Workshop on State-Level Electricity Reforms: Firm Choices, Emerging Generation Markets and Externalities “Open Access: Experiences” ALOK ROY General Manager, NRLDC POWERGRID September 23, 2004 New Delhi

Short term Open Access in Transmission NRLDC has processed more than 250 applications in just 4.5 months. Approval for 185 applications could be given. Bidding had to be conducted on five occasions. Besides these there were several cases when congestion arose due to multiple applications by only a single applicant.

COMPLICATIONS IN PROCESSING APPLICATIONS DUE TO 1.Varying spare capacities in transmission system due to  Dynamic system parameters  Unpredictable unit outages/emergency shutdowns  Changing transmission losses  Varying capacity reservations during different hours of the day  Non-utilization of reserved capacity  Varying ISGS capacity allocations during different hours of the day

COMPLICATIONS IN PROCESSING APPLICATIONS DUE TO 2.Non-firm shutdown programs leading to  Part-approvals  Refusals  Cancellations 3.Requests for re-routing transactions and adjustment of charges due to  Change in outage schedule  Tripping/ revival of a particular transmission element

COMPLICATIONS IN PROCESSING APPLICATIONS DUE TO 4.Different traders for the same set of buyer & seller 5.Same set of buyer, seller and trader but additional sale of power 6.Same set of buyer, seller & trader but varying capacities wheeled through different routes

DISTRACTIONS FOR RLDC OPERATORS Several inconsistent requests for revisions in short-term transactions Frequent phone calls from stakeholders Applications submitted at the last moment upsetting the whole scheduling process

Stranded generation ? Report of the ‘Task Force on Investment and Reforms’ estimates installed capacity of captive to be in excess of 27,500 MW as of Need for identifying which of these is actually ‘stranded’. Power from Internal Combustion based Diesel Generation Sets may not be viable for inter-state trading.

Inter-state trading - a perspective In FY , PTC’s trading volume was just 1.84% of the country’s regional energy consumption (excluding trading against Malana, Chukha and Kurichu hydro projects). These hydro projects contributed 18.5% to PTC’s trading volume of MUs. In May 2004, after inter-state open access was implemented, the total inter-state contracted power through trading in Northern Region was 2.62% of the regional consumption.

Inter-state trading-a perspective (contd/-) Considering the diversity of loads across states and regions and the network capability, the scope for inter- state trading is limited. Identifying viable captive generation would provide a major fillip to trading. However a major boost to trading will occur only after Availability Based Tariff (ABT) is implemented at intra- state level and open access allowed in distribution by SERCs.

Inter-state trading-a perspective (contd/-) Captive generators would be generally embedded in the state system. Obviously, these captive generators cannot become a partner in the regional level scheduling and Unscheduled Interchange (UI) Pool Account as it would become totally unmanageable. Intra-state ABT with payment security mechanism for UI is a must.

Pan-caking of open access charges ? Since inter-state open access has been implemented in the country with effect from 6 th May 2004, NRLDC has handled more than 250 applications to date. How thick is the open access pancake?

Volume of Inter-state trading in Northern Region MonthNR monthly energy consumption in Million Units (A) Scheduled Open Access Trading in Million Units (B) % of trade volume to energy consumption (C) = (B*100/A) May % Jun % Jul % Aug %

0.05% energy more than 40 paise/kWhr 1.27% energy 20 to 40 paise/kWhr 13.93% energy 15 to 20 paise/kWhr 66.70% energy less than 5 paise/kWhr 0.58% energy 5 to 10 paise/kWhr 17.46% energy 10 to 15 paise/kwhr TOTAL COST FOR SHORT-TERM TRANSMISSION TRANSACTIONS APPROVED BY NRLDC IN MAY 2004 TOTAL MWHr RESERVED = The above cost includes the transmission charges, scheduling charges, 2 % handling charges and non-refundable processing fees

Break-up of open access cost for May 2004 Nodal RLDC charges: 0.38 paise/kwh Other RLDC charges: 0.14 paise/kwh CTU charges : 6.59 paise/kwh Total: 7.11 paise/kwh Since 75% of CTU charges are ultimately refunded to long term customers, the incremental increase is only 2.15 paise/kwh. This is much less than the current level of trading margins.

Transmission constraint ? If network constraints do not permit short-term inter-state transactions, can it be called a transmission constraint ? No ! Transmission constraint term is a misnomer. The network has simply not been planned for any random short-term transaction. It has been planned for a certain Central Sector generation with related security criteria. It is suggested that in case of network congestion priority could be given to cheaper power (say hydro power in North-Eastern Region)

Inter Regional Links Present IR Capacity = 8,500 MW By the year 2012 = 30,000 MW 500 MW 1200 MW 1000MW 2000MW 500 MW

Transmission constraint The other questions are : ‘Can we over-design our transmission network to accommodate all possible short-term transactions ?’ Who pays the cost for such a vast network ? Is it worthwhile considering the small quantum of short- term inter state trading involved?

Thank you