sharing of ists charges and losses
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Sharing of ISTS Charges
and LossesMarch 18,2011
www.pwc.com
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Agenda
Indian Power Sector Review
Exiting Method for sharingISTS 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:
- DesignatedISTS Customers (DIC)
- Inter State Transmission Licensees
- NLDC, RLDC, SLDCs, and RPCs
Regulations shall come into force from 1.4.2011 (as amended)
Responsible agencies:
- ImplementingAgency (IA): NLDC
- Collection & disbursement of charges: CTU (PGCIL)
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Indian Power Sector Review
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Indian Power Sector Review
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Evolution of National Grid
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Indian Power Sector ReviewInter State Transmission System (ISTS)
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Therapidlyincreasinginter-regionalcapacityhascausedachangeinthenatureofthe
ISTS withinashorttime. Fromapredominantlyregional systemithas quicklyevolved
intoanational transmissionsystem.
Thepresentmechanismofallocationoftransmissionchargesamongstvarious
networkusersis basedonaregional postagestampmethod.
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
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Existing Method for sharing ISTS charges & lossesRegional Postage Stamp (RPS) Method
All users of a system in a region pay the same price per MW ofallocated 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 & lossesRegional Postage Stamp (RPS) Method
Power in NERis 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 getpancaked and the landed price of electrical energy at the load centre works outto approximately Rs. 4.64/kWh
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Need for a changeKey triggers
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Change in configuration of the ISTS
Changingnature ofuse of the transmission system by various users
Pricinginefficiencyin 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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Proposed MethodsMarginal Participation (MP) method
MP method analyzes how much the flow through each network branch jincreases when the injection/ withdrawal in a bus iis increased by 1 MW
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Flowvariationiscomputedforeachscenario,Winter- peak,otherthanpeak, Summer- peak,otherthanpeak,and Monsoon- peak,otherthan
peak
Any1 MWincreaseingeneration (orload)atnodeihasto becompensatedbyacorresponding1 MWincreaseinload (orgeneration)atsomeothernodeornodes (slack bus)
Oncetheflowvariationisobtained,itispossibletocomputeaseasonalusageindexforeachnetworkuser
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Proposed MethodsMarginal Participation (MP) method
The seasonal index is computed as,
- Ueil is the seasonal usage index in line ldue to injection/withdrawal at node i- Fle is the flowin line lunder scenario e under base case
- File is the flowin line lunder scenario e due to injection / withdrawal of 1 MW at node i
- Pie is power dispatch / demand at bus iunder scenario e under base case
The revenue requirement of each line is allocated pro-rata to the different agents
according to their total participationin the corresponding line
- Cl is the seasonal ARR of line
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Proposed MethodsAverage Participation (AP) method
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Foreveryindividualgeneratori, anumberofphysicalpathsareconstructed,tracingpowerproducedanddispatched
Similarcalculationsarealsoperformedforthedemands
Aruleallocatesresponsibilityforthecostsofactualflowsonvariouslinesfromsourcestosinksaccordingtoasimpleallocationrule,inwhichinflowsaredistributedproportionally betweentheoutflows.
(12/40)*100 = 30%
(28/40)*100 = 70%
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Proposed MethodsComparison
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Attribute AP Method MP Method RPS Method
Cost-reflectiveness Based on flow patternscaused by all networkusers
Based onincremental useofnetwork assessedthrough load flows
Transmission charges do notreflect networkutilization
Locational signals forinvestment
Weak locational signals Provides good locationalsignals in terms oftransmission charges
Provide no signal
Technical Soundness Maynot strictly reflectthe laws of physics
Adheres better to thelaws of physics allocationdepends on the selectionof slacknodes
Does not relate to physicallaws of the network flows
Suitability for longterm, short term andspot transactions
No difference betweenshort term and longterm use
No difference betweenshort term and long termuse
Transmission charges forshort term access need to bedetermined
Implementation Not difficult if principleis accepted byusers
Not difficult if principle isaccepted byusers
Implementationis easythough there may be issuesregarding fairness in thecontext of large networks
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Hybrid MethodA combination of MP & AP method
Reasons for adopting Hybrid method:
The nodal transmission access charges in the Hybrid method have aacceptable variance
Hybrid method takes into account all the incidental flows
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HybridMethod
Computationofcharges &lossesoneachnodeusing
MP method
Selectionofslack busesusingAP method
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Pricing MechanismUsing Hybrid method
- All injection from the lower voltage system shall be treated as a generatorand vice-versa in the case ofnet withdrawal
Identification of the slacknodes: usingAP method
Computation: Hybrid Method for the determination of TransmissionCharges (as discussed earlier)
Computation: Hybrid Method for the Sharing Of TransmissionLosses (methodology will be same as for charges)
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Marginal Loss factor
Loss allocation factor
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Pricing MechanismUsing Hybrid method
Computation: Determination of sharing of YTC & TransmissionLosses
- Treatment of HVDC
Zero Marginal Participation for HVDC Line MP Method cannot recover its cost directly
HVDC line can be modeled as:
Load at sending end
Generator at receiving end
Compute Transmission Charges for all load andgenerators with allHVDC lines in service
Disconnect HVDC line and again compute new transmission chargesfor all loads andgenerators
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Pricing MechanismUsing Hybrid method
Compute difference betweennodal charges with or without HVDC
Identifynodes 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 identifiednodes
- YTC of substations to be apportionedin 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 thepeak conditions
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Pricing MechanismUsing 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 LossAllocation Mechanism
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Pricing MechanismUsing 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 combinedin a manner that they areGeographically and electrically proximate
- Nodes with connectivity to Thermal Generators > 1500 MW or HydroGenerators > 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 : WeightedAverage of Nodal Charges
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TransitionAccounting, Billing & Collection of charges
Accounting
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Billing
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TransitionAccounting, Billing & Collection of charges
Treatment of deviations
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Demand/ Gen
Net drawl/injection
Netinjection/drawl
Deviation
>20%
Deviation
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TransitionCommercial Agreements
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Transmission ServiceAgreement (TSA)
Governstheprovisionoftransmissionservicesandcharges
CTU shallpublishthedraft Model TSA
SigningofTSAshallnot beapre-conditionforconstructionofnewnetworkelementsbyCTU and Transmission Licensees
Revenue SharingAgreement
CTU shallenterintoaseparateRSAwithother ISTS Transmission Licenseesfor
disbursingmonthlytransmissionchargesamongthemselves
AmendmentsofContracts
Realignmentofallexistingcontractswithin60daysofnotificationofTSA
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PoC Charges & Impact
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Dateofnotification:December30,2010
ImpactforWest Bengal:
Change as per new charges: (196621301 167984790)/167984790 = 17%
Increase in the retail tariffin state by1 paisa considering sales of 35,000 MU
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Thank you...
Questions?
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Key triggersChangingnature ofuse of the transmission system by various users
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Following analysis indicates that most of the proposed private sector capacityisbeing 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
InIndia it has been the practice that the users pay for the transmission charges onthe ISTS, andnot the generators. The introduction of Merchant power would requirea change in these arrangements.
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Data acquisition
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