Workshop on State-Level Electricity Reforms:

Firm Choices, Emerging Generation Markets and Externalities

“Open Access: Experiences”

ALOK ROYGeneral 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 TO1. 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 2001.

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 2003-04, 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 11029 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 6th 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

Month NR 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 04 13733 360.0 2.62 %Jun 04 14431 543.8 3.77 %Jul 04 15173 756.1 4.98 %

Aug-04 14318 1104.1 7.71 %

0.05% energy more than 40 paise/kWhr

1.27% energy20 to 40 paise/kWhr

13.93% energy15 to 20 paise/kWhr

66.70% energyless than 5 paise/kWhr

0.58% energy5 to 10 paise/kWhr

17.46% energy10 to 15 paise/kwhr

TOTAL COST FOR SHORT-TERM TRANSMISSION TRANSACTIONS APPROVED BY

NRLDC IN MAY 2004

TOTAL MWHr RESERVED = 417671.4

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.

DISTRIBUTION OF TOTAL ENERGY COST FOR SHORT-TERM OPEN ACCESS TRANSACTIONS

APPROVED BY NRLDC IN JUNE 2004

72% of Energy Less than

5 paise/kwh

6% Of Energy 25 to 30 paise/kwh

2% of Energy 20 to 25 paise/kwh

7% of Energy5 to 10 paise/kwh

7% of Energy10 to 15 paise/kwh

6% of Energy15 to 20 paise/kwh

Total Reserved Energy = 767253 MWHrTotal OA Charges = 6.77 paisa/kWHr Break up of OA Charges STU Charges = 0.08 paisa / kWHrSLDC Charges = 0.01 paisa / kWHrCTU Charges = 6.30 paisa / kWHrRLDC Charges = 0.38 paisa / kWHrLess 75% refund of CTU charges to long term customers = 4.72 paisa / kWHr

Net OA Charges = 2.05 paisa / kWHr

DISTRIBUTION OF TOTAL ENERGY COST FOR SHORT-TERM OPEN ACCESS TRANSACTIONS APPROVED BY NRLDC DURING AUGUST 2004

8 % of Energy 15-30 paise/ kWhr

10 % of Energy 10-15 paise/kwh

34 % of Energy 5-10 paise/kWh

48 % Energy less than

5 paise/kWh

Total Reserved Energy = 1334138 MWHrTotal OA Charges = 7.36 paise/kWhrBreakup of OA ChargesSTU Charges = 0.16 paise/kWhrSLDC Charges = 0.02 paise/kWhrCTU Charges = 6.87 paise/KWhrRLDC Charges = 0.41 paise/kWhr Less 75 % Refund of CTU Charges to long term customers = 5.15 paise/kWhrNet OA Charges = 2.21 paise/kWhr

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 LinksInter Regional Links

Present IR CapacityPresent IR Capacity= 8,500 MW= 8,500 MW

By the year 2012By the year 2012= 30,000 MW= 30,000 MW

500 MW500 MW1200 MW1200 MW

1000MW1000MW

2000MW2000MW

500 MW500 MW

500 MW500 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