Sharing of Inter-State Transmission Charges and Losses (PoC Regime)

Abbhimanyu Gartia,Dy General Manager, WRLDC, MUMBAI

In this Presentation Historical Background

Evolution Regional Postage Stamp Method

Drivers of Change

POC Mechanism – Features

Issues

Regulation Amendment and Related Orders

Historical Background

Historical Background

Evolution of Transmission Pricing

Implicit transmission pricing model Transmission charges were clubbed with generation tariff

Unbundling of generation and transmission

Transmission pricing model changed from implicit to explicit Transmission charges were apportioned on the basis of net

energy drawn

Evolution of Transmission Pricing

Late 1970’s: Regional generation projects by CPSUs

Development of associated regional transmission schemes

to enable drawal of respective shares by regional beneficiaries

Regional Postage Stamp method to suit above arrangement

Pooling of Transmission Charges of associated transmission

schemes and sharing on the basis of allocation

Neutral to distance and direction

Evolution of Transmission Pricing

Regional Postage Stamp Method: Interregional

allocation

Pan caking of regional transmission charges and losses

Beneficiary states were to pay

transmission charges of other region in which generation

source located

Transmission charges of intermediate regions involved in

case generation source located which is not adjacent

(pancacking and cross subsidisation)

o …………………………………

Pancaking in Losses

Generation Located in NER

Drawee Entity in NR

NER-ER Boundary

ER-NR Boundary

3%4 %5%

100 MW97 MW93.12 MW88.46 MW

Drivers of Change

Drivers for Change

Holding Pattern: Risk Mitigation

4776

Network Size Complexities

Buses   4830

Generating Stations   557

Generating Units   1148

Loads   2672

Branches

DC Lines 7

765 kV 2

400 kV 622

220 kV 3034

132 kV 5130

Total 8795

Transformers   2031

National Transmission Pricing Framework

National Transmission Pricing Framework

As per mandate of NEP/ TP

Sensitivity to distance and direction

Avoids pan- caking of charges

Addresses multiple transmission licensee regime

Provides economic signal for locating generation and

load

New Pricing Framework

a necessity rather than a choice

Policy Mandate

Provisions of National Electricity PolicySection 5.3.2

“Network expansion should be planned and implemented keeping in view the anticipated transmission needs that would be incident on the system in the open access regime. Prior agreement with the beneficiaries would not be a pre-condition for network expansion. CTU/STU should undertake network expansion after identifying the requirements in consultation with stakeholders and taking up the execution after due regulatory approvals.”

Policy Mandate

Section 5.3.5“To facilitate orderly growth and development of the power sector and also for secure and reliable operation of the grid, adequate margins in transmission system should be created. The transmission capacity would be planned and built to cater to both the redundancy levels and margins keeping in view international standards and practices.”

“To facilitate cost effective transmission of power across the region, a national transmission tariff framework needs to be implemented by CERC. The tariff mechanism would be sensitive to distance, direction and related to quantum of flow.”

Policy Mandate

Provisions of Tariff Policy

Section 7.1(2)

“The National Electricity Policy mandates that the national tariff framework implemented should be sensitive to distance, direction and related to quantum of power flow. This would be developed by CERC taking into consideration the advice of the CEA. Such tariff mechanism should be implemented by 1st April 2006”

Policy Mandate

Section 7.1(2)

“Transmission charges, under this framework, can be determined on MW per circuit kilometer basis, zonal postage stamp basis, or some other pragmatic variant, the ultimate objective being to get the transmission system users to share the total transmission cost in proportion to their respective utilization of the transmission system. The overall tariff framework should be such as not to inhibit planned development / augmentation of the transmission system, but should discourage non-optimal transmission investment.”

Policy Mandate

Section 7.1(4)

“In view of the approach laid down by the NEP, prior agreement with the beneficiaries would not be a pre-condition for network expansion. CTU/STU should undertake network expansion after identifying the requirements in consonance with the National Electricity Plan and in consultation with stakeholders, and taking up the execution after due regulatory approvals.”

Policy Mandate

Section 7.1(7)

“After coming into effect the CERC regulation on the framework for the inter-state transmission, a similar approach should be implemented by SERCs in next two years for the intra state transmission, duly considering factors like voltage, distance, direction and quantum of flow.”

Policy Mandate

Section 7.2Transmission Losses

“Transactions should be charged on the basis of average losses arrived at after appropriately considering the distance and directional sensitivity, as applicable to relevant voltage level, on the transmission system. Based on the methodology laid down by the CERC in this regard for inter- state transmission, the Forum of Regulators may evolve a similar approach for intra-state transmission.”

Regulatory Initiatives

Discussion Paper on Sharing of Charges and losses in Inter-State Transmission System (ISTS) (2007)

Approach Paper on Formulating Pricing Methodology for Inter-State Transmission in India (May 2009)

Draft Regulation on Sharing of Inter-State Transmission Charges and Losses (February 2010)

Regulation on Sharing of Inter-State Transmission Charges and Losses (June 2010)

25th February 2011 NLDC 22

PoC Mechanism

Distance Sensitivity

Direction Sensitivity

Quantum Sensitivity

Methodology Proposed in India

Point of Connection (PoC) Charges In Rs. per MW per month Nodal / Zonal Charges Separate Injection & Withdrawal Charge

Usage Based Methodology Based on Load Flow Studies Hybrid of Average Participation and Marginal Participation

methods

PoC Charges To be made known upfront To be applied on Medium Term and Short Term Trades

Handling Transition To begin with 50% Uniform Charges and 50% PoC Charges Gradual movement towards 100% PoC Charges

NLDC

Average Participation

Tracing of Power Load Tracing Generator Tracing

25th February 2011 NLDC 25

Marginal Participation

Marginal Participation The charges are based on incremental utilization of

network assessed through load flows.

25th February 2011 NLDC 26

Hybrid Methodology

Hybrid of Average Participation Marginal Participation

Average Participation Used to identify slack (responding) buses for each node

Marginal Participation To compute the participation factor of each node on each

line.

25th February 2011 NLDC 27

Distance Sensitivity

Flow of electricity Based on Laws of Physics Independent of Contract Path

Electrical Distance is captured in PoC Mechanism Conductor Impedance Charges of Transmission Lines

Direction Sensitivity

Separate PoC Rates for Withdrawal and Injection Generation Hub

High Injection PoC Rate Demand Met from Local Generation

Low Withdrawal PoC Rate

ZONE AInjection PoC Rate(Rs 100000 per MW)

Withdrawal PoC Rate(Rs 70000 per MW)

Quantum Sensitivity

Access vs Usage

Planning based on Access

Usage reflected in PoC Rates

Access is reflected in charges payable

Process of Computation of PoC Rates

Input Data from various

stakeholders

Preparation of Basic Network &

Load Flow Studies

Network Truncation &

Load Flow Studies on Truncated Network

Computation of Nodal Charges(Average and

Marginal Participation)

Zoning of Nodes (Generation Nodes

and Demand Nodes)

Scaling of PoC Rates to Recover

Total Charges

PoC Rates Slabs

Zones are made out of nodes Nodes are the substations appearing in the truncated

network 400 kV & above substations in NR,WR,SR,ER and 132 kV &

above substations in NER

Nodal Charges are computed from Hybrid Method

Zoning……………Sample Case

Bus Name Owner

Generation Charges

Load Charges Generation Load

BAWANA-G

DEL_TH31242888 0 388 0

BAMNOL4 DEL_STU 0 59138840 0 645

BAWANA4 DEL_STU 0 39132218 0 425

MAHARANI NR_PGCIL0 17697566 0 295

MANDOLA NR_PGCIL0 77146314 0 793

PANIPAT * BBMB 0 10870697 0 163

Total31242888 203985637 388 2321

Computation of Zonal PoC Rate

Zonal Withdrawal PoC Rate (Rs/MW/Month)

= Total Charges

Total LTA

Zonal Withdrawal PoC Rate of Delhi: =Rs 203985635 / 3563 MW = 57244 Rs/MW/Month

Zonal Injection PoC Rate of Delhi:= Rs 31242888 / 420 MW = 74388 Rs/MW/Month

Computation of Zonal PoC Rate

Uniform Rate (Rs/MW/Month) = 

Total MTC-----------------------------------------------------------------------------------

-(Sum of Approved Injection + Sum of Approved Withdrawal +

Sum of Approved Additional Medium Term Injection + Sum of Approved Additional Medium Term Withdrawal)

= Rs 5957754576 (MTC of NEW Grid) / (40161 + 33751) MW

=80606 Rs/MW/Month

Computation of Zonal PoC Rate

Net Injection PoC Rate: 0.5*82495 + 0.5*80606 =81550 Rs/MW/Month

Net Withdarwal PoC Rate: 0.5*63482 + 0.5*80606 =72044 Rs/MW/Month

• Net PoC Rate = 50% PoC + 50% Uniform Rate

Injection PoC Slab Rate of Delhi : Rs 85000 Rs/MW/MonthWithdrawal PoC Slab Rate of Delhi : Rs 70000 Rs/MW/Month

Approved Slab Rates (Rs/MW/Month)

Slab for PoC rates approved by CERC

100000

85000

70000

110000

95000

80000

NEW GridNEW Grid SR GridSR Grid

Slab rates for PoC Losses approved by CERC

Average Loss

Average Los + 0.3%

Average Loss - 0.3%

PoC Charges Slab Rates………………..(1)

Envy Free Allocation

Min-Max Theory

Principle of Minimum Regret

Certainty in Transmission Rate

Transmission Rate in Postage Stamp Method

= Total Regional ISTS Charges

(Total LTA of all states of a region)+ (Export LTA)

Variation in Total Regional ISTS Charges Approval of tariff of new assets by the Commission

Variation in Total LTA Commissioning of new generators

PoC Mechanism Single PoC Rate Year Ahead Declaration

Siting Signals

Hydro Generation Location Depends upon availability of water head Fixed

Liquid Fuel or Coal Fired generation Freight Charges vs Electron Carriage Charges

Postage Stamp method Signal for investment near buyer

PoC Method Signal for investment at efficient locations

41

Point of Connection Mechanism

•In Rs. per MW per month•Nodal / Zonal Charges•Separate Injection & Withdrawal Charges•To be made known upfront•To be applied on Long Term, Medium Term and Short Term Trades

•Based on Load Flow Studies•Hybrid of Average Participation and Marginal Participation methods

•To begin with 50% Uniform Charges and 50% PoC Charges•Introduction of Slabs

Important Numbers 2011-12

Total Yearly Transmission Charges : 8700 Cr (approx)

Total LTA : 47000 MW (approx)

Total Zones : 71 (Nodes: 500 approx)

Uniform Rate NEW Grid : 80000 Rs/MW/Month SR Grid : 90000 Rs/MW/Month

19/04/23 POSOCO 43

ISSUES

Change in Transmission Charges

Change in CERC norms Tariff based on 2009-14 norms Provisional Tariff approved by the Commission

Inclusion of tariff of transmission system expected to be commissioned up to 30th September 2011.

Avoidance of Pancaking

Transmission Line Vintage

Transmission is a service Same service offered by old and new lines Power flow independent of vintage

Comparison with other cybernetics Same tariff in rail, road and air transport irrespective of

vintage of carrier.

Transmission Line Vintage

Uniform Charge Component

Regulation provides

50% Uniform Charge in total PoC Rate

Discussed in SOR

“3.3.62 : This is a transition mechanism adopted to

avoid tariff shock to any beneficiary. This may be

reconsidered by the Commission after two years”

Fallout of 100 % PoC

Wide variation in PoC Rates

Shock during transition

National Pool vs Regional Pool Uniform Charge Computed separately for NEW and SR

Grid

Regional boundaries losing significance Trans Regional ISGS Increasing Inter Regional Flows Meshed Network

Regional Pool Signal for planning

NEP 2005 and Tariff Policy 2006 National transmission tariff framework

Single Scenario

Unavailability of Data

Adjustment Prone/Gaming/Disputes

Authentic Data Published by CEA

Single PoC Rate

Easy to Comprehend

Stable Signal

Market Friendly

RPC Certified Lines

Charges of RPC Certified Lines

Charges shared before 15.6.2010 considered

Criteria for certifying new lines

50% or more inter state power flow

Unavailability of approved Tariff

RPC Certified lines charges

Should be excluded from ARR of STUs

Way Forward

“Implement, Gain Experience & Ramp Up”

Improvements in PoC mechanism based on the

experience gained

Similar Mechanism to be replicated in states.

Section 7.1(7) of the amended Tariff Policy:

“After coming into effect of the CERC Regulation on the framework

for inter-State transmission, a similar approach should be

implemented by the SERCs in next two years for the intra-State

transmission, duly considering factors like voltage, distance,

direction and quantum of flow.”

CERC (Sharing of Inter State Transmission Charges and Losses) (First Amendment)

Regulations 2011

Amendment to Regulation 2 of Principal Regulations … (2)

Amendment to Regulation 2 of Principal Regulations … (3)

Definition of DIC DISCOMs/ Designated Agency in State prior to PoC

implementation to be treated as DIC in that State for preparation of RTA and for Billing & Collection

After Implementation, States may designate any agency as DIC

Definition of ‘Target Region’ after sub-clause (t) of Regulation 2 inserted as:

"(ti) 'Target Region' means the region to which a generator proposes to sell power after obtaining Long-term Access from the CTU and for which beneficiaries in the said region have not been identified."

CERC (Sharing of Inter State Transmission Charges and Losses) (First Amendment) Regulations 2011

Definition of YTC:Sub-clause (y) of clause (1) of Regulation 2 substituted as:

“(y) ‘Yearly Transmission Charge (YTC)’ means the Annual Transmission Charges for the existing and new transmission assets of the transmission licensees and deemed ISTS Licensees including non-ISTS lines certified by Regional Power Committees for carrying inter-State power, determined by the Appropriate Commission under section 62 of the Act or adopted by the Appropriate Commission under section 63 of the Act or as otherwise provided in these Regulations”

Amendment to Regulation 7 of Principal Regulations Amendment to Clause (1)(l) of Regulation 7:

YTC to be revised on six monthly basis i.e., on 1st April and 1st October in first year

Subsequently, revision on Quarterly basis i.e., 1st April, 1st July, 1st October and 1st December

Sub-Clause (m) of Clause (1) of Regulation 7 (allocation of YTC of sub-stations to transmission lines) to be deleted

Revenue collected from Approved Additional MTOA in a synchronous grid to be reimbursed to DICs in same synchronously connected grid having LTA in following month

Injection PoC and Demand PoC charges for MTOA to target region to be adjusted against Injection PoC and Demand PoC Charges for LTA to target region without identified beneficiaries and not against LTA granted to any other target region without identified beneficiaries

Generator with LTA to a target region without identified beneficiaries Injection PoC Charges plus lowest of Demand PoC Charge among all

DICs in target region for remaining quantum after offsetting MTOA

Adjustment not allowed for Collective and Bilateral transactions

Amendment to Regulation 11 of Principal Regulations

Amendment to Regulation 11 of Principal Regulations

Injection PoC and Demand PoC charges for STOA to target region to be adjusted against Injection PoC and Demand PoC Charges for LTA to target region without identified beneficiaries and not against LTA granted to any other target region without identified beneficiaries

Generator with LTA to a target region without identified beneficiaries Injection PoC Charges plus lowest of Demand PoC Charge

among all DICs in target region for remaining quantum after offsetting MTOA and STOA

Amendment to Annexure of Principal Regulations YTC computed for assets at each Voltage level and for

each Conductor configuration based on Indicative Cost submitted by CTU

YTC for RPC certified non-ISTS lines To be approved by Appropriate Commission Average YTC to be used if tariff not approved by Appropriate

Commission Common methodology to be adopted by NLDC for

certifying non-ISTS lines carrying Inter-State power Recovery of YTC of assets to be commissioned in

Application period based on Approved/Provisional tariff Disbursement to owners of RPC certified non-ISTS lines

only after tariff is approved by Appropriate Commission

Amendment to Annexure of Principal Regulations

Following to be added after first paragraph in Step 4 of Clause (2) under Para 2.7

“The charges of the HVDC back to back inter-regional links at Chandrapur and Gazuwaka shall be included in the YTC of the NEW grid and the SR grid in the ratio of 1:1 and charges for Talcher–Kolar HVDC bi-pole link shall be shared by DICs of SR only.”

Thank You