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Tata Power, Indias largest private power utility
was looking to automate its power generation INTERVIEW
billing. Moving from a spreadsheet and people Dinesh Kumar, President (IT) /CIO,
dependent process to a SAP platform was not Bajaj Energy provides an insight on how
CIOs can win employee support during
easy. CIO Ujjal Kumar Ghatak along with TCS difficult times.
developed an innovative solution using standard
SAP IS-U modules. This is how they did it.
TRANSFORMERS CASE STUDY

A Magical
Billing Solution
POWERS Tata Power
Tata Power, Indias largest private power utility, was
Company
Tata Power looking to automate its power generation billing. Moving
Industry from a spreadsheet and people dependent process to a
Private Power Utility
Offering
SAP platform was not easy. CIO Ujjal Kumar Ghatak along
Power Generation,
Transmission &
with TCS developed an innovative solution using standard
Distribution SAP IS-U modules. This is how they did it.
 Custom Solutions Group
TATA CONSULTANCY SERVICES

R
R
ecognized as Indias 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 The biggest benefit
growth creating greater value to consumers by
providing reliable power supply. Tata Power has was that it reduced
pioneered the generation of electricity in India. It financial risk by
has successfully served Mumbai consumers for
over ninety years and has spread its footprints switching over from spreadsheet-
across the nation. Today, it is the countrys largest based manual system to an
private player in the energy sector. Apart from
Mumbai and Delhi, the company has generation integrated SAP ERP
capacities in Jojobera (Jharkhand), Haldia (West
Bengal) and Belgam (Karnataka).
ASHOK SETHI ,
Tata Power has an installed power generation
Vice President - Mumbai Operations, Tata Power
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 PPA (Power Purchase Agreement) or based on
Stations at Bhira, Bhivpuri and Khopoli, accounting the percentage allocation of capacity by compa-
for 1797 MW. Its diverse generation capability ny, provided such instances are approved by the
facilitates the company in producing low cost regulatory body. Thus, currently, a total thermal
energy, thereby giving its consumers a greater value and hydro generation capacity of 2027 MW has
for money. Tata Power is the first in the country to been allocated to three distribution companies
get approval for installing and operating 4000 MW in a certain ratio. Further, the 2027 MW capac-
UMPP (Ultra Mega Power ity as mentioned above also

85%
Projects) at Mundra (Gujarat). includes 250 MW newly com-
Tata Power has drawn its missioned coal-based gen-
growth trajectory to have a eration (Trombay Unit -8).
total generation capacity of From this generated power,
25000 MW by 2017. 60 percent is allocated to two
Tata Power is also in the distribution companies and
distribution business for of TATA Powers the balance 100 MW is sold
the last several decades,
supplying power to various
revenue comes as merchant power through
auctions conducted by the
High Tension (HT) and Low from power power traders. The various
Tension (LT) customers in and
around the city of Mumbai.
generation, thermal units consume dif-
ferent fuels such as oil, gas
Further, the Regulatory totalling more than and coal for generation of
Commission of Maharashtra
state has approved Tata
Rs 4000 crores. power.
Based on the existing tariff
Power to supply power to order, billing is carried out by
customers who may desire Tata Power - Generation to its
to change their utility service provider to take main customers the distribution companies on a
advantage of the low tariffs levied by Tata Power monthly basis. Out of Tata Powers total revenue from
- Distribution. Mumbai, about 85 percent comes from its generation
business i.e. from billing its three distribution
Power Generation billing companies. Total annual generation billing is to the
critical for revenue tune of Rs.4000 Crores.
The Electricity Act 2003 has decentralized the Since October 2006, the generation billing
generation business. Accordingly, Tata Power process has been conducted manually, using
Generation Business can sell power to distribu- spreadsheets. The monthly quantities would be
tion companies either based on duly approved communicated to the billing group via e-mail and
 TRANSFORMERS CASE STUDY

the billing department would station is capable of firing on

prepare the bills and forward it Previously, the bills multiple fuels. Hence the cost
to the distribution companies. of generation was dependent
One of the key requirements were generated on the quantity of fuel used
for Tata Power was to mitigate over the month in the different
the risk of conducting the manually and then generation plants.
generation billing process on Tata power also had different
spreadsheets and automating couriered across to types of incentives for its
it. Tata Power was using the
SAP IS-U SAPs Industry the DisComs. A delay licensees. Besides, the nature
of power generation is such
Specific Solution for Utilities
Industry for its distribution
of even a single day that many tariff scenarios
would emerge. In case the
business.
Ujjal Kumar Ghatak, CIO,
would translate in licensee did not consume its
allocated power, Tata Power
Tata Power, was keen that the loss of interest. had the provision to sell the
power generation billing should unconsumed power in the
also be on the SAP platform. open market, and the credit
It would have been a huge challenge to use a of the sale of allocated energy (of the licensees)
different platform for the power generation billing, had to be provided to them. One of the thermal
and then integrate that with SAP. We would have generating units has about 40 percent of its share
spent most of our time dealing with the integration allocated as Merchant Power adjustments
aspect rather than focusing on the billing. So, the of the sale of merchant power were required
power generation billing had to be done on the SAP to be incorporated into the allocated shares of
platform. he says. However, this was easier said licensees. These complex accounting of the billed
than done. Power generation billing is a complex amounts, discounts and staggered payment
business process due to several reasons. For each receipts had to be raised within SAP Fl-CO (SAP
of the distribution companies (customers of Tata Finance and Control) and then to the SAP IS-U.
Powers generation business), a provisional bill Tata Power also had non-standard calculations
followed by at least four supplementary bills for for delayed payment charges and arrears. It also
every billing period are required to be created. The had complex accounting methodologies of DPC
billing involves a complex business logic based on (delayed payment charges) and cash discount,
the Tariff Regulations of the Maharashtra State involving different treatment for different
Electricity Regulator. Tata Power has Hydro as well customers. There was also the unique scenario of
as Thermal Capacity in its generation portfolio, Tata Power - Distribution being its sister concern.
and each generating unit at the thermal power In this case, there was no need for cash payment
as the accounts could be adjusted internally.

Billing Process
On the first of every month, two separate main bills
Power Generation (one for power generated from Unit 8 and another
for power generated from Non-Unit 8.) would be
Billing requires generated based on the prevailing Tariff Order.
multiple monthly bills for On the third of every month, two supplementary
bills with differential rate based on Fuel
a single customer. So we Adjustment Charge (FAC) would be generated.
developed an innovative At this stage, four bills would be generated for
solution using standard SAP a single customer (two main bills Unit 8 and
Non-unit 8) and two supplementary bills (Unit 8
IS-U for billing and invoicing. and Non-Unit 8). Subsequent to supplementary
bills, any number of bills could be generated for
Ujjal Kumar Ghatak,
any number of times. Supplementary bills may be
CIO - Tata Power
generated due to changes in fuel quantity, cost or
change in Milion Units (MUs) generated (normally
after audit, once every quarter). The bills were

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 Powers 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 (SAP-
Sales 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.
Custom Solutions Group
TATA CONSULTANCY SERVICES
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
Powers 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.