1 THE INDIA ELECTRICITY MARKET TIME LINE REAL TIME 15 MT BLOCKS LONG TERM LOAD FORECAST FUND MOBILISATION 10-5 YEARS POWER PURCHASE AGREEMENTS CAPACITY COMMITTMENT 1-5 YEARS SHORT TERM LOAD FORECAST DAY-AHEAD SCHEDULING WEEK TO DAY AHEAD

2 Components of inter-utility tariff (Pre – ABT Mechanism)  Fixed charges  Interest on loans  Depreciation  O & M charges  Return on equity  Interest on Working Capital  Energy charges (fuel cost)  Incentives  Surcharge & other levies  No charge for reactive energy

3 TENTATIVE COST FOR NTPC THERMAL STATIONS FOR THE MONTH OF DEC 2003 Station Fixed Cost Rs. Cr/yr (1) Average Fixed Cost Rs. Cr/day (2) Average Fixed Cost P / KWh (3) Variable Base Cost P / KWh (4) Variable FPA P / KWh (5) Total Variable Base Cost P / KWh (6) Composite Cost P / KWh (3) + (6) Singrauli Rihand Unchahar – I Anta GPS* Auraiya GPS* DadriGPS G) Dadri (T) Unchahar – II Dadrigas(L) *Rates for mixed fuel (gas+ liquid fuel, naphtha)

4 Payment to Inter State Generating Stations (ISGS) from beneficiaries under Availability Based Tariff (ABT)  Capacity charges  Energy charges  Unscheduled Interchange (UI)

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6 CAPACITY CHARGE Capacity charge will be related to ‘availability’ of the generating station and the percentage capacity allocated to the state. ‘Availability’ for this purpose means the readiness of the generating station to deliver ex-bus output expressed as a percentage of its rated ex-bus output capability.

7 ENERGY CHARGE Energy charges shall be worked out on the basis of a paise per kwh rate on ex-bus energy scheduled to be sent out from the generating station as per the following formula Energy charges = Rate of energy charges (paise/kwh) x Scheduled Generation (ex-bus MWh)

8 UNSCHEDULED INTERCHANGE (U I) :  Variation in actual generation / drawal with respect to scheduled generation / drawal shall be accounted for through Unscheduled Interchange (UI).  UI for generating station shall be equal to its total actual generation minus its scheduled generation.  UI for beneficiary shall be equal to its total actual drawal minus its total scheduled drawal.

9 UNSCHEDULED INTERCHANGE (U I) :  UI shall be worked out for each 15 minute time block.  Charges for all UI transactions shall be based on average frequency of the time block.  UI rates shall be frequency dependent and uniform throughout the country.

10 UI RATE Rate of Unscheduled Drawal/Injection Frequency (Hz) Rate (p/u) Above and below 570

11 AVAILABILITY BASED TARIFF (A) CAPACITY CHARGE (B) ENERGY CHARGE (C) ADJUSTMENT FOR DEVIATIONS (U I CHARGE) (U I CHARGE) (A) = a function of the Ex-Bus MW availability of Power Plant for the day declared before the day starts x SEB’s % allocation from the plant (B) = MWh for the day as per Ex-Bus drawal schedule for the SEB finalised before the day starts x Energy charge rate (C) = Σ (Actual energy interchange in a 15 minute time block – scheduled energy interchange for the time block) x UI rate for the time block TOTAL PAYMENT FOR THE DAY = (A) + (B) ± (C)

12 FEATURES :  ( A) and (B) do not depend on actual plant generation / drawal. No metering required for this as they are based on off-line figures. All deviations taken care of by (C)  No complication regarding deemed generation.  Perpetual incentive for maximizing generation and reducing drawal during deficit, but no incentive to over generate during surplus.