Workshop on the New Point of Connection Change Mechanism for Transmission in India Version

8/6/2019 Workshop on the New Point of Connection Change Mechanism for Transmission in India Version

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AF - Merca dos EMI Ca pac ity Build ing Series: on

The Point of Connec tion:

Charge Mechanism for Transmission in IndiaAug ust 4, 2011, Hote l Shangri - la , New Delhi

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The Point of Conne c tion (PoC) cha rg ingmechanism for transmission servicesprov ided by the Inte r Sta te TransmissionSystem operators has been imp lem ented

in Ind ia w ith effe c t from July 1, 2011.

Though the mec hanism is based on strongengineering and economic principles,inputs by va rious sta keholders ac ted as anover lay on these core d isc ip l inef u n d a m e n t a ls. Th is m e t h o d w a sdeveloped after long debates involvingRegula to rs, Policy M akers, TransmissionServic e Provid e rs, Syste m Op erat o r,

Generat ing companies, Distr ibut ionCo mpanies, Consultants, Pow er Trad ersa nd Pow er Excha ng es. This ov erlayhelped satisfy the important requirementof a c cep tab ility, while the c ore disc ip linefundamentals helped the mechanismsatisfy e ffic ienc y - sensitivity o f ta riffs tod istanc e, direc tion a nd qua ntum of flow -requ i remen ts o f the ta r i f f des ignmechanism.

From Sta te networks to Reg iona l grids andfina lly to a n Integ ra ted Nationa l Netwo rk,the power systems in India has physicallyevo lved ove r last tw o d ec ades. This notonly allowed better utilization of naturalresources - fossil fue l, hyd ro, solar and wind- whic h a re g eograp hic a lly dispersed butalso allowed widening of the markets forvarious generators and customers. Withla rge numbers o f genera to rs and

customers - this vast expanse of the inter-connected transmission grid has satisfiedan ideal pre-condition for competitiveelec tric ity m arkets.

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This p hysic a l developme nt o f p ow ernetworks had to be supported by ac om merc ia l mec hanism to o. The p re-exist ing postage stamp method of

transmission p ric ing had served its purpo sewhen electricity markets in India wereBa lkanized by the sta te bound aries. Thishad to change in view of the physicalexpansion of the grids and to realize theob jec tives of the Elec tric ity Ac t 2003.

Point of Connection (PoC) mechanismhas changed the way markets wil loperate in Ind ia. Artific ial transmission ta riff

based barr iers (pancak ing) to thegeographic outreach by generators,distribution companies and open accesscustomers have been mitigated by thenew mechanism. Further, since theelectricity grid now operates as anintegrated network and is no longer aloose agglomerate of regional and stategrids - inter -state power flows over statelines and the sta te gene ra ting sta tions useISTS netw orks to c onve y their energy.


The Point o f Connec tion:Charge Mec hanism for Transmission in Ind ia

Aug ust 4, 2011, Hote l Shangri - la, New Delhi

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Ma rkets for Pow er and c ond uc t of va riousp layers in this ma rket w ill be influenc ed byt r a n s m i s s i o n g r i d a n d a t t e n d a n tcommercial mechanisms. It is thereforec ritic al to understand and ap prec iate thechallenges and strategically employalternative conducts to achieve ande x t e n d t h e b e n e f i t s o f t h e n e wtransmission pricing mechanism. Certainkey c ha lleng es a re:

?The d a ta req uirem ents from variousDesigna te d ISTS Custo mers.o G e n e r a t o r s w i l l n o w b e

required to appropriately plantransmission ac c ess

o Some state-owned lines, whic h areb e i n g u se d f o r in t e r st a t etransmission b ut c urrently not beingpa id fo r by ISTS users will now ha vet o b e c o n sid e re d o n d u erepresentat ion from the statetra nsm ission ut ilities. Suc h g ridintegra tio nis a b lessing and wo uld

reflec t the t rue sp irit of the na tiona lgrid.?The sc heduling and loss a lloc a tion

mec hanism will undergo a c hange?The RPCs will be req uired to keep a

record of transmission system usagebased on SEM meter da ta a t the ISTSinterface points and this shall be thebasis of billing any deviations from theapprove d transmission usage.?Realignment of the e xisting BPTAs to the

req uirem ents of the new TSA w ill be achallenge.

?Fina lly, the STU c ha rges may still getpan-caked with the ISTS c ha rges forinter-state OA transactions. In case aPoC mec hanism is imp lem ented a t thesta te leve l also (for which eac h SERCma y take a d ec ision), we could have atruly integ ra ted grid - where one p ric ingmechanism governs open access onthe na tiona l grid .

In this context it becomes pertinent forState Transmission Utilities, DistributionCo mp anies, Genera to rs, Traders, andconsultants to understand the following

a ttributes of the PoC mec hanism:

1. Tec hnic a l (bo th eng inee ring a ndec onomic) underpinnings,

2. Development process - why werevarious assumptions and simplificationsdone,

3. Various agenc ies / c om mittees invo lved

a n d p ro c u re m e n t o f d a t a f o rde termination of PoC c harges

4. Imp lic a tions of transmission pric ing onc ase-I b idd ing p roc ess

5. Implications of PoC mechanism onutilization and hence sharing of IntraSta te Transmission Netw orks

6. Regulatory Framework and the

C o n c e p t o f d e fa u l t m a n d a to r ytransmission servic es agreement

AF Mercad os EMI was involved deep ly in the conc ep tualisation of the fram ework, the

ana lysis for de termining the PoC c harges, and the deve lopment of the regula tions




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Different Definitions of Utiliza tion.

Flat versus Loc a tiona l Charges.

Ma rg inal versus Ave rage Cost Pric ing.

LMPs and FTR based Transmission Pricing -

Imp lementa tion issues in Indian Context.

Session I: Definition ofUtilization - Distanc e

and Direction Sensitivity

Contrac t Path Me thod

Postage Sta mp s

Loc ation Dep end ent Pric ing Metho ds:

?Long Run ve rsus Sho rt Run Pricing Signa ls

o Investmen t Cost Re la ted Pric ing

a pp lied in Eng land a nd Wa les

(zona l p ricing based o n LRMC);

o C o st Re f le c t iv e Ne tw o rk Pric i n g

applied in Australia (zonal pricing

based on LRMC);

o Pric ing b ased on ma rginal transmission

losses app lied in Norwa y (zona l pric ing

based on SRMC);

Tea / Coffee11:30 AM to

11:45 AM

10:00 AM to

11:30 AM

Session II: PracticalTransmission Pric ingMechanisms - Part I

11:45 AM to1:15 PM

Prog ramme Sc hed ule

Lunch 1:15 AM to2:00 PM

Session III:Prac tic al Transmission

Pricing Mec han isms - Part II

2:00 PM to

3:30 PM

?Hybrid Methodology (PoC) mechanism

evolved in India for sharing of transmission

c ha rges and losses

o Average Part ic ipat ion Method

o Marginal Part ic ipation Method

o Hyb rid Metho d

The ob jec tive of the two sessions is to :

?Te c h n i c a l l y d i sc u ss p r a c t i c a l

transmission pricing mechanisms and their

algorithms

?To a p p rec iat e ho w t he Hyb rid PoC

me c hanism w as evo lved in Ind ia

?Definitions of Approved Injection and

Approved Withdrawa l.

?Trea tme nt o f Long , Med ium and Short

Term Open Ac cess.

?Noda l versus Zona l issues.

?Explanation of Impact on various states

and simp lific a tions.

?Constraints on Da ta Ava ilab ility.

?Billing , Co llec tion and Disbursem ent a t

Intra-Sta te Leve l - some issues.

?Way Forward - Implementation at

the Sta te Level.

Tea / Coffee3:30 PM to

3:45 PM

Session IV: Developmentof Reg ulations, Interestsand Conc erns of VariousStakehold ers, Way Forwa rd

3:45 PM to

5:30 PM

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Siddhartha SwarupManager- Business DevelopmentT: +91 11 4505 7445, F: +91 11 4505 7446M : +91 9999 221 308E: [email protected]

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www. metisbs.com

[email protected] / [email protected]

91 11 4505 7445 / 9810 233 471 / 9999 221 308

91 11 4505 7446

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Payment Via Cheque Electronic Transfer / RTGS

Cheque to be drawn in favour ofMetis Business Solutions Pvt. Ltd.payable at New Delhi

Account Name: Metis Business Solutions Private LimitedAccount No.: 02072000003413Bank Branch IFSC Code (for RTGS): KKBK0000207Bank Name & Address: Kotak Mahindra Bank Ltd.4893, Phoota Road Opp Westend Cinema, Sadar BazarDelhi-110 006

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There is a 10 % team discount for a group of 3 executives from the same company, 15% discount on a group of 5 and 20%discount on a group of 7 or more.

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Tel : (91) (11) 4505 7445 Fax : (91) (11) 4505 7446E-mail : [email protected] Website : www.metisbs.com




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Workshop on the New Point of Connection Change Mechanism for Transmission in India Version