Electric Entities: New Models Sh. R.P. Singh CHAIRMAN & MANAGING DIRECTOR POWER GRID CORPORATION OF INDIA LIMITED

Power Sector Reforms Worlwide DEVELOPING COUNTRIES To mobilise private investment efficiently and quickly to meet rapid growth in demand To improve efficiency and quality of service. DEVELOPED COUNTRIES To keep downward pressure on costs and prices To increase efficiency through competition.

Power Sector Reforms: the Trend Unbundling into Generation, Transmission and Distribution Regulation of monopolistic segments Introduction of competition Establishment of predictable, transparent and unambiguous regulatory framework

VARIOUS MODEL ADOPTED WORLD OVER UK Foremost country to restructure Vertically integrated CEGB unbundled. Transmission & Grid operation entrusted to NGC (TSO) Australia Went for unregulated Merchant Transmission Not met with much success and reverted back to regulated status United States Generation, transmission & distribution unbuindles and many utilities setup Independent System Operator (ISO) USA is now moving towards TSO model through RTO French model Canadian model

UK & South African Model G G G G G T + SO D D D D D This model is also followed in other European countries like Norway, Sweden, Finland, Netherland, Denmark etc.

G G G G G G RTO SO T T T SO D D D D D D American Model G G G G G G RTO SO T T T SO D D D D D D This model is followed in USA. Based on their California experience, USA is now moving towards TSO model through RTO.

G T + SO D RTE EdF French Model This model is followed in France, wherein Transmission and System Operation functions have been delegated to RTE. EdF is responsible for the Generation and the Distribution.

G G G G T T T SO TA D D D D Canadian Model This model is followed in Alberta, Canada. In this model, since, there are more than one main transmission companies, an independent System Operator and Transmission Administrator exist.

Indian Electricity Market; Evolution Electricity Act, 1887 First legislation on Electricity in India. Basic legal frame work for Electricity Supply Industry was provided. Electricity Act, 1910 Electricity (Supply) Act, 1948 Dealt with Statutory Powers and functions of CEA, SEBs and Generating Companies. State Electricity Boards were formed as vertically integrated utilities. 1948 Country demarcated into five regions and Regional Electricity Boards established. 1963 1975 Central Sector generating Utilities like NTPC, NHPC were established. Policy decision taken by GoI to form a National Grid 1981 Cont …

Indian Electricity Market; Evolution …Cont. 1989 POWERGRID was formed. Power Sector reforms introduced in a limited way 1991 Private Sector Participation in Power Generation was opened . 1998 Private Sector participation in transmission was opened. Electricity Regulatory Commission Act, 1998 promulgated. CERC at Central level & SERCs at State level to be established. 1998 Power Sector reforms gained momentum in a bid way 2003 Electricity Act 2003 was enacted, repealing all previous Acts.

Indian Electricity Market; Evolution Electricity Act, 2003 – salient points: Delicensing of generation, Transmission, Distribution & Power trading – licensed activity More than one distribution licensee in the same area Facilitating open access to transmission & distribution Metering of all electricity with stringent theft penalties Power producers to choose credit worthy buyers CPPs to sell additional capacity through “open access”

Open Access Greatly misunderstood Does not mean “Free for all” Phenomenal cost to build the Transmission Network to transfer any quantum of power from one point to the other, Transmission facilities to transfer power from definite sources to defined customers Only some operational margins available. Can be used to transfer economic power to bridge demand-supply gap

Inter-State Long-term Open Access Central Transmission Utility (CTU) ; Nodal agency Period of Applicability ; 25 years or more Procedure, guidelines and Terms and conditions formulated and available at POWERGRID web-site System studies to determine whether system strengthening required or not.

Short - Term Open Access Short Term Access– upto 1 year usage Nodal Agency - RLDC of the region in which the importing utility is located. Trading of surpluses Approval subject to transfer capacity available Reduced priority then long-term Economically priced ( ¼ th of long term ) Allotment based on e-bidding, in case of congestion in Transmission corridor

Role of POWERGRID POWERGRID, the Central Transmission Utility to take up construction, operation and maintenance of major EHV transmission network and for operation of Regional and National Grid. Investment of Rs. 70,000 crores planned during 2002-12 for supporting generation capacity addition of 100,000 MW and for National Grid

Role of POWERGRID Development of National Grid Interregional power transfer capacity enhanced to 8500 MW Planned to further enhance it to 2300 MW by 2006-07 and 30,000 MW by 2009-10.

POWERGRID in Southern Region Power situation in SR had various problems poor frequency, poor voltage depleted natural resources POWERGRID evacuating power from 4500 MW Central Generating units in SR over 6700 Ckt Kms & 15 S/S SR greatly benefited by Inter-regional Links like 1000 MW at Chandrapur between WR & SR 500 MW at Gajuwaka between ER & SR 2000 MW HVDC bipole between ER & SR’ Further investment of 7500 Crore planned during next 5 yrs POWERGRID’s telecom network extends upto Cochin

POWERGRID & Grid Management Many Milestones Achieved Three of the RLDCS (SR, NR & NER) modernised to improve effective Grid Operation NO MAJOR GRID DISTURBANCE IN 2003-04 DUE TO proactive approach in grid management commercial mechanism under ABT modernisation of RLDCS implementation of inter-regional links deployment of expert manpower round the clock vigil

ISO Vs. TSO; A Debate UK has kept Transmission & System Operation together In North America, FERC introduced RTOs by bringing together system operators and transmission providers Their not being under one umbrella was identified as one of the major reasons for recent grid collapses In China and South Africa also, transmission and Load Despatch Centres are retained together after restructuring.

ISO Vs. TSO; A Debate INDEPENDENT SYSTEM OPERATOR (ISO) System operation is independent of the function of transmission system development ISO prevalent when there are multiple transmission agencies TRANSMISSION SYSTEM OPERATOR (TSO) Grid operation as well as transmission system development with single entity TSO prevalent where unbundling has taken place and there is one transmission utility

ISO Vs. TSO ; A Debate In India, Transmission and system operation being under one umbrella is one of the major reasons for the outstanding performance of Indian grid Convenient to identify transmission congestion and make decisions to adopt suitable technology for power transfer

Economic Power Supply to Agriculture Reforms have laid special emphasis on improving distribution sector and rural electrification Endeavor to provide secure, reliable and economic power to agriculture Agriculture extends a helping hand in maintaining Grid Stability Flattening of Load Curve; reduces the gap between off-peak & peak Contains high voltage during off-peak Non-supply of agriculture during off peak will lead to hostile load, frequency & voltage curve and high cost of energy to meet peak load

Economic Power Supply to Agriculture Enough scope is available to supply economic power to agriculture without burdening the exchequer Disproportional losses in Power Sector not on account of agriculture but due to rampant theft Cheaper power from the neighboring regions can be important during off peak time Availability based Tariff leads to very less cost of energy during off peak time

Conclusion – Challenges and Issues MAJOR ISSUES WITH REGARD TO REFORMS commercial interest takes precedence over public interest development of environmental friendly generation capacity and provision of electricity for rural areas does not remain a consideration GOVERNMENTS’ ROLE VERY IMPORTANT IN TERMS OF SETTING UP REGULATORY FRAMEWORKS SO THAT THESE ISSUES ARE ADDRESSED