1 SCOPE OF THE PRESENTATION Grid operation - overview Availability Based Tariff Benefits to Region & it’s constituents Intra_state ABT – it’s necessity Issues How to implement?

2 GRID STATUS – PRE - ABT Very wide Frequency fluctuations  48.0Hz to 52 Hz. Low Grid Voltages  400kV going down up to 330kV Frequent Grid Disturbances Sub-Optimal Operation High Technical loss Overdrawals at low frequency – might is right Grid Operation on fire fighting instead of Optimisation & Economy

3 AVAILABILITY BASED TARIFF Spearheaded by POWERGRID Features:  Unique commercial mechanism linked with frequency  Fixed Charges i.e. Capacity charges  As per Plant Availability.  Variable Charges i.e. Energy charges  As per Schedule.  Unscheduled Inter change (UI) i.e. deviations from schedule ( Schedule – Actual)  Price as per prevailing system frequency SCH-ACT GRAPHS

4 UI RATE Current Rate of Unscheduled Drawal/Injection Frequency (Hz)Rate (p/u) Above and below570 Till From to till date From to

5 Achievements –Implemented between July 2002 and Nov.’2003 –Improved quality of supply.. –Unutilised capacity harnessed-Pumped StorageUnutilised capacity harnessed –Merit order Operation. – Grid discipline –Emphasis on load forecasting –Discourage overdrawals during low frequency –Facilitate bi-lateral trading –Maximisation of generation availability AVAILABILITY BASED TARIFF

6 Need for intra-State ABT Accountability of utilities after reforms Passing on UI payment –Intra State ABT to identify agencies responsible for overdrawal/underdrawal, overgeneration/ undergeneration, resulting in UI payment to regional pool. Proper Demand forecast and load management by DISCOMs To establish a framework for bilateral trading at intra-State level To achieve overall merit order operation.

ISGS: Inter State Generating Stations SGS: State Generating Stations CTU: Central Transmission Utility STU: State Transmission Utility Inter-State ABT Intra-State ABT Distribution Control Centre – One for each Discom IPPsCPPs Non-conventional source of energy e.g., wind energy

8 Intra-state ABT. what it achieves ?. Unbundling of Vertically Integrated State Utilities Mechanism to price power based on Demand/Supply Harness surplus generating capacity available in state with CPPs/IPPs Operation of grid on economic principles –Merit Order Despatch Open Access in Intra-state Transmission and Distribution.

9 Intra state ABT Pre – requisites –Allocations from ISGS/ other state owned generators to various Discoms by State Govt –control centres in each Discom –Rtus at required locations - generating stations, drawal points from state transcos - on various tie-lines lines, various other critical lines -scada information to discom control centres -SEMs at required locations

10 Intra-state ABT – what it achieves ? Generate signals for efficient grid operation at the intra-state level. –Overdrawals at low frequency by Discoms duly priced. – Encourage serving of higher consumer demand –Encourage maximisation of generation during deficit conditions. –Each Discom and state generating station responsible for its actions – a profit centre –Commercial signals available to large consumers capable of regulating drawal

11 …Intra-state ABT – what it achieves ? UI mechanism at the intra-state level. – UI to be applied on the deviations from the schedules of the DISCOMS/State generators/IPPs/CPPs. – State Utilities to be collectively liable for the States’ liabilities with the regional UI pool account. –Achieves merit order operation for all the entities under ABT –Commercial viability of running Pumped Storage Stations.

12 Issues needs to be addressed for intra-State ABT Restructured SEBs Identification of entities for intra-State ABT Scheduling Principles & Procedures Commercial Principle –Metering Philosophy Treatment of existing Agreements Organisational Development Regulatory Issues

13 INTRA-STATE ABT COMMUNICATION REQUIREMENTS SLDC TO DISCOM COMMUNICATION TO BE ON A STRONG REDUNDANT BACKBONE VISIBILITY OF DATA TO SYSTEM OPERATOR –INTERCHANGE FLOWS –EMBEDDED GENERATORS –WIND FARMS, MINI HYDEL, CPP TO BE TELEMETERED IN STAGES –AND FINALLY, DMS SYSTEM FOR LOAD MANAGEMENT DATA ARCHIVAL AND ANALYSIS COULD HELP IN ACCURATE SCHEDULING

14 The main steps involved to implement intra- State ABT are: Listing of entities on which ABT/UI mechanism to be applied Listing of Metering locations and assess the requirement of meters and accessories Finalize the specifications for meters and accessories Presentation of the mechanism to all concerned Finalisation of the tariff for all generating stations in ABT format. Implementation of intra-State ABT

15 Implementation of intra-State ABT Finalisation of shares of each distribution zones and other commercial arrangements Organize installation & commissioning of meters and accessories. Organising meter reading, data transfer and computation at SLDC Establishment of the scheduling process along with scheduling software Presentation/training to all concerned

16 Implementation Plan 1 st Phase Activities –Finalisation of listing of entities –Listing of Metering locations –Finalisation of quantities of SEMs, DCDs/MTEs –Finalisation of technical specifications of SEMs/DCDs –Initiate tendering process for procurement of meters

17 2 nd Phase Activities –Finsalisation of Tariff of State Generating Stations as per ABT parameters/norms –Finalisation of Reactive Charge scheme –Finalisation of commercial mechanism for CPPs, Wind farms, Wheeling and banking, Open Access Customers etc. –Determination of Allocations of different Discoms in State Genco/ ISGS/ IPPs. Implementation Plan

18 3 rd Phase Activities –Supply and commissioning of meters at different locations –Installation of software for data processing –Installation of software for scheduling / energy accounting –Training –Estimate time for implementation – 12 to 18 months Implementation Plan

19 Some of the features of New National Electricity Policy – Feb.’05 Appropriate Commissions to undertake development of power market SERCs to notify GRID CODE by September 2005, if not yet notified State Commissions to ensure upgradation of SLDCs by June 2006 SERCs are advised to introduce ABT regime at the State level within one year i.e. by February 2006.

20 Status on intra-State ABT Many SEBs restructured, others in process State Utilities looking for benefits of intra- State ABT Gujarat took lead for intra-State ABT Punjab took lead in Northern Region Road-map for Maharashtra is ready POWERGRID assisting these States by providing consultancy Other States like MPSEB & Haryana to follow.

21 CASE STUDY FOR GUJARAT STATE

22 …Current Issues Market model for power procurement by Discoms Single Buyer Model Multi Buyer Model ABT parameters/norms Treatment for Open Access Transactions –CPP/IPP/Wind Farms/Banking transactions and Bulk consumers

23 West DISCOM GUJARAT STATE POWER POOL : Single Buyer Model GEN IPP 1 IPP 2 South DISCOM A Central DISCOM North DISCOM External Purchases s STATE GENCO SELLS THROUGH GETCO SYSTEM RESIDUAL GEB/TRADECO TO POOL ALL GENERATION ISGS Allocations SEC AECo Power Purchases/Sales

24 GUJARAT STATE POWER POOL : Multiple Buyer Model GEN IPP 1 IPP 2 TRANSMISSION SYSTEM OF GETCO STATE GENCO South DISCOM A Central DISCOM North DISCOM West DISCOM SEC AECo TRADECO External Purchases Power Purchases/Sales

25 Metering philosophy GENCO Power Stations One main meter for each Generator Transformer/ Station Transformer One (standby) meter for each outgoing feeder Lines connecting Discom-Discom One meter each at both ends IPPs One Meter (main) at IPP-end One meter (standby) at Discom end Open Access Customers One Meter (main) at Injection-end One meter (standby) at customers end

26 Meter Location - philosophy Lines connecting CPP-Discom One meter (main) at CPP end One meter (standby) at Discom end Lines connecting embedded licensees with Discom One meter (main) at Discom end One meter (standby) at licensee’s end Lines connecting CTU and STU points Meters already provided

27 Assessment of Meters/DCDs - Alternatives Alternative 1 : Discom boundary at 11 kV feeder from 66/11 kV X’ers –Metering at 11 kV side of 66/11 kV Xers. –More meters and data recording at lower voltage level would add to inaccuracies. –Data collection would be exhaustive and unnecessary. Since 66kV network is owned by GETCO, proportionate losses would be borne by all Discoms. –Lot of bulk customers are connected above 11kV and are consumers of Discoms. Metering requirement would be high. –No. of meters exceed 3600 Nos. (incl 20% spares) –No. of DCDs/MTEs would be high

28 No of meters>3600

29 Assessment of Meters/DCDs - Alternatives Alternative 2 : Metering at 66kV side of X’ers of 220/66kV, 132/66kV. –Losses in 66kV transmission network included in actual drawal. –Inter-discom lines 66kV and below to be metered. –Customers connected at 132kV and above to be metered ….? –No. of meters 1195 (incl 20% spares) –No. of DCDs 203 ( incl 20% spares)

30 No of meters = 1195

31 Assessment of Meters/DCDs - Alternatives Alternative 3 : Metering at 220kV side of 220/66kV, 220/132kV X’ers. –Inter-discom lines at 132kV and below to be metered. –Bulk customers connected at 220kV to be metered. –Losses below 132kV and 66kV network included in the drawal –No. of meters 772 (incl 20% spares) –No. of DCDs 133 (incl 20% spares)

32 No of meters = 772

33 Assessment of Meters/DCDs - Alternatives Alternative 4 : RECOMMENDED ALTERNATIVE Metering at Discom’s boundaries (the network dedicated to Discom) –Metering at GETCO (Dedicated to Discom) – GETCO (dedicated to other discom) –Metering at inter-Discom, Discom-to-Genco, Discom-to-IPP, Discom-to-CPP feeders Advantages –Cost of metering and infrastructure for data communication would reduce drastically. –Losses of dedicated overlayed GETCO network included in Discom drawal, which anyway has to be apportioned. –Losses of common GETCO network shall be pooled. –As such differences between estimated and actual losses becomes negligible. –No. of meters reduces to 614 (incl 20% spares) –No. of DCDs 114 (131 with 20% spares 131)

34 No of meters = 614

35

36 Intra-State ABT Parameters/norms… –UI rate Same as inter-state UI rate Higher than inter-state UI rate Lower than inter-state UI rate –UI rate curve - slope Multi-slope Curve Options Option 1 : Two-part tariff with UI mechanism Capacity Charges – linked to availability Variable Charges – linked to schedule UI Charges – linked to deviations Option 2 : Single part tariff with UI mechanism GENCO to recover its costs through single-part (CC+VC) – linked to schedule. In such a case, merit order suffers. UI Charges – linked to deviations

37 1. Higher UI Rate than region 2. Lower UI Rate than region 3. Differential UI Rate (Different UI rates for injection and drawal) 4. Regional UI Rate Recommended UI Rate : “Regional UI Rate” to start with Options for UI Rate

38 UI RATE Rate of Unscheduled Drawal/Injection Frequency (Hz)Rate (p/u) Above and below570

39 Options for UI Rate Rationale: 1.It is important that we avoid the problem of different and inconsistent mechanisms at inter-state and intra-State levels. The uniformity in two mechanisms are stressed for the following reasons: Intra-State balancing mechanism should result in matching UI charges to be paid/received to/from State UI pool from/to regional UI Pool. Pricing signals received from inter-State balancing and spot market should be passed downward to intra-State level so as to avoid seams across State boundaries. Different State and regional commercial mechanisms would cause host of other issues caused by inconsistent mechanisms. The electricity available within the State should not be priced in a different manner so that one is preferred over another specially when the cost of generation is the same.

40 –Allocations to Discoms from shared generating plants -to be notified by State government State generators Central Sector generators IPPs –Criteria to be finalised In percentages, not in MW terms No capacity to remain unallocated Intra-State ABT Parameters/norms…

41 –STU’s role in collection and disbursement of STU’s transmission charges CTU’s transmission charges Intra-State UI charges Regional UI charges Intra-State Reactive Energy charges Regional Reactive Energy charges RLDC fees and charges Intra-State ABT Parameters/norms…

42 –Tariff norms for State Generating Plants Financial Norms – similar to ISGS –Depreciation, Rate of return, O&M Cost, Debt : Equity ratio, etc. Operational Norms – similar to ISGS –Auxiliary power consumption –Target availability Can be reviewed in 5 years. Scheme for incentives – based on plant availability. Intra-State ABT Parameters/norms…

43 –Re-negotiation of existing contracts with IPPs….? Financial Norms – as per ISGS –Depreciation, Rate of return, O&M Cost, D:E ratio etc. –Incentives Operational Norms – as per ISGS –Auxiliary power consumption –Target availability 80% Intra-State ABT Parameters/norms…

44 Scheme for Reactive Energy Charge Proposal 1: Similar to scheme for Regional ISTS Discom pays/receives for VAR drawal/absorption for Var exchanges at inter-utility connection point –Pays for Var drawal when voltage is below 97%. –Receives for VAR return when voltage is below 97% –Receives for VAR drawal when voltages above 103% and –Pays for VAR return when voltages above 103%. –No charges for VAR drawal/return between 97%-103% Charges payable/receivable by IPPs/ State Genco – variation from Regional scheme – so as to incentivse them to inject/absorb for better system operation Use 0.5 class meters being installed by SML/Elster/L&T. As per Option 4, metering is proposed at notional boundaries of Discom network and not at actual drawal points. Pricing at about 10p/kVarh to incentivise installation of HT Capacitors

45 Scheme for Reactive Energy Charge Proposal 2: Hybrid Scheme Payment of Var charges to ISGS as per Regional scheme –Use ABT meters at SGS-Discom tie-points Payment of Var charges by Discoms to Transco as per scheme similar to HT consumers. –Use normal meters at Transco-Discom tie-points

46 Category 1 : –CPPs having net injectable capacity > 5MW would be under ABT/UI mechanism –Net Injection = Injection –(Consumption + Wheeling Losses) Wheeling losses will depend on voltage level of connection points. Typical cases Case 1 : When Injection and Consumption at the same bus –Wheeling Loss = 0 Case 2 : When Injection and Consumption in same Discom Wheeling Losses = Average Distribution Loss of Discom Case 3 : When Injection and Consumption points at Transco Wheeling Losses = Average Transmission Loss of Transco Proposed Scheme for CPPs

47 –CPPs divided in two Categories for their applicability for ABT Category 1: CPPs having net injection > 5MW –All deviations to be treated at UI rates, ABT Meters would be required. Two Proposals for accounting for CPPs Proposal 1 Consider pre-fixed Schedules at both connection points as NIL Measure Actual Injection at Injection-point (time-block wise) Actual Consumption at Consumption-point (time-block wise) Fix Post-facto Schedule at Injection-point = Actual Consumption +Wheeling Losses Calculate UI = Actual Injection at Injection-point - Post facto Schedule at Injection point Proposed Scheme for CPP

48 Proposal 2 –Fix Schedules as given by CPP –We may decide the procedure for fixing schedule production and consumption ends Whether schedule to be collected every day? And allow different schedules at different times of day? OR Fixed schedule for a period (say 3 months) and no change within day and during currency of transaction allowed. OR Treat as Open Access Transaction to be approved by SLDC and all wheeling and Scheduling/Operation charges collected by SLDC in advance Proposed Scheme for CPP

49 Category 2 : CPPs having net injection injection Existing commercial mechanism HT rates of GEB Ordinary meters would be sufficient Proposed Scheme for CPP

50 Large Consumers 1.Large Consumers >20MW not desiring Open Access ABT/UI mechanism to apply. Rationale: Consumers with demand more than 1% of average Discom (average load 2000MW) would affect the UI of Discom. 2.Large Consumers <20MW not desiring Open Access Same as at present. Wind Farms not desiring Open Access Not under UI Renewable Energy Obligations under GERC regulations would apply. Commercial Mechanism for Large Consumers / Wind Farms

51 a) Treatment of Existing Banking Transactions Injection and drawals would be treated at prevailing UI rates Netting of injection and drawals not in terms of enrgy but in rupees terms Payment receivable by the agency for its Injection = 0.9 x  UI charges for injection Payment payable by the agency for its Drawal = 1.1 x  UI charges for drawals 10% will go towards wheeling since no such wheeling charges are being charged. Schedule = 0. Net payment would be the sum of above two charges. b) Treatment for new Banking Transactions To be discouraged and other stipulations for CPP/Co-gen would apply. Commercial Mechanism for Banking Arrangements

52 Implementation Plan 1 st Phase Activities By end October,04 –Finalisation of listing of entities –Listing of Metering locations –Finalisation of quantities of SEMs, DCDs/MTEs –Finalisation of Reactive Charge scheme –Finalisation of technical specifications of SEMs/DCDs –Initiate tendering process for procurement of meters –Explanation of Intra-state ABT

53 Implementation Plan 2 nd Phase Activities By end December,04 –Finsalisation of Tariff of State Generating Stations as per ABT parameters/norms –Determination of Allocations of different Discoms in State Genco/ ISGS/ IPPs. –Formulation of market structure –Conversion of existing PPAs into ABT-compliant form –Finalisation of commercial mechanism for CPPs, Wind farms, Wheeling and banking, Open Access Customers etc.

54 Implementation Plan 3 rd Phase Activities By end March,05 –Supply and commissioning of meters at different locations –Training the field staff for meter reading/data collection –Installation of software for data processing –Installation of software for scheduling –Organising UI and REC Pool Account Operation

55 Concluding remarks… Listing of Entities for ABT Implementation Finalise the State Power Pool – Single/Multi Buyer Alternative for Metering Scheme Meter Data Collection Mechanism – Manual/AMR Generation Tariff Notification by GERC

56 Concluding remarks… Open Access Notification by GERC UI Rate for Intra-State ABT Renegotiation of Existing Contracts with IPPs/CPPs Meter procurement process to commence at the earliest Listing of SEMs to be checked by GEB

57 UI RATE Rate of Unscheduled Drawal/Injection Frequency (Hz)Rate (p/u) Above and below570

58 Schedule Vs Actual Injection at ISGS Declared Capability ά Capacity Charges Schedule ά Energy Charges Actual Injection U I Frequency NEXT

59 Schedule Vs Actual Drawal by State Entitlement ά Capacity Charges Schedule ά Energy Charges Actual Drawal Frequency U I

60 Schedule Vs Drawal by GEB Frequency Drawal Schedule Overdrawal at High Frequency UI

61 Flattening of Load Curve

62 Open Access Within Discom : Open Access Within Discom : Captive GenerationLoad Open Access within Discom Discom Boundaries Issue: To ensure X = Y+ Wheeling Losses And Method for pricing deviations X Y

63 Within Discom : Issues: –Wheeling Charges to be decided by SERC – Wheeling losses to be decided by SERC – Pricing of deviations between X (injection into grid) and sum of Y(drawal from grid) +Wheeling Losses –Pricing of deviations depending on ‘Size’ ? –Metering similar to SEMs installed for ABT ABT for embedded utilities -

64 Open Access Across Discoms : Captive Generation Load Open Access across Discoms Discom ADiscom B X Y

65 Open Access and ABT for embedded utilities - Case Studies Across Discoms : Issues: –Wheeling Charges to be decided by GERC – Wheeling losses payable to STU/Discoms as decided by SERCs –Scheduling by SLDC – Pricing of deviations between X (injection into grid) and sum of Y(drawal from grid) +Wheeling Losses. –Pricing of deviations depending on ‘Size’ ?

66 EXISTING STU TARIFF (effective from ) Applicable to all ST consumers having contracted demand more than 100 KVA 1.Demand Charges 1.1For billing demand upto contract demand: For first 500 KVA of billing demandRs per kVA per month For next 500 kVA of billing demandRs.126 per kVA per month For next 1500 kVA of billing demand Rs.189 per kVA per month For billing demand in excess of 2500 kVA Rs per kVA per month 1.2For billing Demand in Excess of Contract Demand: For billing demand in excess over the contract demand Rs.335 per kVA per month

67 PLUS Energy Charges For entire consumption during the month Upto 1000 kVA contract demand380 paise per unit For 1001 kVA to 2500 kVA contract demand 400 paise per unit Above 2500 kVA contract demand410 paise per unit PLUS Time of Use Charges (These charges shall be levied from a consumer having contract demand or actual demand of 500 kVA and above): For energy consumption during the two peak periods, viz., 0700 Hrs to 1100 Hrs and 1800 Hrs to 2200 Hrs 75 paise per unit

68 Billing Demand The billing demand shall be the highest of the following: Actual maximum demand established during the month Eighty-five percent of the contract demand One hundred kVA Power Factor –Power Factor Adjustment Charges: The power factor adjustment charges shall be levied at the rate of 1% on the total amount of electricity bills for the month under the head “Demand Charges” and “Energy Charges” for every 1% drop or part thereof in the average power factor during the month below 90% upto 85%. In addition to the above clause, for every 1% drop or part thereof in average power factor during the month below 85% at the rate of 2% on the total amount of electricity bill for that month under the head “Demand Charges” and “Energy Charges” will be charged.

Hz Incremental Cost (Paise/kWH) UI Price System Frequency Station Generation 75 % 25 % 0 % 50 % % Pool Price MANUAL LOAD-SHEDDING DIESEL GENR, DEPLETED HYDRO GAS - TURBINE NORMAL HYDRO LOAD-CENTER COMBINED CYCLE PIT - HEAD NUCLEAR OVER FLOWING HYDRO Typical Graph Depicting Pricing of Unscheduled Interchanges w.r.t. System Frequency

70 APKARKERTNPONDY Total UI exported(-) / Imported(+) in MUs Total amount paid in Crores Rs Average rate of UI in paise/unit SUMMARY OF UI – 124 WKS

71 UI IN SR TOTAL UI TURNOVER : MU TOTAL UI AMOUNT DISBURSED: CR AVG WEEKLY TRANSACTION:- 63 MU AVG WEEKLY UI AMOUNT DISBURSED:- 13 CR

ABT, Intra-State ABT ABT, Intra-State ABT SRLDC Power Grid Corporation of India Ltd. BANGALORE

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