CHAPTER 6 RECOMMENDATIONS

The transmission is complement to generation to some extent. The tariffs charged by transmission industry should be allocated fairly to the user. Tariffs charged arbitrarily can lead to wrong signals to the consumers as well as investors and results into improper development of both generation and transmission resources. For any transmission company the selection of any methodology also depend upon the commitment/contract. The methodology should be same for the all companies to provide an economic and transparent tariff. The Postage Stamp method is easily understandable and the

transmission charges can be computed easily on the flat basis. Conventional Postage stamp method allocates total system costs to consumers on the basis of energy consumed/load shared by him. Four different methodologies for pricing based on postage stamp are presented in this report and the ARR based method is found to be best among the different variations of Postage Stamp considered. Postage Stamp Method requires correct values of transmission losses and results in higher cost because it incorporates historical fixed cost and does not provide any information about transmission congestion. Mw-Mile method is a very efficient method to calculate the transmission charge. The factors that may increase or decrease the transmission charges are flexibility in choosing a location, distance of generator from load, type of load and generation (active and reactive), line capacity factor, cost of the line and transaction voltage class. Following points need to be noted regarding the MW Mile method-

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Out

of

all

methodologies

proposed

in

MW-Mile

Method

methodology-3 (Division_base_Trans_both) is the best. Other methods in MW Mile can also be applied depending upon the contracts and conditions between the Transco and Disco.

MW mile can be effectively applied for a short distance radial line and the methodology need not require any amendment for a particular company. If a new line especially radial line is made only for a particular company, then cost of the particular line can be recovered and added to Capital base according to CERC guidelines. The charges for higher voltage class are less as compared to lower voltage class. So benefit should be given to company taking power at higher voltage. For smooth operation of the system and avoiding system overloading it is imperative that overloaded substations should be charged more than an under loaded stations. This generates a correct economic signal for the company and also insists the substations to limit their load resulting in an increase in the life of the system. MW-Mile method can be efficiently used to calculate the

transmission charge if a company have the option of buying the power at more then one node from the Transmission Company.

Proposed methodology can also be used to predict the charges for the next twelve months with an error of +10% to -10%.

After going through the merits and demerits of individual methodologies it is recommended that MW-Mile method is best suited for the present state of the UPPCL system. The MW-Mile method gives a correct economic signal for the company, and also charges the customer reasonably. We therefore recommend this method for Transmission pricing and wheeling.

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