YEARS OF INCORPORATION

TNEB NLC NTPC Powergrid

: : : :

1957 1956 1975 1989

(56 (57 (38 (24

years years years years

old) old) old) old)

ELECTRICITY ACTS
Indian Electricity Act, 1910, The Electricity (Supply) Act, 1948 The Electricity Regulatory Commissions Act,
1998 CERC AND STATE ERCs

THE ELECTRICITY ACT, 2003

De-licensing of Generation , Non-

discriminatory open access , Power Trading , Tariff Regulations of ERCs and Tariff Policy and National Electricity Policy of GOI etc.,

STRUCTURE OF THE ELECTRICITY SUPPLY INDUSTRY

The Electricity Supply Industry comprises

mainly of: Generation Transmission Distribution

FLOW CHART OF THE ELECTRICITY SUPPLY INDUSTRY

NTPC, NHPC, NPCIL, IPPs, and SEBs

GENERATION

PGCIL AND SEBs & Licensees

TRANSMISSION

DISTRIBUTION

TRANSMISSION OF ELECTRICITY

TRANSMISSION :

Transmission of electricity is defined as the bulk transfer of power at high voltage (132KV and above) over long distances. A power transmission system is referred to as GRID

GRID SYSTEM IN INDIA

The grid consists of two types of
infrastructures: High voltage transmission system for transporting power over long distances (AC & HVDC) Lower voltage distribution systems.

STRUCTURE OF POWER TRANSMISSION IN INDIA

India has two types of

transmission companies
Central Transmission Utility (CTU) State Transmission Utilities (STU)

CTU is responsible for

transmission between states and between regions STUs are responsible for transmission within states. Private Transmission Licensees

GROWTH OF POWER TRANSMISSION IN INDIA

The transmission system in India

was developed according to the growth in power generation capacity

The 220KV power transmission was introduced in 1960 400 KV was introduced in 1977 HVDC (back to back) and HVDC bi-pole transmission were set up in 1989 and 1990 respectively. 765KV/1200KV schemes recently commissioned/ under commissioning

GRID SYSTEM IN INDIA

The country has been divided into five regions for transmission systems, namely
Northern, North Eastern, Eastern, Western and Southern

October 1991 - Eastern and the Northeastern regional grids were synchronized March 2002 West synchronized with the above mentioned regional grids through
AC lines (Central Grid).

In August 2006 North synchronized with the Central grid, to form the NEW grid. There are five regional grids and two freq In 2014, the whole of India will operate as a single grid with the SR grid
synchronised with the NEW grid.

TRANSMISSION PRICING (ISTS)

TRANSMISSION :
ISTS Transmission assets are common to many players and usage based pricing is important.

PRICING: Deciding the amount to be

paid for such transfer of power Pricing mechanism must be able to capture the utilisation and charge for the resources being utilised.

PRICING PROCESS
Pricing nechanism involves two
distinct processes:
Determination of Transmission Charges (Servicing the investments) Sharing of Transmission charges among the beneficiaries (many use)

DETERMINATION OF TRANSMISSION CHARGES

GOI Notifications dated 1992 and

1997 CERC formed in 1999 CERC Regulations on Terms and Conditions of Tariff 2001,2004,2009.
Cost Plus Approach (Sec 62) Adoption of Tariff (Sec 63)

COST PLUS APPROACH

YEARLY TRANSMISSION
CHARGES AS PER CERC REGULATIONS ON TARIFF DETERMNATION
RETURN ON EQUITY INTEREST ON LOAN DEPRECIATION O AND M EXPENCES INTEREST ON WORKING CAPITAL

HISTORICAL BACKGROUND

METHODS OF TRANSMISSION PRICING

METHODS OF TRANSMISSION
PRICING
MW- MILE METHOD POSTAGE STAMP METHOD (ZONAL, INCREMENTAL , NATIONAL, REGIONAL)

CONTRACT PATH METHOD

LOCATION BASED MARGINAL PRICING ETC,.

THESE METHODS HAVE BEEN TRIED

IN DIFFERENT COUNTRIES

REGIONAL POSTAGE STAMP METHOD

In India, till 2011, allocation

mechanism of sharing transmission charges was based on regional postage stamp system / method All States in the Region were sharing the transmission charges on a Regional pooled basis, in the ratio of the quantum of power drawn through the Inter-State transmission system.

 In the pre ABT era , the apportioning of

PRE AND POST ABT ERA

transmission service charges were done prorata on energy drawal basis. Post ABT the apportioning to different beneficiaries was on the basis of capacity allocation (MW) out of the total capacity handled by the transmission system in the region. The quantum of power allocation is calculated as the sum of entitlements (firm share plus share from unallocated quota of power in the Central Generating Stations) from Central Generating Stations

ENTITLEMENTS OF REGIONAL BENEFICIARIES : CASE STUDY

RAMAGUNDAM STPS: (3x200+3x500) MW

TAMILNADU ANDHRA KARNATAKA KERALA PONDY GOA UNALLOCATED SHARE TOTAL

:470 MW :580 MW :345 MW :245 MW :50 MW :100 MW :310 MW 2100 MW

Ramagundam Evacuation scheme

Ramagundam Hyd 400 KV S/C Hyd-Nagarjuna Sagar 400 KV S/C NSagar-Cuddappah 400 KV S/C Cuddappah-Bangalore 400 KV S/C Ramagundam-N Sagar 400 KV S/C Bangalore Salem 400 KV S/C SS at Cuddappah, Hyderabad,Salem

DETERMINATION OF YTC FOR A TR SYSTEM

RAMAGUNDAM EVACUATION SCHEME: CAPITAL COST OF THE PROJECT :Rs 100 Crs DEBT EQUITY RATIO : 70:30 COMPONENTS OF TARIFF: (FIRST YEAR)
Return on Equity @16% : Rs. 4.8 Crs Interest on Loan @10% :Rs 7.0 Crs Depreciation @ 7% of CC :Rs. 7.0 Crs O&M Charges @1.5% of CC :Rs. 1.5 Crs Interest on Working Capital :Rs 0.7 Crs ANNUAL TRANSMISSION CHARGES :Rs 21.0 Crs SHARE TO TAMILNADU PER MONTH : (470/2100)*21/12 = 0.4 Crs Approx (Regional postage post ABT)

 MERITS

MERITS & DEMERITS OF POSTAGE STAMP METHOD

This is the simplest form of transmission pricing. Even with the introduction of open access in transmission this mechanism has served the needs of the system well.

DEMERITS

However, with the integration of the regional grids, and the objective of the policy and regulatory framework to provide access to sellers and buyers, an appropriate change in the pricing mechanism which is sensitive to quantum of flow, distance and direction of flow is required. One of the problems in postage stamp method is that of pan caking of charges-Term used to describe stacking up of charges in a transmission system due to repeated application of charges for different regions. This can be understood with the following example cited below:

 A generator (say A Ltd.) in Arunachal Pradesh (NER),

ELUCIDATION OF POSTAGE STAMP METHOD

willing to supply power in Maharashtra (WR). According to postage system, the total charges and total transmission losses of the system for each region is pooled and is spread over the users of the system on per MW basis. A Ltd. will have to bear the transmission charges for three regions involved namely NER-ER-WR (there is no direct link in NER-WR), While a local generator of WR may use own dedicated line or may pay only one region charges for supply within the region. Thus, a generator in other region becomes grossly uncompetitive in the sellers region. If a State Transmission Utility (STU) network is also used, then charges and losses of such STU would further be loaded, which may vary widely among states.

 There is an increase in the landed cost of power in inter

regional exchange of power .

NEED TO REVIEW POSTAGE STAMP METHOD

Also the actual displacement of power may be very small as

against the underlying theory of assuming full displacement from injection to delivery point, due to many generators and consumers connected in between the two. The system worked well in pre-reforms era where there was only government owned agencies in both generation and demand and there were identifiable lines. system, post 2012, would be a deeply meshed network, making it almost impossible and impractical to trace the destination to source and underlying routes.

With the reforms and private sector players coming in, the

An ideal transmission pricing mechanism should allow the

power plant developers and customers to decide the optimal location of the power plant by comparing the costs of fuel transportation and the cost of electricity

REVISED FRAMEWORK
The beginning of the revised framework for
sharing of transmission charges and losses lies in the National Electricity Policy (NEP) notified by the Central Government under Section 3 of the Act vide Resolution No.23/40/2004-R&R(Vol.II) dated 12.1.2005 provides as under:

Para 5.3.4 of the National Electricity Policy

To facilitate cost effective transmission of power across the region, a national transmission tariff framework needs to be implemented by CERC. The tariff mechanism would be sensitive to distance, direction and related to quantum of flow.

 The CERC, after due consideration of the alternative

POINT OF CONNECTION METHODOLOGY BY IIT-BOMBAY

methodologies and the comments from various stakeholders has selected Point of Connection (PoC) methodology based on a hybrid method, which brings together the strengths of both the Marginal Participation and the Average Participation Method .
Any generator node is required to pay a single charge based on its location in the grid to gain access to any demand customer located anywhere in the country.
Similarly, any demand node will also be required to pay just one charge and get access to any generator in the grid.

MARGINAL PARTICIPATION
It analyses how flow in the grid is
modified when minor changes are introduced in the production or consumption of one unit of power(1 MW) Marginal Participation sensitivities are obtained UK , Norway, Brazil, Columbia have implemented.

AVERAGE PARTICIPATION
POWER TRACING: For every individual generator a number of

physical paths are constructed from the point of injection to reach the various loads. Similar calculations are performed for demands tracing upstream to reach the generators. Wide range for PoC charges, little international exp.

HYBRID APPROACH
In the Hybrid method, distributed slack buses
(responding nodes) are selected using AP method and the MP method is used to capture network utilisation, by injection/withdrawal at each node.

Hybrid method results in generators feeding

geographically and electrically proximate demand first and then the demands which are geographically and electrically distant.

PoC REGIME
CERC Consultation Paper Apr. 2009 Tr. Sharing Regulations June 2010 Stake holders consultations
/workshops Implementation / Validation Committees / 50% RPS+50% PoC /SLAB RATES Made Effective from July 2011 2011-2012 SR/NEW 2012-13(H Y) 5 Regions

NEED FOR SLABS

Philosophy behind slab rates:
Principle of Minimum regret Min Max fairness algorithm to reduce

standard deviation Reasons: Reduce Heart burn Easy to comprehend and implement

PROCESS TO ARRIVE SLABS

Computation of Nodal PoC using
WebNetUse software. Computation of Zonal PoC rates as weighted aerage of Nodal PoC rates of each Demand/Generation Zone. Distribution of Demand/Generation Zonal PoC rates into three different tiers/Slabs .

SLAB RATES
YEAR 2011-12
NEW GRID /MW/Month(P/unit) /MW/Month(P/unit) 70000 (10) 85000 (12) 100000 (14) SR GRID

80000 (11) 95000 (13) 110000 (15)

DETERMINATION OF POC RATES

Network data and YTC data Network data and YTC data Nodewise Injection / withdrawal data

ISTS licensees

Deemed / Certified ISTS owners

Designated ISTS Customers (DIC)

Implementing Agency (IA)

(NLDC)

WebNetUse Software

POC RATES

SIZE OF INDIAN NETWORK

Buses Generating Stations Generating units Loads
765 KV 400 KV 220 KV 132 K Total

4830 557 1148 2672

7 2 622 3034 5130 8795

Branches D/C lines

POWER TRF 2030 Dynamic system,power flows by displacement

MONTHLY TR BILL OF TN (POC)

POWERGRID APPROVED YTC FOR 2013-14(SR): TANGEDCO ENTITLEMENT OF CGS POWER : TOTAL POWER HANDLED BY SR GRID : TN SHARE : ANNUAL TR CHARGES TO TN ACCOUNT : MONTHLY TR CHARGES PAYABLE :

1800 Crs 3000 MW 10000 MW 30% 540 Crs 45 Crs APPROX

 Based on the Yearly Transmission Charges of ISTS

PRINCIPLES FOR SHARING ISTS CHARGES (POC)

Transmission Licensees and transmission losses in the ISTS network, the Implementing Agency shall compute the Point of Connection charges and Loss Allocation Factors for all DICs:(a) Using load-flow based methods; and (b) based on the Point of Connection Charge method. computed in terms of Rupees per MW per month for an Application Period which shall be determined in advance. (PEAK/OFF PEAK FIVE SEASONS)

The Point of Connection transmission charges shall be

PROCESS TO DETERMINE POINT OF CONNECTION TRANSMISSION CHARGES AND LOSSES ALLOCATIONS

The Implementing Agency shall collect the

Basic Network data pertaining to the network elements and the generation and load at the various network nodes. electricity system, electrical plant or line below 132 kV except where generators are connected to the grid at 110 kV.

The Basic Network shall not contain any

Nodal generation information and Forecast

demand data shall be submitted by the Designated ISTS Customers

PROCESS TO DETERMINE POINT OF CONNECTION TRANSMISSION CHARGES AND LOSSES ALLOCATIONS

The Implementing Agency shall run

AC load flows using the Basic Network, nodal generation and nodal demand. Basic Network along with the converged load flow results for various grid conditions shall be validated by the validation committee. Approved Basic Network, nodal generation and nodal demand data shall form the base for computation of Marginal Participation factors and loss allocation factors.

PROCESS TO DETERMINE POINT OF CONNECTION TRANSMISSION CHARGES AND LOSSES ALLOCATIONS

Overall charges to be shared among

nodes shall be computed based on the Yearly Transmission Charge (YTC) apportioned to each of the lines of the ISTS Licensees. aggregate the charges for geographically and electrically contiguous nodes on the ISTS to create zones, in order to arrive at uniform zonal charge in Rs / MW / month.

The Implementing Agency shall

PROCESS TO DETERMINE POINT OF CONNECTION TRANSMISSION CHARGES AND LOSSES ALLOCATIONS

Implementing Agency shall create

zones for generation and demand. Such zoning shall be governed by the following considerations:
(i) Zones shall contain relevant nodes whose costs (as determined from the output from the Hybrid method) are within the same range. (ii) The nodes within zones shall be combined in a manner such that they are geographically and electrically proximate. The demand zones shall normally be the state control areas except in the case of North Eastern States, which are considered as a single demand zone. Generation zones are formed by combining the generators connected to the ISTS.

TAMILNADU INJECTION POC RATES (ISTS)

PERIOD
Rate in Paise/Unit TN NLC VALLUR 2011-12 11.00 ---2012-13(HY1) 14.0 10.00 10.00 2012-13(HY2) 8.35 8.35 8.35 2013-14(Q1) 12.86 8.86 8.86 2013-14(Q2) 13.5 9.50 9.50 2013-14(Q3) 14.06 10.06 10.06

KUDN -----12.35 12.86 ------

TAMILNADU WITHDRAWAL POC RATES (ISTS)

PERIOD
2011-12 2012-13(HY1) 2012-13(HY2) 2013-14(Q1) 2013-14(Q2) 2013-14(Q3) Rate in Paise/Unit 13.00 14.00 12.35 10.86 11.50 14.06

TNERC TRANSMISSION CHARGES (INTRA STATE)

2013-14(1) 2013-14(2) 2014-15 2015-16
27.01 PAISE/UNIT 8.22 PAISE/UNIT 19.55 PAISE/UNIT 24.82 PAISE/UNIT

 1) The CTU shall be responsible for raising the

transmission bills, collection and disbursement of transmission charges to ISTS transmission licensees.

BILLING

BILLING
The billing for ISTS charges for all Designated
ISTS Customers shall be on the basis of Rs./MW/Month, and shall be raised by the CTU in four parts. use of the transmission assets of the ISTS Licensees based on the Point of Connection methodology. This part of the bill shall be computed as: Approved Injection X PoC for injection

The first part of the bill shall recover charges for

For Generators:

For Demand: Approved Withdrawal x PoC for withdrawal

BILLING
The second part of the bill shall recover
charges for Additional Approved Medium Term Open Access similar to above formula. The second part of the bill shall be raised on the Designated ISTS Customers along with the first part of the bill.

BILLING
The third part of the bill shall be used to
adjust any variations in interest rates, FERV, rescheduling of commissioning of transmission assets, etc. as allowed by the Commission for any ISTS Transmission Licensee. This part of the bill shall be raised on first working day of September and first working day of March for the previous six months. Deviations shall be billed separately by the CTU as fourth part, bill based on the RTA issued by the RPCs. (25% extra for deviations from approved injection/withdrawal)

BENEFITS OF NEW REGULATIONS

The PoC charge based transmission
mechanism will benefit the transmission network development and the Designated ISTS Customers (DICs) of the transmission system in the following ways:
At present the transmission investments are faced with the uncertainty in generation. This commercial arrangement would facilitate financial closure of transmission investments.
The PoC based transmission pricing mechanism would facilitate integration of electricity markets and enhance open access and competition by obviating the need for pan-caking of transmission charges.

BENEFITS OF NEW REGULATIONS

The National Electricity Policy requires the
transmission charges to reflect network utilization. The Point of Connection tariffs are based on load flow analysis and capture utilization of each network element by the customers.
transparent competition for case-1 bids.

The new framework will greatly facilitate fair and

THANK U FOR DISCUSSIONS

DEFINITIONS
ISTS: INTER STATE TRANSMISSION
SYSTEM
Any system for the conveyance of electricity by means of a transmission line from the territory of one state to another state. The conveyance of electricity across the territory of an intervening state as well as conveyance within the state which is incidental to such interstate transmission of energy The transmission of electricity within the territory of state on a system built ,owned, operated, maintained or controlled by CTU

 DESIGNATED ISTS CUSTOMER (DIC):

Users of any element of the ISTS and includes Generators STU SEB or load serving entities directly connected to ISTS and Bulk consumer Transmission system which has the regulatory approval of the Commission as being used for interstate transmission of power

DEEMED ISTS:

NON - ISTS LINES

Transmission assets of non-ISTS licensees ,which have been certified by RPCs as being used for inter state transmission.

 BASIC NETWORK

The power system of the country at voltage levels 765 KV,400 Kv,220Kv and 132KV and HVDC Transmission network and all generator and loads connected to it. A substation or a switchyard of a generator Annual Transmission Charges approved by the Commission for all the transmission projects of a transmission licensee, Provisional/ Determined as per CERC T&C Benchmarked Adopted

NODE

YEARLY TRANSMISSION CHARGES(YTC)

LOSS ALLOCATION FACTOR Loss allocation Factor of a bus measures the losses attributed to that node . PARTICIPATION FACTOR Participation Factor of a node in any transmission line means the percentage of usage of that line by a node, whether a generator node or a demand node. PoC CHARGING METHOD It is the methodology of computation of sharing ISTS charges and losses amongst DICs , which depends on the location of the node in the grid . PoC TRANSMISSION CHARGES Nodal/Zonal charges determined using the PoC charging method. UNIFORM CHARGE
The charge determined by dividing the YTC of the ISTS licensee by the sum of the approved injection and approved withdrawal from the grid alternatively defined as POSTAGE STAMP Charge.

UNIFORM LOSS This means the energy loss and is accounted for by providing a differential

Power snap shot

India Installed capacity: 2,25,793 MW
State Central Private

89,092(39.5%) 65,613(29%) 71,088(31.5%)

153848 39623 4780 27542

Thermal Hydro Nuclear Renewables

AVERAGE PARTICIPATION