsible for lapses.

Billing: For accounting to serve any purpose, the measured energy must be
billed to the consumer of that energy. You have studied about the billing
50 problems encountered by utilities in Unit 1 of the Course BEE-001 and Unit 3
of the Course BEE-003. Correct billing and timely serving of the bill will go a Energy
long way in improving the collections. Computerised spot billing can solve Accounting
these problems and increase collection. You will study more on this aspect
in Block 4 of this course.

In the case of abnormal meters, utilities usually take into account the last three
months’ average for billing purposes. However, the last three months’
average would not give a correct picture of the consumption as a meter initially
becomes sluggish and then slowly drifts to a stuck up position. A study in
Andhra Pradesh revealed that the utilities are annually losing crores of rupees
on this count alone.

There is no substitute to proper metering and billing. Utilities need to be alert

and vigilant in this matter. For example, if a comparison with similarly
connected loads reveals very high consumption, it is an indication of
unauthorized additional loads. Utilities must also target not only the services
where the variation from the norm is abnormally high but also the ones where
the standard deviation in consumption is less than 2%. Constant realisation of
less than minimum revenue in better-off areas should attract the utility’s
attention and remedial measures should be taken.

Collection: Utilities should take stringent action against defaulters and

provide increased facilities for bill payments to improve collections. These
aspects have been dealt with in detail in Units 2 and 3 of the course BEE-003
and Block 4 of BEE-001.

In the next section, we describe the energy accounting procedure. But before
studying further you may like to check your understanding by attempting the
following SAQ.

# 7$ . & . "

a) State the purposes for which a power utility can use energy accounting.
b) Match the terms Technical loss, T & D loss, AT & C losses given in
Column 1 with their descriptions given in Column 2 in the following
table:

Type of Loss Description of Loss

1. Technical loss A. The aggregate of T&D loss and revenue loss.
2. T & D loss B. The cumulative energy lost by all the elements
in a power system because of the resistance
offered by them to the electric current flowing
through them.
3. AT & C losses C. The sum total of technical losses and losses
in the network on account of non-metering of
actual consumption.

51
Energy Conservation,
Audit and Accounting 7 8 3

In Sec. 2.3, you have learnt that energy accounting in the electricity sector
involves evolving procedures and checks to account for energy from
generating stations down to the consumer level. The various steps in the
energy accounting procedure are:

• measurement of the available energy (the energy input);

• measurement of the energy consumed; and
• estimating the energy lost, the revenue realised and the commercial
losses.

The deficit in the cost of energy available at the meter and the billing
collections give an estimate of the AT&C losses. Fig. 2.6 and Table 2.2 show
how a typical town area could be divided for the purposes of energy
accounting.

CHIEF ENGINEER
ZONE LEVEL

SUPERINTENDING
ENGINEER
CIRCLE LEVEL

ASSISTANT ENGINEER
SUBSTATION LEVEL

JUNIOR ENGINEER
FEEDER LEVEL

CONSUMER LEVEL

52 Fig. 2.6: The Town Level Grid to Consumer Supply and the Administrative Setup from the JE
to CE Level
Table 2.2: Organisational Structure and Areas of Responsibility for Energy Energy
Accounting
Accounting

LEVEL AREA OF RESPONSIBILITY

CE LEVEL Town divided into circles, say, p circles in each town

SE LEVEL Circle divided into a set of substations, say, q substations in

each circle

EE LEVEL Each substation divided into a set of feeders, say, r feeders

JE LEVEL Each feeder caters to, say, s customers through the secondary
of the distribution transformer connected to it.

We shall discuss in a while how the technical and commercial losses can be
segregated.

For distribution utilities, the focus of energy accounting should be on

grid substations where sub-transmission systems (66/33/11kV) take off
generally as a radial system to supply power to consumers at different
voltage levels. Note that feeders emanate from each substation towards the
customers. The feeders at 11kV are taken to the load centre and terminated
into a distribution transformer (DTR). The customers are connected at
220 V from the secondary of the distribution transformer.

In order to implement the energy accounting procedure successfully, utilities

should adopt a bottom-up rather than a top-down approach to energy
accounting. The reason is very simple. The first view of the loss can be
obtained by monitoring the energy input to a particular feeder and the amount
of energy bill collected. Thus feeder becomes the focal point and must,
therefore, be the first point of check and measure. Each Junior Engineer
should be entrusted with the responsibility of covering one or more 11 kV
feeder(s), which could be feeding a number of consumers. S/he should be
responsible to account for the energy received by the feeder and billing of
consumers connected to it.

The following steps could be taken at the feeder level for energy accounting:

measure the energy received at the feeder;

list the customers billed;
WHAT ROLE OR
record the revenue from bills; RESPONSIBILITY
compute the difference in billing and collections from customers; and WOULD YOU
HAVE IN THE
obtain the difference in input energy cost at the feeder level and the total
PROCESS OF
revenue realised from collections.
ENERGY
In the next step, energy accounting could be done for the set of feeders at the ACCOUNTING?
substation level and then for the group of substations at circle level and finally
for the town area. The hierarchy in this distribution could be matched with the
administrative hierarchy for the purpose of accounting as shown in Fig. 2.6. 53
Energy Conservation, Responsibility could be fixed for the higher levels like EE Level, SE Level and
Audit and Accounting CE Level. The exercise would involve establishment of an energy
measurement system and preparation of energy balance related to the
different responsibility areas. It would also require the segregation of technical
and commercial losses. Let us now look at these aspects.

2.4.1 Energy Measurement

Preparation of an effective energy account will be possible only if:

Meters are installed on both sides of each element of the network as

indicated in Fig. 2.7.
Accurate energy meters are installed in all the consumer installations. The
accuracy class of the 11 kV feeders must be Class 1 / Class 0.5 while the
accuracy class of the meters at consumer installations must be Class 2.
Energy meter readings are taken at the sending end and at all the
consumer installations simultaneously.
Similar accuracy class meters are installed both for measuring energy
input to the system and energy sales.
Electronic trivector meters with data logging facilities are provided on the
11 kV feeders/secondary side of distribution transformers to record load
curve which facilitates assessment of load factors and loss load factors.

The data to be registered at the 11 kV meter level includes:

• 3 phase energy;
• kW of all the phases at peak kVA interval;
• kVAr of all the three phases at peak kVA of interval;
• phase voltages of each phase with respect to neutral; and
• power down time in minutes during the interval.

The time interval may be 15 or 30 minutes.

You may not be familiar with the terms kVA and kVAr.

• kVA is the product of kilovolts and amperes. It is also called the apparent
power.
• kVAr is the reactive power, i.e., the portion of apparent power that does no
work. This power must be supplied to all reactive loads, for example,
transformers, motors, magnetic equipment, etc.

Energy measurement at various points informs you about the losses between
those points.

All meters should be regularly tested and calibrated as the efficacy of the data
for energy accounting would largely depend on the quality of meters employed
in the system. Network metering and consumer metering system should be
reviewed regularly. Working, non-working, defective, un-metered supply, etc.
54 should be documented for taking corrective measures.
 Energy
Accounting

Fig. 2.7: Typical Metering Arrangement for Energy

Accounting with Areas of Responsibility 55
Energy Conservation, A sample format for computation of losses is given in Table 2.3:
Audit and Accounting
Table 2.3: Sample Format for Computation of Losses for System Elements

Sl. System Elements Losses (MU) Losses as % of Energy

No. Available in the System

1. 220 kV Line M7–M9

2. 220 kV / 132 kV M 9 – M 10
transformation

3. 132 kV Line M 11 – M 12

4. 132 / 33 kV M 12 – M 15
Transformation

5. 33 kV Line M 16 – M 17

6. 33 / 11 kV M 17 – M 21 – M 22
Transformation

7. 11 kV Line and M 21 – M 23 – M 24
Distribution
Transformers*

8. LV Lines $ M 25 – M 31

Note: *The description given above refers to the method of calculation of losses in respect of
an individual 11 kV feeder and should include the reading of meters on the distribution
transformers as well.
$ refers to a typical LV feeder.

You should refer to Fig. 2.7 for the location of the meters M1, M2, etc.

2.4.2 Preparation of Energy Balance

An energy balance is a set of relationships accounting for all the energy

that is produced and consumed. It matches inputs and outputs in a
system over a given time period (Fig. 2.8).

ENERGY ENERGY
INPUT OUTPUT

Fig. 2.8: Energy Balance Matches Energy Input with Energy Output in a System

The system could be the entire country or a limited area or even a process in
a factory. An energy balance is usually made with reference to a year, though
it can also be made for consecutive years to show variations over time.
Energy balances are used to quantify the energy used or produced by a
56 system.
These are usually constructed from two sides: Energy
Accounting
1) from end-uses back to total primary energy consumption, and
2) from resource extraction to primary energy supply.

The basic equation of an energy balance is:

Source + Import = Export + Variation of stock + Use + Loss

+ Statistical differences

In this equation,
sources are local primary energy sources;
imports are energy sources which come from outside the area under
consideration (e.g., the country, region, village, etc.);
exports go to other areas (countries, regions, etc.);
variation of stock is reduction of stock (wood, oil) and storage;
use can be specified sector-wise or by energy form or by end-use. This
includes use of fuels for non-energy purposes;
losses can be technical and administrative;
statistical difference is included to balance for inaccuracies in supply
and demand, for example, due to evaluation of losses. These statistical
differences can sometimes be as high as 10%.

Local Energy
Primary Losses
ENERGY
Energy
OUTPUT
Source
Energy Energy
s
Exports Use
Energy
Sources Reduction of Statistical
from Stock, Storage Difference
Outside

Fig. 2.9: Schematic Diagram for the Energy Balance Equation

We need to quantify all these quantities while preparing the energy balance for
energy accounting. An important part of preparing an energy balance is the
construction of an energy chain to trace the flows of energy within an economy
or system, starting from the primary source(s) of supply through the processes
of conversion, transformation and transportation, to final/delivered energy and
finishing with end-use (Fig. 2.4).

All too frequently, energy balances are constructed in terms of primary

energy without taking into account conversions or transformations. This
can lead to incorrect conclusions. The most common example is electricity, 57
Energy Conservation, which is a secondary form of energy. Electricity is usually included in a primary
Audit and Accounting energy balance on the basis of the amount of fossil fuel needed to produce it.
Or, when electricity is generated from hydro, renewable energy resources or
nuclear energy, an energy equivalent or heat content is used.
However, it is not simply a matter of taking a conversion of one single fuel to
another, since the conversion efficiency varies with the primary energy source.
For example, for hydro it is around 90%, whereas for coal it is around 40%.
The amount of energy required to produce electricity should reflect these
differences. For example, it would take at least twice the amount of energy to
produce one unit of electricity if coal were used instead of hydro.
An energy balance should include the accounting of commercial energy,
non-commercial energy, non-energy products, and energy imports and
exports.
We now briefly explain what is involved in this.
Commercial Energy: It should be clearly specified which energy forms
are included in commercial and non-commercial energy categories.
Non-commercial Energy: Non-commercial energy usually includes
biomass (woody and agricultural residues) and animate energy (as you
have learnt in Unit 1). Despite their important contribution to the energy
supply, particularly in rural areas, these sources do not usually appear in
national energy balances. They are difficult to quantify physically since
they are traded and used in non-standard units. Their flows are not
monitored since they fall outside the purview of the monetised economy.
A few countries now include agricultural processing residues, such as
bagasse and rice husk, in their energy balances.
Non-energy Products: These include products from primary energy
carriers such as petrochemicals from crude oil, coal and natural gas and
should be listed separately.
Energy Imports and Exports: These include imports, exports, storage,
stock changes, transformation (conversion of one fuel to another, for
example, coal to coke), distribution and conversion losses as well as self
consumption by the energy industry (if relevant). These must be included
while constructing an energy balance for the Energy Accounting System.
Energy balances provide overviews, and constitute basic energy planning
tools for analysing the current and projected energy situation. The overviews
aid sustainable resource management, indicating options for energy saving, or
for policies of energy pricing and redistribution, etc.
Having explained the concept of energy balance, we would like to discuss the
measurement and separation of technical and commercial losses.

2.4.3 How to Measure and Separate the Technical and

Commercial Losses

The separation of commercial loss from the total technical and commercial
58 loss involves comparison of the losses as measured by ‘Energy Accounting’
with the losses as estimated by network simulation studies. For an 11 kV Energy
feeder, the procedure can be outlined as follows: Accounting

Undertake energy accounting for the particular 11 kV feeder. The

difference of energy input measured at feeder end and the recorded
consumption is the total loss:

Total loss = (Energy input measured at feeder end) − (Recorded

consumption)

Using modern distribution system analysis software, carry out a simulation

study for the load flow for different loading conditions during the Energy
Accounting period.

The difference of total loss and the loss obtained from simulation studies
(technical loss) is an indication of the non-technical loss in each
distribution feeder:

Non-technical loss = Total loss − Loss obtained from simulation

studies (technical loss)

This accounting and analysis would enable segregation of technical and non-
technical losses in the system and help in drawing up strategies for achieving
results on both the fronts. It is also essential to identify network elements with
high technical losses.

Identification of Elements with High Technical Losses

The technical losses computed for each element of the network from load flow
studies are to be compared with reasonable level of losses for that element.
The reasonable level of losses in various segments of the system have been
set out by the Committee of experts/ Central Electricity Authority in the
“Guidelines for Development of Sub-transmission and Distribution System”
for conditions prevailing in the country. These are given in Table 2.4.

Table 2.4: Level of Power Losses in Various Segments of the System

ZONE SYSTEM ELEMENTS POWER LOSS (%)

A Step-up transformer and EHV 0.50% to 1.00%

transmission system

B Transformation to intermediate
voltage level, transmission system 1.50% to 3.00%
and step-down to sub-transmission
voltage level

C Sub-transmission system and step- 2.25% to 4.50%

down to distribution voltage level

D Distribution lines and service 4.00% to 7.00%

connections

Total losses 8.25% to 15.50%

59
Energy Conservation, Estimation of losses in LT network may be done initially for a sample network
Audit and Accounting emanating from representative distribution transformers covering different
categories of consumers and load density. With full computerisation of the
database, it would be feasible to cover the whole LT system as per needs.

After going through this section, it must have become amply clear to you that
proper ‘Energy Accounting’ is a must for identifying the technical and
commercial losses, separating them and also identifying the ‘culprit’ feeder.

We now discuss special cases and the precautions required in taking energy
measurements.

2.4.4 Special Cases and Cautions in Measurements

Here, we discuss special cases that may arise in the Sub-transmission and
Distribution systems.

Case of Feeders Crossing Boundaries

In the Sub-Transmission and Distribution systems in a responsibility area,

some feeders may cross the boundaries and feed the loads (either in part or in
full) of other areas also. Such inter-area exchanges should be avoided at
11 kV level by network reconfiguration and administrative/jurisdictional
adjustments.

In cases where such network restructuring is not feasible or economical,

additional energy meters could be placed at appropriate locations. Or else,
relevant data on energy transfers/billed consumption could be exchanged
between the units to avoid complication of accounting.

The network within the unit at Division/Sub-Division/feeder level may also be

reconfigured so as to minimise the Inter-Division/Sub-Division/feeder
exchange of energy so that there is no dilution of responsibility in actual
practice.

Measurements and Corrections

The following practices would enhance the reliability and correctness of

energy accounting:

well defined procedures for reading of the energy meters (on 11 kV

feeders) not having data logging facilities, and consumer meters.
simple procedures to correct for non-simultaneous reading of consumer
meters and billing cycles;
accounting for un-metered consumption, till such time as 100%
consumer metering is in place. For this purpose, data derived from sample
metering at selected distribution transformers and sample surveys of
consumption of various categories of consumers on a system wide basis
would be required.

Scientific sampling techniques should be adopted for getting optimum results.

60 The size of the sample and the actual location of the meters to be installed
should be based on a detailed analysis of the consumers’ profile, identification Energy
of regional factors and other parameters having an impact on consumption. Accounting

For example, in the case of agricultural consumers, the parameters would be

cropping pattern, ground water profile, irrigation practices, agro-climatic
factors, etc. For domestic and commercial consumers, the parameters could
be based on income levels, sanctioned/connected load, etc. In the case of
street lighting, the season-wise sample survey, hours of supply and number of
working light points, etc., should be considered. With the analysis of data from
such surveys, the energy consumption of un-metered consumers could be
worked out on a reasonable basis. Accordingly, a reasonably reliable figure of
energy losses for each feeder could be derived.

Even after achieving 100% metering of consumers, it would be necessary to

have metering of some selected distribution transformers, serving different
categories of load to provide a reference point for checking the energy
balance. The data from consumer level metering and sample survey data
should be utilized to firm up consumption of each class of consumer and
derive validated data. The sample metering data would enable the utility to
establish norms of consumption. The utility would also be able to investigate
any deviations from normal consumption and their causes and reasons. The
overall check would also be possible by adopting the population of each class
of consumer and applying the sample data for estimation of consumption to
validate T&D losses.

Finally, we would like to present the major obstacles to energy accounting by

utilities and give some suggestions about how to overcome them.

2.4.5 Overcoming the Problems in Energy Accounting

Lack of meters, inadequate workforce, insufficient numbers of computers are
some of the issues that need to be dealt with by the utility management in
order to implement energy accounting. In addition, there is the problem of
corruption and inefficiency of the workforce of the utility, which is largely
responsible for insufficient revenue realization. The technical problem of time
parallax in data collection also needs to be addressed.

LACK OF INADEQUATE
METERS WORKFORCE

INSUFFICIENT PROBLEMS IN TIME PARALLAX

NUMBERS ENERGY IN DATA
OF COMPUTERS ACCOUNTING COLLECTION

INEFFICIENCY CORRUPTION
OF WORKFORCE IN WORKFORCE

Fig. 2.10: Some Problems in Energy Accounting 61

Energy Conservation, In Table 2.5, we give some suggestions for taking care of these problems.
Audit and Accounting Obviously, it is for the management of the power utilities to take action along
these lines for effective implementation of the energy accounting procedure.

Table 2.5: Role of the Management in Overcoming the Problems in Energy

Accounting

Problem Solutions

Lack of meters Present to the company the business case

(economic study) that the company will lose less
money when meters are installed. Acknowledge
that collections will not be 100%. Even with less
than 100% collections, the business case is
probably positive.

Lack of workforce Make the business case for more staff.

Lack of computers This business case is easy, since the cost of

computers is low, especially when compared to
the lost revenue.

Employees take bribes Pay them a compensation package (salary, bonus

or extort money from incentives, retirement, medical plans, education
customers support, etc.).

Then discipline them. Discharge those that are

found and proven to be corrupt; adhere to the
company’s disciplinary procedures.

Then, prosecute the special cases under the Civil

Laws and if needed under the Criminal Laws.

Time parallax in data Read all the meters on one feeder at the same
collection. time, on the same day. Create meter reading
routes that are based on feeders and not on
geography.

Use the load survey data recording function in the

meter on the DT to time slice the energy flow into
the feeder to coincide with the day of the route
meter reading.

You may now like to pause and try the following SAQ.

# 9$#" ' '1 . && &

a) Construct the equation of energy balance for your utility by specifying

the value of each of its variables.

b) Explain, in your own words, how the AT&C losses can be segregated.
62
We now acquaint you with certain technological requirements and advances in Energy
the energy accounting procedure that should be adopted by utilities to reduce Accounting
their losses.

9 % 8 (
%
The energy accounting exercise involves the establishment of an energy
measurement system and preparation of energy balance related to the
different responsibility areas, as explained in the previous sections. The
exercise is highly data intensive as it involves a large number of feeders at the
11 kV and 0.4 kV level connected from different substations, with each feeder
serving a large number of consumers of various categories.

Advanced IT technologies are helpful in the preparation of electrical network

database and documentation and consolidation of consumer details, which are
essential steps in energy accounting. Each consumer can be identified with
the Distribution transformer through which s/he is fed, and then each
Distribution transformer can be identified with the feeder on which the
transformer is installed. In turn, each feeder can be identified with the
substation from which electric supply is received. This could be done by
giving one ‘Code No.’ to each consumer, which would be her/his ‘technical
address’ on the bill. In addition, the bill should include the identification of
meter reader and applicable tariffs.

The energy accounting would require constant review and modification to

bring it to a stage and level wherein a reasonably true picture emerges.
Considering the volume of data and nature of job, it would be necessary to
computerise the energy accounting system to generate Management
Information System (MIS) reports for different levels of management. This
would facilitate remedial measures to improve billing. In medium and long
term, it would facilitate to take systemic improvement measures.

Computerised billing software placed at Division/sub-division level should be

designed to capture the concept of tracking the consumer to the electrical
network and meter reader. MIS reports of each feeder could be generated
through suitable Financial Energy Management System software packages
developed to meet specific needs of the circle. Some of the important features
of the software could be as under:

feeder-wise/distribution transformer-wise loss;

equipment failure and interruption analyses for the feeder;
billing CGL ( Consumer General Ledger);
consumer analyses (kWh/kW); and
realisation index (Rs./kWh) for each category and feeder as a whole.

This would enable feeder-wise monitoring of activities and assessment of

achievements vis-à-vis targets for loss reduction and revenue realisation.
You may now like to know: Which software can be used for the
above-mentioned purposes? 63
Energy Conservation, All energy accounting software have the following features:
Audit and Accounting
Organization/Site Records such as the name of the site, its address, and
associated accounts and meters.
Billing and Climate Records, e.g., total monthly energy consumption and
cost based on monthly utility bills for each fuel.
Reports and Graphs.
User Friendliness.
Documentation and Support.

We now present an example of computer software used for energy

accounting.

LEAP

LEAP stands for Long Term Energy Alternatives Planning and is an

accounting tool that balances production and consumption of energy. Just as
assets have to equal liabilities in a financial balance sheet, supply has to equal
demand in an energy balance. LEAP is deterministic in the sense that all
outcomes are specified by the user. It is a “what if” tool in that it calculates the
implications of a set of assumptions and tells the user what would happen if
these were true.

Based on the assumptions provided by the user, LEAP balances the energy
flow equations, thereby identifying the energy transformation and primary
energy supply requirements. The requirements are back-calculated from a set
of final energy demands, which form the “fixed” side of the first set of the
equations of the accounting process. The entire energy system is (can be)
included in the model and the level of detail is actually decided by the user.
This means that the data requirements are mainly determined by the user’s
preferences and can be made to fit the information that is available. Analysts
in developing countries will find this particularly useful as good data tends to
be a scarce commodity in these countries.

LEAP is also flexible in terms of the format of input data, which makes it easy
to reconcile and compare data from various sources. Cost of fuels and
capacity can also be included at the users’ discretion, as can environmental
effects such as GHG emissions and pollution. The results can easily be
viewed as graphs, charts or tables. The analysis is scenario based, which
means that assumptions for a set of potential futures are compiled. Results
are calculated by LEAP and then compared. The user can thus gain insight
into how different decisions or events may affect the future. You will learn
more about this and other software used by power utilities in Block 3 of this
course. We end this unit after a brief look at the future scenario.

Future Scenario: Real Time Tariffs and Energy Accounting

As the electricity industry moves toward less regulation, time-of-use and other
complex rates are likely to become more common. “Real-time pricing” may
64 also become available, at least to large electricity users. With real-time pricing,
what you pay per kW and per kWh will be based on what your utility pays for Energy
wholesale electricity. Wholesale prices vary based on supply and demand. Accounting
Customers will be notified hours in advance what the electricity prices will be.
Based on this real time information, they could take appropriate action to
reduce their energy use. Taking advantage of real-time pricing will require
computerized energy and price tracking, as well as sophisticated control of
equipment.

We now summarise the contents of this unit.

:
• Energy accounting forms the basis for a detailed and complete
evaluation of the power supply system. It is a system of recording,
analyzing and reporting energy consumption and cost on a regular
basis. This helps in an accurate accounting of the energy generated,
transferred, as well as the energy lost and revenue realised at each
level of power generation, transmission and distribution.

• Energy accounting is needed to estimate the AT&C losses and

determine their sources in the utilities so that measures could be taken to
reduce them. The adoption of proper energy accounting would also
facilitate increased revenue realisation for the energy supplied to the
consumers through the identification of areas and causes of high
energy losses and cutting down on its own expenses on account of the
operational inefficiencies. It also helps the utility in bringing accountability
and efficiency in its working. This would enable improving the financial
health of the utility and would contribute substantially towards overall
development of the power sector.

• The energy accounting procedure involves the preparation of energy

balance, which is a set of relationships accounting for all the energy
which is produced and consumed. It also involves the preparation of
accounts of energy flow to various segments, energy consumption
by various categories of consumers, energy losses including both
technical and commercial losses at various stages, and energy
required for meeting the technical requirements of the system out of
total available quantum over a specified time period. This has to be
done at all levels of responsibility. The exercise involves establishment of
an energy measurement system and segregation of technical and
commercial losses related to the different responsibility areas.

• The steps that can be taken at the feeder level for energy accounting
are to measure the energy received at the feeder, list the customers billed,
record the revenue from bills, compute the difference in billing and
collections and obtain the difference in input energy cost at the feeder level
and the total revenue realised from collections. Special cases that may
arise in the sub-transmission and distribution systems include the case of
feeders crossing boundaries and feeding the loads (either in part or in 65
Energy Conservation, full) of other areas also. Such inter-area exchanges should be avoided
Audit and Accounting at the 11 kV level by network reconfiguration and
administrative/jurisdictional adjustments.

• Practices such as well defined procedures for reading of the energy

meters (on 11 kV feeders) not having data logging facilities, and consumer
meters, simple procedures to correct for non-simultaneous reading of
consumer meters and billing cycles and accounting for un-metered
consumption, till such time as 100% consumer metering is in place would
enhance the reliability and correctness of energy accounting:

• Management of a utility needs to address the problems of lack of

meters, inadequate workforce, insufficient numbers of computers, time
parallax in data collection, corruption and inefficiency of the workforce in
order to implement energy accounting. Advanced IT technologies are
helpful in the preparation of electrical network database and
documentation and consolidation of consumer details, which are essential
first steps in energy accounting.

; (#

1. Explain the need for energy accounting giving examples from your own
experiences in a power distribution utility.

2. What do you understand by energy accounting? Prepare an estimate of

the energy available, energy consumed and energy lost in the area of your
responsibility. What reasons for revenue losses are revealed by your
energy accounting?

3. Which of the objectives of energy accounting stated in the unit are relevant
to your utility? Explain with examples.

4. In your opinion, what problems will your utility encounter if it resorts to

energy accounting? How can these be managed?

5. Describe the procedure of energy accounting for the area of your

responsibility. For example, if you are stationed at the feeder, what are the
steps you would take for energy accounting? Explain each step. Give data
as far as possible.

6. What is the importance of metering, billing and collections in energy

accounting?

7. Explain how energy accounting can benefit from the use of information
technology.

8. What is an energy balance? How is it prepared for energy accounting?

9. Explain the practices that can improve the accuracy and reliability of
energy accounting.

10. Describe the main features of LEAP.

66