Transmission Pricing India

8/2/2019 Transmission Pricing India

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TRANSMISSION PRICING


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EVOLUTION OF


Stage

I

Cost ofTransmissionclubbed withGenerationTariff

Stage II

Determinedon the basisof energydrawn

(Usage Based)

Stage III

Determinedon the basisof MWentitlements

(AccessBased)

Stage IV

HybridMethodologylike NodalBased.

Upto 19911992-2002

2002-2011

2011onwards


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EA-2003 AND NATIONAL

ELECTRICITY PLAN

EA-2003: Facilitate competitive markets

Generation De-licensed

Non-dDscriminatory open access

Efficient, coordinated and economical development of ISTS

Prior agreement with beneficiaries not a pre-condition for ISTSdevelopment

CTU/STU should undertake network expansion after identifying therequirements in consultation with stakeholders and taking up theexecution after due regulatory approvals.

Transmission tariff to be made sensitive to distance, direction andquantum of flow.


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TARIFF POLICY ON


Sensitive to distance, direction and quantum

Sharing in proportion to utilization

Facilitate planned development/augmentation

Discourage non-optimal investment

Prior agreement not pre-condition

Apportionment of losses- distance and direction

sensitive.


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NEED FOR CHANGE IN

PRICING FRAMEWORK

Synchronous integration of Regions.

Changes caused by law and policy.

Open Access and Competitive Power Markets

Pricing Inefficiencies.

National Grid / Trans-regional Grid

Changing Network utilization.

Agreement of beneficiaries a challenge.


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TYPESOF TARIFFS

Postage stamp

Contract Path Method

MW-Mile

Point of Connection


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POSTAGE STAMP METHOD

A postage stamp rate is a flat per kW charge for network access

within a particular zone, based on average system costs. Postage

stamp transmission tariffs allocate total system costs to consumers

on the basis of load share/Energy share.

This method results in higher costs above marginal costs because it

incorporates historical fixed costs. The cost for transmitting power

within the zone is independent of the transmission distance.

A generator transmitting to a load in a different zone would have topay the postage stamp charges for the zone of origin and the zone

of delivery, and also any intervening zones. This accumulation of

zone access charges is often called pan-caking


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POSTAGE STAMP METHOD

The advantage of using this method is that it is easy to administer. It

does not reflect marginal costs except in a special circumstance

where all generators are at equal distances from load and where

the load on each line is equal.

In this method the total charge has been divided into two

components

Actual power Transmission charges

Charges for transmission losses


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THE MW-MILEMETHOD

The MW-Mile method calculates the flow at each circuit

caused by the generation/load pattern of each agent based

on a power flow model. Costs are then allocated in proportion

to ratio of power flow and circuit capacity.

According to this method the embedded cost of transmission

facility is allocated based on the changes in power flowcaused by a transaction in a transmission line and length of

the line. This method is also called Line-by-Line method.


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THE CONTRACT PATHMETHOD

Sensitive to distance:

The contract path shall be the shortest route formed by

series of transmission lines capable of carrying contractedpower between the point of receipt to point of delivery in

the wheeling system. Monthly transmission charges of this

path would be payable in proportion to contracted power.

Provides wrong economic signal, based on fictitious path,power flow on parallel path is ignored


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POINTOF CONNECTION

It is the latest transmission charge pricing methodology

introduced for sharing of Inter State Transmission Systems (ISTS)

charges and Losses among the Designated ISTS Customers (DICs)depending on their location and sensitive to their distances

from load centers and generation and the direction of the node

in the grid.

The need for this method was triggered due to the problemsconfronted in the application of the present Regional Postage

Stamp Method which implied that all the users of a system in a

region pay same price/MW of allotted transmission capacity.


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COMPUTATION OF POC

CHARGES

Average YTC per circuit km (for each voltage level & conductor

configuration) shall be used for computation of charges.

PoC Charges to be computed for 5 blocks of month for peak and other

the peak conditions

Representative Blocks of Months

April to June July to September

October to November

December to February

March


13/20

COMPUTATION OF POC

CHARGES

Average YTC to be apportioned to peak and other than peak

based on the no. of hours constituting these periods.

50% recovery through Hybrid Methodology and 50% through

Uniform Charge Sharing Mechanism(for first two years ).

Loss Allocation Factor to be computed for each season using

Hybrid Methodology

50% losses through Hybrid Method and 50% through

Uniform Loss Allocation Mechanism(for first two years)


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COMPUTATION OF POC

CHARGES

Criteria for Zoning of nodes:

Costs within the same range

Geographically and electrically proximate

Nodes with connectivity to Thermal Generators > 1500 MW or

Hydro Generators > 500 MW to be taken as separate zone.

Except NER states where entire region is to be taken as one zone.

Zonal Charges : Weighted Average of Nodal Charges


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COMPUTATION OF POC

CHARGES

Generating stations connected to ISTS network < 400KVwould be charged at zonal charges where physically located

No transmission charges/losses for solar projects (for theentire useful life) commissioned within next 3 years.

In the event of a Designated ISTS Customer failing to provideits requisition for demand or injection for an Application

Period, the last demand or injection forecast supplied by theDIC and as adjusted by the Implementing Agency for LoadFlow Analysis shall be deemed to be Approved Withdrawalor Approved Injection


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SPECIFIC CHARGES

For deviation > 20% in any time block, the DIC shall be

required to pay transmission charges for excess generation

@ 25% above the zonal POC charges determined for zonewhere the Designated ISTS Customer is physically located

Payment on account of additional charges for deviation bythe generator shall not be charged to its long term customer

and shall be payable by the generator


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INDIRECT METHODFOR

HVDC COST ALLOCATION

Compute Transmission Charges for all load and generators with all HVDC

lines in service.

Disconnect HVDC line and again compute new transmission charges for all

loads and generators

Compute difference between nodal charges with or without HVDC.

Identify nodes which benefits with the presence of HVDC

[Benefit = (old cost i.e. base case with injection) minus (new usage cost i.e. withlink disconnected)]

In case benefit is ve, same to be collared to zero

Allocate HVDC line cost to the identified nodes.


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COMPARISONOFDIFFERENT

METHODS IN TRANSMISSION PRICING

Postage Stamp Method

Positive: Simple, familiar, most widely used in developing market

Negative : Insensitive to distance & direction

Contract Path Methodology

Positive: Sensitive to distance

Negative: Provides wrong economic signal, based on fictitiouspath, power flow on parallel path is ignored


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COMPARISONOFDIFFERENT

METHODS IN TRANSMISSION PRICING

Distance Based MW-Mile Methodology

Positive: Simple, sensitive to distance

Negative: Based on physical distance, not on actual power flow.

Point tariff, Nodal Pricing or Locational Marginal Pricing (LMP)

Positive: Provides economic signals, suitable for developed /

saturated market

Negative: Complex, not suitable for developing market, lossesforms the part of transmission pricing, based on MWhnot on MW.


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Documents

Transmission Pricing India