An IDG Custom SOLUTIONS initiative
IN ASSOCIATION WITH
Transforming Business Through Judicious Application of IT
Tata Power, India’s largest private power utility
was looking to automate its power generation
billing. Moving from a spreadsheet and people
dependent process to a SAP platform was not
easy. CIO Ujjal Kumar Ghatak along with TCS
developed an innovative solution using standard
SAP IS-U modules. This is how they did it.
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Dinesh Kumar, President (IT) /CIO,
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TRANSFORMERS CASE STUDY
A Magical
Billing Solution
POWERS Tata Power
Company
Tata Power
Industry
Private Power Utility
Offering
Power Generation,
Transmission &
Distribution
Tata Power, India’s largest private power utility, was
looking to automate its power generation billing. Moving
from a spreadsheet and people dependent process to a
SAP platform was not easy. CIO Ujjal Kumar Ghatak along
with TCS developed an innovative solution using standard
SAP IS-U modules. This is how they did it.
Custom Solutions Group
TATA CONSULTANCY SERVICES
R
R
ecognized as India’s largest and oldest
private sector power utility, with a
reputation for trustworthiness, built up
over nearly nine decades, Tata Power is
surging ahead with plans of sustained
growth creating greater value to consumers by
providing reliable power supply. Tata Power has
pioneered the generation of electricity in India. It
has successfully served Mumbai consumers for
over ninety years and has spread its footprints
across the nation. Today, it is the country’s largest
private player in the energy sector. Apart from
Mumbai and Delhi, the company has generation
capacities in Jojobera (Jharkhand), Haldia (West
Bengal) and Belgam (Karnataka).
Tata Power has an installed power generation
capacity of above 2900 MW with the Mumbai power
business, which has a unique mix of thermal and
hydro power, generated at the Thermal Power
Station, Trombay, and the Hydro Electric Power
Stations at Bhira, Bhivpuri and Khopoli, accounting
for 1797 MW. Its diverse generation capability
facilitates the company in producing low cost
energy, thereby giving its consumers a greater value
for money. Tata Power is the first in the country to
get approval for installing and operating 4000 MW
UMPP (Ultra Mega Power
Projects) at Mundra (Gujarat).
Tata Power has drawn its
growth trajectory to have a
total generation capacity of
25000 MW by 2017.
Tata Power is also in the
distribution business for
the last several decades,
supplying power to various
High Tension (HT) and Low
Tension (LT) customers in and
around the city of Mumbai.
Further, the Regulatory
Commission of Maharashtra
state has approved Tata
Power to supply power to
customers who may desire
to change their utility service provider to take
advantage of the low tariffs levied by Tata Power
- Distribution.
The biggest benefit
was that it reduced
financial risk by
switching over from spreadsheetbased manual system to an
integrated SAP ERP“
ASHOK SETHI ,
Vice President - Mumbai Operations, Tata Power
PPA (Power Purchase Agreement) or based on
the percentage allocation of capacity by company, provided such instances are approved by the
regulatory body. Thus, currently, a total thermal
and hydro generation capacity of 2027 MW has
been allocated to three distribution companies
in a certain ratio. Further, the 2027 MW capacity as mentioned above also
includes 250 MW newly commissioned coal-based generation (Trombay Unit -8).
From this generated power,
60 percent is allocated to two
distribution companies and
the balance 100 MW is sold
as merchant power through
auctions conducted by the
power traders. The various
thermal units consume different fuels such as oil, gas
and coal for generation of
power.
Based on the existing tariff
order, billing is carried out by
Tata Power - Generation to its
main customers — the distribution companies — on a
monthly basis. Out of Tata Power’s total revenue from
Mumbai, about 85 percent comes from its generation
business i.e. from billing its three distribution
companies. Total annual generation billing is to the
tune of Rs.4000 Crores.
Since October 2006, the generation billing
process has been conducted manually, using
spreadsheets. The monthly quantities would be
communicated to the billing group via e-mail and
85%
of TATA Power’s
revenue comes
from power
generation,
totalling more than
Rs 4000 crores.
Power Generation billing
critical for revenue
The Electricity Act 2003 has decentralized the
generation business. Accordingly, Tata Power
Generation Business can sell power to distribution companies either based on duly approved
TRANSFORMERS CASE STUDY
the billing department would
prepare the bills and forward it
to the distribution companies.
One of the key requirements
for Tata Power was to mitigate
the risk of conducting the
generation billing process on
spreadsheets and automating
it. Tata Power was using the
SAP IS-U — SAP’s Industry
Specific Solution for Utilities
Industry for its distribution
business.
Ujjal Kumar Ghatak, CIO,
Tata Power, was keen that the
power generation billing should
also be on the SAP platform.
“It would have been a huge challenge to use a
different platform for the power generation billing,
and then integrate that with SAP. We would have
spent most of our time dealing with the integration
aspect rather than focusing on the billing. So, the
power generation billing had to be done on the SAP
platform.” he says. However, this was easier said
than done. Power generation billing is a complex
business process due to several reasons. For each
of the distribution companies (customers of Tata
Power’s generation business), a provisional bill
followed by at least four supplementary bills for
every billing period are required to be created. The
billing involves a complex business logic based on
the Tariff Regulations of the Maharashtra State
Electricity Regulator. Tata Power has Hydro as well
as Thermal Capacity in its generation portfolio,
and each generating unit at the thermal power
station is capable of firing on
multiple fuels. Hence the cost
of generation was dependent
on the quantity of fuel used
over the month in the different
generation plants.
Tata power also had different
types of incentives for its
licensees. Besides, the nature
of power generation is such
that many tariff scenarios
would emerge. In case the
licensee did not consume its
allocated power, Tata Power
had the provision to sell the
unconsumed power in the
open market, and the credit
of the sale of allocated energy (of the licensees)
had to be provided to them. One of the thermal
generating units has about 40 percent of its share
allocated as ‘Merchant Power’ — adjustments
of the sale of merchant power were required
to be incorporated into the allocated shares of
licensees. These complex accounting of the billed
amounts, discounts and staggered payment
receipts had to be raised within SAP Fl-CO (SAP
Finance and Control) and then to the SAP IS-U.
Tata Power also had non-standard calculations
for delayed payment charges and arrears. It also
had complex accounting methodologies of DPC
(delayed payment charges) and cash discount,
involving different treatment for different
customers. There was also the unique scenario of
Tata Power - Distribution being its sister concern.
In this case, there was no need for cash payment
as the accounts could be adjusted internally.
Previously, the bills
were generated
manually and then
couriered across to
the DisComs. A delay
of even a single day
would translate in
loss of interest.
Billing Process
Power Generation
Billing requires
multiple monthly bills for
a single customer. So we
developed an innovative
solution using standard SAP
IS-U for billing and invoicing.
Ujjal Kumar Ghatak,
CIO - Tata Power
On the first of every month, two separate main bills
(one for power generated from Unit 8 and another
for power generated from Non-Unit 8.) would be
generated based on the prevailing Tariff Order.
On the third of every month, two supplementary
bills with differential rate based on Fuel
Adjustment Charge (FAC) would be generated.
At this stage, four bills would be generated for
a single customer (two main bills — Unit 8 and
Non-unit 8) and two supplementary bills (Unit 8
and Non-Unit 8). Subsequent to supplementary
bills, any number of bills could be generated for
any number of times. Supplementary bills may be
generated due to changes in fuel quantity, cost or
change in Milion Units (MUs) generated (normally
after audit, once every quarter). The bills were
Custom Solutions Group
TATA CONSULTANCY SERVICES
generated manually and then couriered across to
the Distribution Companies (also called DisComs).
Since this involved figures that ran into crores, a
delay of even a single day would translate in loss
of significant interest on the sum. This was a highly
mission critical and a risk-prone exercise and only
experienced and senior staff were allowed to carry
this exercise out.
The Solution
Automating this process was no easy task.
Tata Power’s first attempt to do so failed when
their vendor could not fathom the magnitude of
the challenge and abandoned it mid-way. Says
Ghatak, “Our previous vendor had vast experience
in the billing domain, and was confident they
could overcome the challenges of the power
generation billing. They had implemented billing
projects for several utility companies. However,
they abandoned this project, and advised us to
continue generating the bills manually using
spreadsheets, declaring that a business or
program logic can never be created for this
process. They claimed that the process has too
many variables and that it was too dynamic. At
that point, Tata Power consulted TCS, who offered
to pick up the gauntlet,” he recalls.
Working closely with the billing team, the primary
task for TCS was to understand the complexities
of the power generation billing. They drew all
possible scenarios and made adjustments for
any issue that the billing team may have faced
in the last ten years. The IT team soon realized
that in the existing SAP IS-U processes, only one
supplementary bill could be generated, as only a
single adjustment reversal was permitted.
Since there was no existing solution, Tata
Power developed a first-of-its-kind solution to
tackle this issue. Within six months, they created
system workarounds using the standard SAP IS-U
for billing and invoicing. The solution seamlessly
integrated with all business processes like plant
generation data from a module called Load
Dispatch and sale of power from SAP-SD (SAPSales and Distribution) module. The maximum
number of bills to be generated for a particular
customer is fixed and accordingly, the same
number of contract accounts is created in SAP
IS-U. The contract number would not change
and there was no provision for joint invoicing.
Generation data along with fuel mix and auxiliary
consumption is entered at respective process
points and the data is integrated with generation
billing. The entire solution is built in SAP.
Business Benefits out of
this Integrated IT Solution
eamless integration of SAP SD, Fl-CO and
S
IS-U modules
Increased utilization of SAP assets
tandardized business processes using SAP which
S
follows best practices
educed financial risk by switching over from
R
spreadsheet based manual system to Integrated
SAP ERP
Reduced cycle time
Maintaining audit trail at all users / process level
ompliance with SOA (Schedule of Authority) as per
C
business defined practice
entralized storage of all data and information
C
security is assured
ystem based solution rather than
S
person driven
Business Benefits
The innovative power generation billing system
was a seamless integration of SAP SD, Fl-CO and
IS-U modules, increasing the utilization of Tata
Power’s SAP assets. It also led to approximately
50 percent savings of manual effort.
The biggest benefit was that it reduced financial
risk by switching over from spreadsheet-based
manual system to an integrated SAP ERP, and
standardizing business processes. It has become
easier for Tata Power to maintain an audit trail
for all users and at all process levels (F&A,
Regulatory, Customer and Audit requirements).
It also enabled the centralized storage of all data
and information, assuring security and reduced
cycle time. “Now, the company never misses the
deadline of generating the bills on the first of every
month.” says Ghatak. “The people-dependency and
manual-intervention has also reduced dramatically.
These two factors were always looked as top-ten
risks for the company in its assessments. The
company is now looking to replicate this success
in our other plants such as Maithon Power Limited
(MPL) in Jharkhand, and Coastal Gujarat Power Ltd
(CGPL) in Mundra”, he adds.