CHAPTER 4 ASSUMPTIONS MADE IN VARIOUS METHODOLOGIES

For the formulations of various methodologies and case study following assumptions are made while selecting data.

4.1 Postage Stamp Method

4.1.1 Return on capital base /equity Return on capital base/equity normally depends on the amount of profit to be earned by the company. Return on capital base in ARR has been taken as 16% of the capital base during the calculations (As per CERC notification March 26, 2001 and maximum value proposed by Ministry of power May 5, 1999). Normally return on equity is taken 12 % of the capital base, but considering the various factors like high T & D losses, poor collection efficiency and also the important fact that UPPCL is not a profit earning company at present, it is recommended that the return on the capital base should be fixed at the maximum value recommended by Ministry of Power at 16%. 4.1.2 Loss percentage Percentage of energy loss had been proposed as 5% of the total energy by the UPERC in its tariff order (KESCO FY02 and FY03) but international practices and experiences shows that these losses are around 1.0 to 2.0% for transmission. These losses can vary depending upon the values of real and reactive power generation, real and reactive power demand etc. After doing extensive load flow analysis on the data of UPPCL these losses at different line-voltage-class are calculated and are shown in the table-4.1. The losses are much below than the value (5%) taken by UPERC and we should use these losses in our calculations. But since the UPPCL system is also supplying power at low voltages, which is below 132 KV, e.g. 33KV, 11KV etc, which causes more losses. So to 43

compensate for these additional losses at low voltages and any hidden irregularities in the system these losses must be taken on higher side. We propose to choose these losses on different line-voltage-class on higher side as given in the table below and these figures will be used for all subsequent calculationsTable No 4.1 S.No. 1 2 3 4 5 6 7 8 9 10 132 220 400 800 800 800 800 400 400 220 Voltage Class Sending Receiving 132 220 400 800 400 220 132 220 132 132 % Losses of Energy Actual 1.71 1.53 1.41 0.93 0.98 1.13 1.29 1.45 1.51 1.59 Proposed 3.6 3.0 2.0 1.5 1.6 1.8 2.2 2.8 3.0 3.2

4.1.3 Approximation of energy Energy sold is actually known on yearly basis, but we have divided it by 12 to get energy sold on monthly basis. However, it may not reflect the actual variation and or seasonal variation in the energy pattern on monthly basis. 4.1.4 Transmission share In the approximation method Coefficient k is taken as 0.2 to calculate transmission share (asset) out of total asset including distribution and transmission. Presently it is possible to actually segregate the assets of transmission and distribution.

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4.1.5 Initial capitalized spare cost The yearly initial capitalized spare cost has been taken as 1% of the capital base. (As taken by power grid for its calculation of ARR) 4.1.6 Tax on income Tax on the income is taken as zero because utilities at present are not making any profit and are not paying any tax. 4.1.7 Availability Full annual transmission charges are recoverable at 98 percent nominative availability of Operation. 4.1.8 Collection In CERC method it is assumed that collection is made by letter of credit and no bill is pending.

4.2 MW Mile Method

4.2.1 Approximation of the line costs For the given UPPCL system on which studies are conducted (appendix C) there are at present 320 transmission lines. As current costs of individual lines are not available so the cost of lines is calculated in groups of the voltage-class-wise (800 SC / 400DC / 400SC / 220DC / 220SC / 132DC / 132SC). 4.2.2 Data collection The calculations of various constants in this method are based on data provided by the Planning section of UPPCL planning, Urja Pranali Lucknow, KESCO and NPCL etc. 4.2.3 Change in generator data For convergence of load flow solutions, some changes have been made in the generator data, which are shown in the table No. 7 of Appendix C. The changes have been made at the places where the convergence problems due to data occur. Basically the reactive power generation and bus voltage have been considered very important and, if any of the two

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goes out of the limit during convergence that has to be controlled by some changes in the reactive power limit of the generator or by a capacitor. The variation limit of Bus voltages have been taken +30 % to -30 % and other variation have been taken as +10 % to -10 % of the given values. 4.2.4 Per Unit base For ease in calculations and enhanced computational efficiency, all the data have been taken in per unit values. The base value for power is taken as 100 MVA and for bus voltage as 400KV, although any base can be used depending upon the convenience. 4.2.5 Loss Percentage The loss % has been considered as described in the table 4.1 for different voltage class.

4.3 Forecasting the charges for next year in MW Mile Method

Forecasting has been done using the monthly load variation of the last three years (2000-02) of UPPCL. The maximum error in the charge is within +10% to -10%.

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