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Computation of tariff under open access for bulk customer in a state. S.C. Saxena National Load Despatch Center. Acknowledgement. FOR Secretariat Detailed inputs regarding Model Terms and Conditions for Intra State Open Access Case Studies for calculation of Open Access Charges

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computation of tariff under open access for bulk customer in a state

Computation of tariff under open access for bulk customer in a state

S.C. Saxena

National Load Despatch Center

acknowledgement
Acknowledgement
  • FOR Secretariat
    • Detailed inputs regarding Model Terms and Conditions for Intra State Open Access
    • Case Studies for calculation of Open Access Charges
  • Power Exchanges
    • Case Studies for calculation of Open Access Charges

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presentation outline
Presentation Outline

Introduction

Model Terms and Conditions of Intra-State Open Access Regulations, September 2010

Case Studies

Issues in Intra – State Open Access

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introduction

Introduction

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definition
DEFINITION
  • Electricity Act 2003: Open Access is defined as

“Open access” means the non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission.”

5

ea 2003 provisions for grant of open access
EA 2003: Provisions for Grant Of Open Access

Section 38(2)(d): CTU and functions

Section 39(2)(d): STU and functions

Section 40(c): Duties of Transmission Licensees

Section 42(2): Duties of Distribution Licensees and Open Access

ea 2003 provisions for grant of open access1
EA 2003: Provisions for Grant Of Open Access

Section 42(2) Distribution Licensee

(2)The State Commission shall introduce open access in such phases and subject to such conditions, (including the cross subsidies, and other operational constraints) as may be specified within one year of the appointed date by it and in specifying the extent of open access in successive phases and in determining the charges for wheeling, it shall have due regard to all relevant factors including such cross subsidies, and other operational constraints: ……….

Provided also that the State commission shall, not later than five years from the date of commencement of the Electricity (Amendment)Act, 2003, by regulations, provide such open access to all consumers who require a supply of electricity where the maximum power to be made available at any time exceeds one megawatt.

national electricity policy 2005 section 5 4 5
National Electricity Policy, 2005 – Section 5.4.5

The Electricity Act 2003 enables competing generating companies and trading licensees, besides the area distribution licensees, to sell electricity to consumers when open access in distribution is introduced by the State Electricity Regulatory Commissions. As required by the Act, the SERCs shall notify regulations by June 2005 that would enable open access to distribution networks in terms of sub-section 2 of section 42 which stipulates that such open access would be allowed, ….

……Section 49 of the Act provides that such consumers who have been allowed open access under section 42 may enter into agreement with any person for supply of electricity on such terms and conditions, including tariff, as may be agreed upon by them.

……. While making regulations for open access in distribution, the SERCs will also determine wheeling charges and cross-subsidy surcharge as required under section 42 of the Act.

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tariff policy
Tariff Policy

Section 8.5.1 provides

“A consumer who is permitted open access will have to make payment to the generator, the transmission licensee whose transmission systems are used, distribution utility for the wheeling charges and in addition, the cross subsidy surcharge.

The computation of cross subsidy surcharge, therefore, needs to be done in a manner that while it compensates the distribution licensee, it does not constrain introduction of competition through open access…….”

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tariff policy1
Tariff Policy
  • Section 6.3: Harnessing Captive Generation
    • Wheeling charges and other terms and conditions for implementation should be determined in advance by the respective State Commission, duly ensuring that the charges are reasonable and fair.
    • Grid connected captive plants could also supply power to non-captive users connected to the grid through available transmission facilities based on negotiated tariffs. Such sale of electricity would be subject to relevant regulations for open access
  • Section 6.4:
    • Non-Conventional Energy Sources, including co-generation
  • Section 8.5:
    • Calculation of Cross Subsidy Surcharge and Additional Surcharge for Open Access

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model terms and conditions of intra state open access regulations september 2010

Model Terms and Conditions of Intra-State Open Access Regulations, September 2010

Forum of Regulators

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contents
Contents

Preliminary

Connectivity

General Provisions for Open Access

Application Procedure and Approval

Open Access Charges

Scheduling, Metering, Revision and Losses

Imbalance and Reactive Energy Charges

Commercial Matters

Limited Short Term Open Access

Information System

Open Access to Generator Connected to Distribution System

Miscellaneous

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definition of open access oa customer
Definition of Open Access, OA Customer

“Open access” means the non discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a generating company in accordance with these regulations and includes long term access, medium-term open access and short-term open access.

"Open access customer" means a consumer, trader, distribution licensee or a generating company who has been granted open access under these regulations.

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regulation 11 categories of open access consumers
Regulation 11: Categories of Open Access Consumers

The application procedure, application fee and the time frame of processing request by eligible consumers seeking Open Access shall be based on the following criteria

  • (1) System to which connected
    • (a) Intra-State transmission system
    • (b) Distribution system
  • (2) Inter-se location of drawal and injection points
    • (a) Both within the same distribution system
    • (b) within the State but in different distribution systems
    • (c) In different States
  • (3) Duration of Open Access
    • (a) Long term access
    • (b) Medium-term open access
    • (c) Short-term open access

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categories of open access consumers
Categories of Open Access Consumers

Consumer

STU

DISCOM

Connection Point

Inter-State

Intra-State

Intra-State

(within DISCOM)

Location of drawal Point

STOA

MTOA

LTA

STOA

MTOA

LTA

Any OA

Period of OA

Nodal Agency

SLDC

STU

STU

RLDC

CTU

CTU

DISCOM

eligibility for open access
Eligibility for Open Access
  • Open access shall be permissible to the customers seeking for open access capacity upto which SERC has introduced open access and
    • connected through an independent feeder emanating from a grid substation of licensee or
    • industrial feeder provided that all the customers on such industrial feeder opt for open access and having simultaneous schedule of drawal under such open access.
  • Consumers who are not on independent feeders, shall be allowed open access subject to the condition
    • that they agree to rostering restrictions imposed by utility on the feeders serving them.
application procedure and approval 1
Application procedure and approval (1)

Consumer connected to Distribution System

Regulation 12

application procedure and approval 2
Application procedure and approval (2)

Consumer connected to Distribution System

Regulation 12

application procedure and approval 3
Application procedure and approval (3)

Consumer connected to Distribution System

Regulation 12

application procedure and approval 4
Application procedure and approval (4)

Consumer connected to Intra-State Transmission System

Regulation 12

application procedure and approval 5
Application procedure and approval (5)

Consumer connected to Intra-State Transmission System

Regulation 12

application procedure and approval 6
Application procedure and approval (6)

Consumer connected to Intra-State Transmission System

Regulation 12

charges payable for open access
Charges Payable for Open Access

Transmission charges

Scheduling and system operation charges payable to State Load Dispatch Centre (SLDC)

Wheeling charges

Cross subsidy surcharge

Additional Surcharge

Standby charges

Imbalance and Reactive Energy Charges (as applicable)

transmission charges
Transmission charges
  • Inter State – As per CERC Regulations
  • Intra-State :
    • Transmission charges shall be payable on the basis of contracted Capacity/ Scheduled Load or actual power flow whichever is higher.
    • Transmission Charges = ATC/(PLS T X365) (in Rs./MW-day)

Where,

      • ATC= Annual Transmission Charges determined by the Commission for the State transmission system for the concerned year.
      • PLST= Peak load projected to be served by the State transmission system in concerned year.
    • For Open Access for a part of a day, the transmission charges shall be payable on pro-rata basis
scheduling and system operation charges payable to state load despatch centre sldc
Scheduling and system operation charges payable to State Load Despatch Centre (SLDC)
  • In respect of inter-State open access
    • Long term access or Medium term open access
      • RLDC fees and charges as specified by the Central Commission.
      • SLDC fees and charges as specified by the Commission under sub-section (3) of section 32 of the Act.
    • Short-term open access
      • RLDC and SLDC charges as specified by the Central Commission.
  • In respect of intra-State open access
    • Long term access or Medium term open access
      • SLDC fees and charges as specified by the Commission under sub-section (3) of section 32 of the Act.
    • Short-term open access
      • A composite operating charge @ Rs.2,000/- per day or part of the day shall be payable by a short-term open access customer for each transaction to the SLDC or as determined by the Commission from time to time.
wheeling charges
Wheeling charges
  • Wheeling charges shall be payable on the basis of contracted Capacity/ Scheduled Load or actual power flow whichever is higher.
  • Wheeling Charges = (ARR – PPC – TC) /(PLSD X365)

(in Rs./MW-Day)

Where,

    • ARR=Annual Revenue Requirement of the distribution licensee in the concerned year
    • PPC=Total Power Purchase Cost of distribution licensee in the concerned year
    • TC =Total transmission charges paid by distribution licensee for State and Inter-State transmission system for the concerned year
    • PLSD=Total Peak load projected to be served by the concerned distribution system in the concerned year
  • For Open Access for a part of a day, the wheeling charges shall be payable on pro-rata basis
possible scenarios
Possible Scenarios

Source: MPERC Order on Determination of Wheeling Charges and Cross Subsidy Charges (SMP 101/10)

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cross subsidy surcharge 1 2
Cross subsidy surcharge (1/2)
  • Surcharge should be computed by the Tariff Policy formula.

S= T- [C (1+L/100)+D]

Where

    • S is the surcharge
    • T is the Tariff payable by the relevant category of consumers;
    • C is the Weighted average cost of power purchase of top 5% at the margin excluding liquid fuel based generation and renewable power
    • D is the Wheeling charge in per kWh basis
      • (to be derived from the wheeling charge in Rs./MW-Day referred to in Regulation 22 )
    • L is the system Losses for the applicable voltage level, expressed as a Percentage
cross subsidy surcharge 2 2
Cross subsidy surcharge (2/2)
  • In case the formula gives negative value of surcharge, the same shall be zero.
  • The Commission may fix a lower surcharge in the situation of shortages and load shedding by the distribution licensee.
  • Cross subsidy surcharge so determined by the Commission shall be reduced by 20% every year at a linear rate.
  • In case power supply position or the consumer load seeking open access changes drastically, the Commission may review the Cross Subsidy Surcharge as and when required.
  • In order to ensure regulatory certainty to a open access consumer applicant, any change in cross-subsidy surcharge level should be made applicable only to the new applicants and the open access already sanctioned should not be disturbed.
additional surcharge
Additional Surcharge

This additional surcharge shall become applicable only if the obligation of the Licensee in terms of power purchase commitments has been and continues to be stranded or there is an unavoidable obligation and incidence to bear fixed costs consequent to such a contract.

Any additional surcharge so determined by the Commission shall be applicable only to the new Open Access applicants.

standby charges
Standby Charges
  • Standby arrangements in cases of outages of generator supplying to open access customer under open access.
  • Standby arrangements for a maximum period of 42 days in a year, subject to the load shedding as is applicable to the embedded consumer of the licensee
    • Standby charges at the temporary rate of charge for that category of consumer subject to the condition that such tariff shall not exceed the highest consumer retail tariff.
  • In cases where temporary rate of charge is not available for that consumer category,
    • the standby arrangements shall be provided by the distribution licensee for a maximum of 42 days in a year and on payment of fixed charges of 42 days and energy charges for that category of consumer in the prevailing rate schedule.
  • In case of stand by arrangements sought by continuous process industries, the licensee shall charge on the basis of actual costs involved in arranging power.
  • Open Access customers would have the option to arrange stand-by power from any other source.
imbalance settlement
Imbalance settlement
  • With load of less than 10 MW
    • The difference between the applicable sanctioned Open Access load and the actual drawal shall be accounted through the Time of Day (ToD) Meters on monthly basis and settled at the rate of the imbalance charge as determined by the Commission (where imbalance charge has not been determined by the Commission, UI rate as determined by the Central Commission shall be applicable).
    • In case of under drawal as a result of non availability of the distribution system or unscheduled load shedding, the open access consumer shall be compensated by the distribution licensee at the average power purchase cost of the distribution licensee.
  • With load of 10 MW and above
    • Settled based on the composite accounts for imbalance transactions issued by SLDC on a weekly cycle based on net metering in accordance with the rates specified by the Commission.
commercial matters 1 3
Commercial Matters (1/3)
  • Billing, collection and disbursement
  • Inter-State transactions:
    • Short-term Open Access
      • for use of CTU and STU systems as per CERC Regulations
      • for use of distribution system open access customer shall pay the charges payable to the distribution licensee within 3 days from the grant of the short-term open access by the nodal agency.
    • Long-term access and medium- term open access
      • Billing, collection and disbursement of charges payable to RLDC as per CERC Regulations.
      • Bills towards the charges payable to SLDC shall be raised by the STU/SLDC directly to the open access customer connected to STU and to the distribution licensee in respect of the customers connected to the distribution system.
      • Distribution licensee shall raise the bill with the open access customer connected to it within 3 days of receipt of bill from SLDC.
      • Open access customer connected to the distribution licensee shall pay the charges within five days of receipt of bill from distribution licensee.
      • The distribution licensee shall disburse the amount payable to STU/SLDC on a monthly basis.
      • Open access customer connected to the STU shall pay the bills within five working days of receipt of the bill.
commercial matters 2 3
Commercial Matters (2/3)
  • Intra-State transactions:
    • Short-term Open Access
      • The short-term open access customer shall deposit with SLDC the transmission charges and operating charges within 3 working days of grant of the short- term open access by SLDC.
      • In addition to the above, the short-term open access customer connected to distribution system of a distribution licensee shall also pay to SLDC, the charges payable to the distribution licensee within 3 days from the grant of the short-term open access by the nodal agency. Such charges would be disbursed to the distribution licensee on a weekly basis.
    • Long-term and Medium-Term open access
      • SLDC, transmission licensees and distribution licensee, where applicable, shall communicate to STU the details of the bills due to them by the 3rd day of the succeeding calendar month.
      • STU shall separately indicate the above charges and raise the bill with the open access customer, together with the charges receivable by it, if any, before the 5th day of the above month. The open access customer shall pay the charges within 7 days from the date of receipt of the bill. STU shall disburse the charges payable to SLDC, transmission licensee and distribution licensee on a monthly basis.
commercial matters 3 3
Commercial Matters (3/3)
  • Late payment surcharge
    • Delayed in payment by a open access customer beyond the due date, a late payment surcharge at the rate of 1.25% per month shall be levied.
  •  Payment Security Mechanism
    • In case of long-term access and medium-term open access, the applicant for open access will open an irrevocable Letter of Credit in favour of the agency responsible for collection of various charges for the estimated amount of various charges for a period of two months.
case studies

Case Studies

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issues in intra state open access

Issues in Intra State Open Access

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open access in inter state transmission key success factors
Open Access in Inter-State Transmission : Key Success Factors
  • Control area demarcation & boundary metering
  • Robust transmission system
  • Assessment of Transfer Capability
  • Balancing mechanism
  • Methodology for transmission charge sharing
  • Treatment of transmission losses
  • Streamlined scheduling and settlement mechanism
  • Transparency and non-discriminatory implementation
  • Compliance
  • Dispute redressal mechanism
  • Congestion management
calculation of cross subsidy surcharge
Calculation of Cross Subsidy Surcharge
  • The formula uses the weighted average cost of power purchase of top 5 % as a factor and this leads to a negative cross subsidy surcharge in certain cases
  • Allowing consumers to migrate to open access increases the burden of the DISCOM
  • The calculation of the cross subsidy surcharge is being done with reference to the average cost of supply instead of the cost of serving the consumer. As a consequence, there is an under-recovery and the concerned utility is under-compensated.
  • A trajectory for continuous reduction of the cross subsidy surcharge has to be identified and implemented by the States.

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standby charges1
Standby Charges
  • The various provisions of Act and Policies mandate the DISCOM of providing standby to OA customers.
    • Unfair on behalf of DISCOMs to keep non open access consumers in dark and provide standby without levying reasonable charges for the standby supply arrangements.
  • As per the latest FOR guidelines, demand charges for standby supply can be charged for 42 days in a year.
    • However, some of the States raised the issue that standby charges should be payable for the entire 365 days.
  • Solution ?
    • Purchase from market
    • Enter into a PPA

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dilemma in planning for procurement
Dilemma in Planning for Procurement
  • Some States have an ambitious plan of achieve load shedding free power supply in the State by ….
    • Planned for power procurement by entering in Long term Contracts or through competitive bidding routes.
    • In case the bulk consumers are allowed to migrate to open access, then, this additional capacity being procured may result in stranded assets.
    • DISCOMs would be left with burden of fixed charges of Long Term PPAs entered into, to the extent of migrated load resulting in increase in Supply related costs.
  • Possible Solution
    • A vibrant market working in the country
    • In case a particular State becomes surplus, the surplus as and when available can be sold in the market.

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development of intra state transmission distribution network
Development of Intra State Transmission & Distribution Network

Open access presupposes the existence of a robust transmission or distribution network.

Many of the States are experiencing a high load growth and commensurate augmentation of the transmission and distribution infrastructure inside the States needs urgent attention to accommodate open access transactions.

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mechanism for handling imbalances
Mechanism for Handling Imbalances
  • Availability Based Tariff has been implemented at the inter-State level
    • Implementation of the ABT Mechanism at inter-State level has been one of the crucial touchstones for the success story of open access at the inter-state level.
  • A similar commercial mechanism needs to be implemented at the intra-State level
    • Should also include a mechanism for handling imbalances.

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procedural issues including metering settlement and accounting issues
Procedural Issues including Metering, Settlement and Accounting Issues
  • Clear procedures including the timelines for approval/clearance of open access needs to be clearly defined by the States.
  • In order to avoid flip-flop situation, the need for a minimum time period for availing open access was also felt.
  • Metering, Settlement and Accounting Systems need to be established and streamlined.

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procedural clarity
Procedural Clarity
  • Imbalance settlement
    • Treatment of under-drawal and over-drawl by Open Access Consumer
  • Metering Arrangements
    • ToD meter or SEM
    • Meter specifications
    • Costs involved
  • Billing Arrangements
    • Procedure for billing
    • Entities responsible for billing for wheeling, energy component etc.
    • Manner of payment of bills
breach of ppas
Breach of PPAs
  • Breaching an already existing PPA to sell power in the open market.
  • Honouring contracts is important
    • Need to initiate necessary safeguards for this.
  • Interplay of the prices in the market also leading to a possibility of gaming.

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interpretation of section 11 ea 2003
Interpretation of Section 11, EA 2003

“Direction to generating companies11.

The Appropriate Government may specify that a generating company shall, in extraordinary circumstances operate and maintain any generating station in accordance with the directions of that Government. Explanation. - For the purposes of this section, the expression “extraordinary circumstances” means circumstances arising out of threat to security of the State, public order or a natural calamity or such other circumstances arising in the public interest.

The Appropriate Commission may offset the adverse financial impact of the directions referred to in sub-section (1) on any generating company in such manner as it considers appropriate”

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need for rationalization of oa charges
Need for Rationalization of OA Charges
  • Several charges levied for Open access in distribution.
  • Charges are high in many States.
  • Charges need rationalization and alignment with Tariff Policy formulation
    • FOR has already recommended the principles for cross subsidy surcharge should be as per the Tariff Policy.
  • Charges should be such that it facilitates open access and does not restrict it.
open access charges vis a vis tariff
Open Access Charges vis a vis Tariff

*Tariff for an embedded consumer of 5MW at 11 KV (33 KV in some cases).

** Effective Open Access Charges for consumer of 5MW at 11 KV (33 KV in some cases) in addition with a assumption of power purchase cost of 4 Rs./KwH.

open access charges vis a vis tariff1
Open Access Charges vis a vis Tariff

*Tariff for an embedded consumer of 5MW at 11 KV (33 KV in some cases).

** Effective Open Access Charges for consumer of 5MW at 11 KV (33 KV in some cases) in addition with a assumption of power purchase cost of 4 Rs./Kwh.

slide58

Cross Subsidy Surcharge in Different States

Source:

Forum of Regulators

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state load despatch centers sldc
State Load Despatch Centers (SLDC)

Section 32(1), Electricity Act 2003:

“The State Load Despatch Centre shall be the apex body to ensure integrated operation of the power system in a State”

functions of sldc
Functions of SLDC

Section 32 (2), EA 2003:

The State Load Despatch Centre shall -

(a) be responsible for optimum scheduling and despatch of electricity within a State, in accordance with the contracts entered into withthe licensees or the generating companies operating in that State;

(b) monitor grid operations;

(c) keep accounts of the quantity of electricity transmitted through the State grid;

(d) exercise supervision and control over the intra-state transmission system; and

(e) be responsible for carrying out real time operations for grid control and despatch of electricity within the State through secure and economic operation of the State grid in accordance with the Grid Standards and the State Grid Code

ring fencing of load despatch centers
Ring Fencing of Load Despatch Centers …
  • LDCs to be ring fenced suitably to ensure their functional autonomy.
  • ERCs to recognize three distinct revenue streams for making LDCs financially self reliant.
    • Fees and charges for system operation
    • Tariff for decision support system and IT infrastructure.
    • Operating charges for scheduling, metering and settlement.
  • Introduction of system of certification of system operators by an independent central body.
  • Proper compensation structure for LDCs to attract and retain best talent
for recommendations way forward
FOR Recommendations: Way Forward

Rationalization of various open access charges including surcharge

Uniform standby arrangement for back-up supply to make open access a reality

Monitoring of open access transactions by the State Commission

Display of illustrative examples of charges for open access to help the potential consumer take an informed decision on the open access option.

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slide63

DISCUSSION

[email protected]

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