The worsening power deficit scenario in Maharashtra warranted immediate action on the part of the Maharashtra State Electricity Distribution Company Limited (MSEDCL). Since the gestation period for addition of generation capacity is long, MSEDCL decided to focus on load-side energy management and utilise the savings thereof to curtail the growing deficit to some extent. MSEDCL also decided to bring in private sector expertise for increasing efficiencies in the distribution system in certain selected circles (networks) through a distribution franchising arrangement.
The Electricity Act 2003 allows the holder of a distribution licence to contract out some or all of the distribution activities to a franchisee. The distribution franchise arrangement applied to the distribution circle in the town of Bhiwandi, about 48 km north-east of Mumbai is a pioneering project and the first “input” distribution franchisee project following the introduction of the concept in the Electricity Act.