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Sharing of ISTS Charges

and Losses
March 18,2011
Agenda

Indian Power Sector Review

Exiting Method for sharing ISTS charges and losses
Need for a change
Proposed Methods
Hybrid Method
Pricing Mechanism
Transition
Point of Connection (PoC) Charges & Impact

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Introduction

• Notification of Regulations : 15th June 2010

• Applicable to:
- Designated ISTS Customers (DIC)
- Inter State Transmission Licensees
- NLDC, RLDC, SLDCs, and RPCs
• Regulations shall come into force from 1.4.2011 (as amended)
• Responsible agencies:
- Implementing Agency (IA): NLDC
- Collection & disbursement of charges: CTU (PGCIL)

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Indian Power Sector Review

Installed Capacity
Two-tier structure: Central and State (29 States + 7 UTs)
Thermal Hydro Nuclear RES
11%
Installed generation capacity 172 GW (Avg. PLF: 77%) 3%

22%
Installed Transmission lines: ~3 Lakh Ckt km
65%

Per-capita consumption: 704 kWh (FY 08)

Installed Capacity (Ownership)

AT&C Losses: ~ 30% Central State Private

18%
No. of Consumers: > 160 Million 32%
vv

Vision: “Power for all by 2012” 50%

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Indian Power Sector Review

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Indian Power Sector Review
Evolution of National Grid

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Indian Power Sector Review
Inter State Transmission System (ISTS)

The rapidly increasing inter-regional capacity has caused a change in the nature of the
ISTS within a short time. From a predominantly regional system it has quickly evolved
into a national transmission system.

IR Links End of 9th Plan By 10th Plan By 11th Plan By 2014-15

ER-SR 620 3120 3620 3620
ER-NR 120 4220 11120 19420
ER-WR 360 1760 6460 12760
ER-NER 1240 1240 2840 2840
NR-WR 980 2080 4180 7180
WR-SR 1680 1680 2680 6880
NER/ER-
NR/WR - 0 6000 6000
Total (MW) 5000 14100 37400 58700

The present mechanism of allocation of transmission charges amongst various

network users is based on a regional postage stamp method.
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Existing Method for sharing ISTS charges & losses
Regional Postage Stamp (RPS) Method

• All users of a system in a region pay the same price per MW of

allocated transmission capacity
• They are charged at a flat rate on a per MW basis
• Mathematically, the rates are calculated as follows:
- Rt = TC * Pt/P Allocated, where,
◦ Rt = Transmission price for transaction t in a particular region
◦ TC = Total transmission charges for each region
◦ Pt = Load for transaction
◦ P Allocated = MW capacity allocations in central sector power plants

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Existing Method for sharing ISTS charges & losses
Regional Postage Stamp (RPS) Method

• Power in NER is considered to be generated by a hydro resource at Rs. 3/ kWh

• Total transmission charges to the load centre work out to Rs. 0.90/kWh
• Similarly, the transmission losses (assumed @ 4% in each region) also get
pancaked and the landed price of electrical energy at the load centre works out
to approximately Rs. 4.64/kWh

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Need for a change
Key triggers

Change in configuration of the ISTS

Changing nature of use of the transmission system by various users

Pricing inefficiency in the emerging circumstances

Evolution of open access and competitive power markets

Changes caused by law and policy (distance, direction and quantum)

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 11 PwC
18/03/11 ISTS Charges & Losses
• Once the flow variation is obtained, it is possible to compute a seasonal
usage index for each network user
• Any 1 MW increase in generation (or load) at node i has to be compensated
by a corresponding 1 MW increase in load (or generation) at some other node
or nodes (slack bus)
• Flow variation is computed for each scenario, Winter - peak, other than peak,
Summer - peak, other than peak, and Monsoon - peak, other than peak
increases when the injection/ withdrawal in a bus i is increased by 1 MW
MP method analyzes how much the flow through each network branch j
Marginal Participation (MP) method
Proposed Methods
Proposed Methods
Marginal Participation (MP) method

• The seasonal index is computed as,

- Ueil is the seasonal usage index in line l due to injection/withdrawal at node i

- Fle is the flow in line l under scenario e under base case
- File is the flow in line l under scenario e due to injection / withdrawal of 1 MW at node i
- Pie is power dispatch / demand at bus i under scenario e under base case
• The revenue requirement of each line is allocated pro-rata to the different agents
according to their total participation in the corresponding line

- Cl is the seasonal ARR of line

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 13 PwC
18/03/11 ISTS Charges & Losses
(28/40)*100 = 70%
(12/40)*100 = 30%
• A rule allocates responsibility for the costs of actual flows on various lines from
sources to sinks according to a simple allocation rule, in which inflows are
distributed proportionally between the outflows.
• Similar calculations are also performed for the demands
• For every individual generator i, a number of physical paths are constructed,
tracing power produced and dispatched
Average Participation (AP) method
Proposed Methods
Proposed Methods
Comparison
Attribute AP Method MP Method RPS Method

Cost-reflectiveness Based on flow patterns Based on incremental use Transmission charges do not
caused by all network of network assessed reflect network utilization
users through load flows
Locational signals for Weak locational signals Provides good locational Provide no signal
investment signals in terms of
transmission charges
Technical Soundness May not strictly reflect Adheres better to the Does not relate to physical
the laws of physics laws of physics allocation laws of the network flows
depends on the selection
of slack nodes
Suitability for long No difference between No difference between Transmission charges for
term, short term and short term and long short term and long term short term access need to be
spot transactions term use use determined
Implementation Not difficult if principle Not difficult if principle is Implementation is easy
is accepted by users accepted by users though there may be issues
regarding fairness in the
context of large networks

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Hybrid Method
A combination of MP & AP method

Computation of charges &

Selection of slack buses
losses on each node using
using AP method
MP method

Hybrid
Method

Reasons for adopting Hybrid method:

• The nodal transmission access charges in the Hybrid method have a
acceptable variance
• Hybrid method takes into account all the incidental flows
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Hybrid Method
A combination of MP & AP method

Illustration: Effective network utilisation using Hybrid Method

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Pricing Mechanism
Using Hybrid method
Following steps shall be followed in the implementation of
the Hybrid methodology:
• Data Acquisition - input to model
- Nodal generation/ demand information
- Network data
• Computation of Load Flows on the Basic Network
- Converged Load Flow results to be verified by validation committee
• Computation: Reduction of the Indian Grid
- truncation of network at 400 kV level as it would involve minimal use of
the state owned lines
- load flow analysis to be conducted for each 400 kV node (and 132kV in the
NER grid) in the NEW grid and SR grid

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Pricing Mechanism
Using Hybrid method

- All injection from the lower voltage system shall be treated as a generator
and vice-versa in the case of net withdrawal
• Identification of the slack nodes: using AP method
• Computation: Hybrid Method for the determination of Transmission
Charges (as discussed earlier)
• Computation: Hybrid Method for the Sharing Of Transmission
Losses (methodology will be same as for charges)

Marginal Loss factor

Loss allocation factor

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Pricing Mechanism
Using Hybrid method

• Computation: Determination of sharing of YTC & Transmission

Losses
- Treatment of HVDC
◦ Zero Marginal Participation for HVDC Line
◦ MP Method can not recover its cost directly
◦ HVDC line can be modeled as:
› Load at sending end
› Generator at receiving end
◦ Compute Transmission Charges for all load and generators with all
HVDC lines in service
◦ Disconnect HVDC line and again compute new transmission charges
for all loads and generators

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Pricing Mechanism
Using Hybrid method

◦ Compute difference between nodal charges with or without HVDC

◦ Identify nodes which benefits with the presence of HVDC
◦ Benefit is new (with disconnection) usage cost minus old (with HVDC)
cost. If benefit is -ve, it is set to zero.
◦ Allocate HVDC line cost to the identified nodes
- YTC of substations to be apportioned in line
◦ 2/3 to higher voltage lines
◦ 1/3 to lower voltage lines
◦ Apportionment among lines on the basis of length
- PoC Charges to be computed for 5 blocks of month and peak and other the
peak conditions

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Pricing Mechanism
Using Hybrid method

- Representative Blocks of Months

◦ April to June
◦ July to September
◦ October to November
◦ December to February
◦ March
- Peak Hours : 8hrs, Other than Peak Hours :16 Hrs
- 50% recovery of transmission charges through Hybrid Methodology and
50% through Uniform Charge Sharing Mechanism
- 50% losses through Hybrid Method and 50% through Uniform Loss
Allocation Mechanism

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Pricing Mechanism
Using Hybrid method

• Creation of Zones & determination of Zonal Charges & Losses

- Zones shall contain relevant nodes with Costs in the same range
- Nodes within zones shall be combined in a manner that they are
Geographically and electrically proximate
- Nodes with connectivity to Thermal Generators > 1500 MW or Hydro
Generators > 500 MW to be taken as separate zones
- Demand zones : State Control Area
◦ Except NER states which are to taken as one zone
- Zonal Charges : Weighted Average of Nodal Charges

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Transition
Accounting, Billing & Collection of charges

Accounting Billing

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 Transition
Accounting, Billing & Collection of charges
Treatment of deviations Collection of charges

Demand/ Gen All DICs

RTGS
Net
Net drawl/
injection/
injection
drawl
CTU

Deviation Deviation
<=20% >20%
RTGS

PoC (1.25) PoC (1.25) PoC All ISTS

Charge Charge Charge Licensees

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Transition
Commercial Agreements

Transmission Service Agreement (TSA)

• Governs the provision of transmission services and charges

• CTU shall publish the draft Model TSA
• Signing of TSA shall not be a pre-condition for construction of new network elements
by CTU and Transmission Licensees

Revenue Sharing Agreement

• CTU shall enter into a separate RSA with other ISTS Transmission Licensees for
disbursing monthly transmission charges among themselves

Amendments of Contracts

• Realignment of all existing contracts within 60 days of notification of TSA

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Transition
Implementation Arrangements

• For First Two Years

- NLDC shall be Implementing Agency
• Procedures to be prepared by IA
- Procedure for Data Collection
- Procedure for Loss Sharing
- Procedure for Transmission Charge Computation
• Expenses of IA to be included in YTC and approved by Commission

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 PoC Charges & Impact

Date of notification: December 30,2010

Impact for West Bengal:

Change as per new charges: (196621301 – 167984790)/167984790 = 17%

Increase in the retail tariff in state by 1 paisa considering sales of 35,000 MU

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PoC Charges & Impact
Addressing the policy mandate

Direction sensitivity

A generator in Delhi intending to sell power to a customer in Central Uttar Pradesh is

required to pay less transmission charges as compared to a generator that is located in
eastern Uttar Pradesh and supplies a demand customer in Delhi

Distance sensitivity

A demand customer in eastern UP pays less transmission charge as compared to a

demand customer in Delhi

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Thank you...

Questions?
Key triggers
Change in configuration of the ISTS

Inter-regional power transmission scenarios by 2012 indicates that most of the flows
on the inter-regional system are unidirectional

Region Requirement Scenario

Northern 10770 MW import Winter peak

Western 6117 MW import Summer peak
Southern 3011 MW import Summer peak
Eastern 18247 MW export Winter off-peak
North-eastern 3535 MW export Monsoon off-peak

The transmission system now features a combination of a decreasing proportion of

regional flows and an increasing share of unidirectional inter-regional flows

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Key triggers
Changing nature of use of the transmission system by various users

Following analysis indicates that most of the proposed private sector capacity is
being established with an optimal resource utilization perspective

Category XIth plan XIIth Plan

Pithead 12500 MW 25000 MW

Coastal 8200 MW 13400 MW
Hydro 3500 MW 21500 MW

In India it has been the practice that the users pay for the transmission charges on the
ISTS, and not the generators. The introduction of Merchant power would require a
change in these arrangements.

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Data acquisition

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