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POWER TRADING

Presentation Coverage

Concept of Electricity Trading Licensing and Trading Provisions Open Access ,Processes & Procedures Power Trading Commercial Aspects

Concept of Electricity Trading

Goods – Service Continuum
Soft drinks Salt Soap Automo biles
Cosmetics Fast food outlets

Tangible dominant Adv. Agency Fast food outlets Consulting Teaching

Intangible dominant

Electricity

Features of Electricity as a Product
Electricity is not Visible It can not be touched It cannot be stored It can not be patented Precise standardization is not possible Transfer of ownership is not possible Production & Consumption of electricity inseparable Consumer is Part of the Production Process

What is Trading As per Electricity Act 2003-------“Purchase of Electricity for Resale” .

U. Payment for variations from the schedule through a common mechanism.I.Power trading is notional : Buyer to pay the agreed amount to the supplier for scheduled quantum of power. . e.g.

10MW A @ 200 p/kWh TRADER 10MW @ 220p/kWh B AGREEMENTS A 8MW ACTUAL FLOW 12 MW B GRID .

200 p/kWh for 10 MW TRADER 220 p/kWh for 10 MW PAYMENTS FOR SCHEDULED QUANTUM A B UI for 2 MW SETTLEMENT FOR DEVIATED QUANTUM UI POOL A/C RLDC UI for 2 MW .

0 764.87 519.16 2.19 FY 06 .02 2.0 723.90 FY 05 .07 15. 11.0 578.35 .96 FY 08 .45 2.06 14.Volume of Electricity Traded / Generated in India FY 03 -04 Electricity Traded ( BU ) Electricity Gen ( BU ) % of Trading to Total Gen.09 24.21 FY 09 .10 40.4 548.41 3.12 2.8 666 704.35 5.15 3.02 FY 07-08 20.03 FY 04 -05 11.

Important Aspects of Trading Price Determination Payment Security Mechanism Penalty Provision for defaults Profit Margin Energy Accounting .

Product Differenciation Night Power Morning Peak Off Peak Evening Peak : 2200 Hrs to 0600 Hrs ( 08 Hrs ) : 0600 Hrs to 1100 hrs (05 Hrs) : 1100 Hrs to 1700 hrs (06 Hrs) : 1700 Hrs to 2200 hrs (05 Hrs) Round the Clock : 0000 to 2400 Hrs ( 24 Hrs) .

Electricity Pricing Night Power Morning Peak Off Peak Evening Peak : 2200 Hrs to 0600 Hrs ( 08 Hrs ) @ 195 P / Unit : 0600 Hrs to 1100 hrs (05 Hrs) @ 235 P / Unit : 1100 Hrs to 1700 hrs (06 Hrs) @ 225 P / Unit : 1700 Hrs to 2200 hrs (05 Hrs) @ 321 P / Unit @ 265 P / Unit Round the Clock : 0000 to 2400 Hrs ( 24 Hrs) .

Name Hr Rate(P/Unit) Composite Rate(P/Unit) NP MPK OPK EPK RTC 8 6 6 5 24 200 250 235 321 255 1600 1500 1410 1605 .

Unscheduled Inter-Change (UI) The mismatch between the scheduled and actual drawl at drawl points & scheduled and the actual injection at injection points shall be met from Grid and shall be governed by UI pricing mechanism applicable to the inter-state transactions. .

1 Hz = 45 P .1 Hz = 30 P .5 Hz .6 49.02 Hz = 06 P .7 Hz = 210 P .8 50 50.3 49.02 Hz = 09 P .8 Hz = 360 P .P 570 UI Rate Chart 435 345 210 150 0 49 49.

UI Injection point UI Drawal Point GRID .

In Case Of Generating Stations • INSTALLED CAPACITY • DECLARED CAPACITY (DC) = 2000 MW = 1900 MW • SCHEDULED GENERATION (SG) = 1900 MW •ACTUAL GENERATION (AG) = 1890 MW UI = (AG – SG) = (1890 – 1900 ) = .10 MW Generating Station to pay for 10 MW .

In case of SEBs • DRAWAL SCHEDULE • SCHEDULE BY RLDC = 700 MW = 700 MW = 750 MW • ACTUAL DRAWAL BY SEB UI = (750 – 700) = 50 MW SEB to Pay for 50 MW .

Licensing and Trading Provisions .

2004. Terms & Conditions for grant of Trading Licence and other related matters Regulations. 2004 vide Notification Dated 6th February. on 30th January.Licensing & Trading Provisions CERC brought out regulations for Procedure. .

2003 – Trading distinct activity permitted with licensing.TRADING PROVISIONS Electricity Act 2003 10th June. (Section 66) . (Sections 79 (2) (b) & 86 (2) (b)) The Regulatory Commission to promote development of market including trading. (Section 12) Regulatory Commission may fix ceiling on trading margin to avoid artificial price volatility.

Advantages of Power Trading Optimal utilisation of existing resources in power sector Shortages in the deficit locations are minimised Could help in deferring investment for additional generation capacity Reduction in average cost of power to some extent Scheduled exchange will increase and un-scheduled exchange will reduce bringing in grid discipline Better grid discipline will improve quality of power in terms of frequency excursion and voltage .

. Frequent mis-match in Regional Energy Accounts Transmission congestion in Inter-Regional Exchanges a) Demand is sensitive to political environment b)Parties not willing to enter into agreements with provision of penalty in case of default Open Access frame work is yet to be finalized by SERCs in the states.Complexity in Power Trading Resolution of Scheduling with RLDC needs vigorous monitoring.

Finance. Power system operations and Commercial aspects of power transfer. 2. Commerce and accounts .Technical and Financial Requirements Full time professional of one each in 1.

capital adequacy and credit-worthiness in accordance with Section 52 of the Act. .Procedure for grant of Trading Licence The form of application for licence shall be specified by the Appropriate Commission Notices shall be published in the newspapers within 7 days of making the application to the Commission The Commission would examine the application with regard to the technical requirement.

Objections received. if any. if any. Licence when granted shall have a term of 25 years . for a period of two weeks. shall be handled.Procedure for grant of Trading Licence The Commission when it decides to grant the licence shall publish its intent for grant of such licence in two newspapers and await objections.

continuity and reliability of service. . if considered necessary.Functions of CERC Section 79 (1) Says The Central Commission shall discharge the following functions • To issue Licence to persons to function as transmission licensees & electricity traders with respect to inter-state operations. • To adjudicate upon disputes. • To fix the trading margin in the inter-State trading of electricity. • To specify Grid code and enforce standards with respect to quality.

if considered.distribution licensees & electricity traders with respect to their operations within the State • To fix the trading margin for intra-State trading of electricity. necessary • To adjudicate upon disputes .Functions of SERC Section 86 (1) Says The State Commission shall discharge the following functions : • To issue Licence to persons seeking to act as transmission licensees.

Need of Licence for Trading Section 12 Says No person shall • Transmit Electricity or • Distribute Electricity or • Undertake Trading in Electricity Unless he is authorised to do so by a Licence issued under Section14 .

in any area which may be specified in the Licence . on application made to it under sec-15 grant any licence to any person To undertake trading in Electricity as an Electricity trader.Issue of Trading Licence Section 14 Says The Appropriate Commission may.

00 15.00 10.00 1.50 3.00 5.00 7.00 .00 7.50 10.00 2.00 20.No Category Energy Traded / of Licence Annum (MU) Net Worth ( Rs. in Lakhs ) 1 2 3 4 5 6 A B C D E F Upto 100 100 to 200 200 to 500 500 to 700 700 to 1000 > 1000 1.Category of Licence S.00 15. in Crores ) Fees ( Rs.

•GMR •Thapar •Subhas Kabini Power Category F Category F Category F Category A Category F Category C Category A Category B Category C Category A Category A Category A Category A Category A . •DLF Power Limited •Jindal Steel & Power Ltd •Chhattisgarh Electricity Company Ltd.InterInter -state Traders •NTPC Vidyut Vyapar Nigam •PTC India •Tata Power Trading Company •Reliance Energy Trading Pvt. •Lanco Electric Utility Co •Sumex Organics Pvt. Ltd. Ltd. •Adani Exports Ltd. •MMTC Ltd.

04 SL 1 2 3 4 5 Supplier WBPDCL GRIDCO Chukha HPC DVC DTL Energy Sold(MU) 2954 1966 1495 1273 762 Top 5 Suppliers in FY .05 SL 1 2 3 4 5 Supplier Energy Sold(MU) GRIDCO 4661 WBPDCL 3177 DVC 760 APTRANSCO 384 Sikkim 270 .Top 5 Suppliers in FY .

05 SL 1 2 3 4 5 Buyer MSEB PSEB MPSEB HVPNL GEB Energy Bought(MU) 2833 1453 1387 1211 864 .04 SL 1 2 3 4 5 Buyer MSEB MPSEB DTL GEB KPTCL Energy Bought(MU) 1837 1525 1282 1011 822 Top 5 Buyers in FY .Top 5 Buyers in FY .

Trading Share of Traders SL 1 2 3 4 Trader PTC NVVN ADANI TATA FY-04 (MU) 11029 962 Nil Nil FY-05 (MU) 8887 2687 735 103 .

Inter-Regional Sale in FY .05 Buyer Region (MU) Seller Region North West South East North 21 West 149 82 South 325 6 46 211 East 3348 4690 365 185 NE 455 18 227 0 Total 3724 5619 576 209 NE Total 21 231 588 8722 719 10281 134 19 153 .

Who Cannot Trade CENTRAL TRANSMISSION UTILITY ( SEC –38 ) STATE TRANSMISSION UTILITY ( SEC – 39 ) .

Utility Ltd Lanco Group 354 509 Plans to become 1000 MW by 2007 .Asset Backed Trading Trading Company NVVN Reliance ETL TPTC PTC Parent Company NTPC REL TATA POWER PTC Parent Company’s Gen.Asset Existing Proposed 23450 MW 1700 MW 2277 NIL 12% IN LANCO& ONGC Tripura 11558 MW upto 2012 8300 MW Ispat Energy Ltd Ispat Industries Ltd Lanco Elec.

FY .04 NVVN Traded 26 MU ---.Asset Backed Trading by NVVN Un-requisitioned Surplus (URS) NVVN Traded 60 MU ---.FY .05 Blending of Power (Cheap power +Costly power) Mixed & sold to Customer as blended power Trading of NTPC power .

Open Access Reservations Procedure .

“OPEN ACCESS” ELECTRICITY ACT. . 2003 Section 40 of Electricity Act 2003 states that the transmission licensee shall provide non-discriminatory open access for the use of its transmission system by any generating company. licensee or consumer in accordance with the regulations specified by the Appropriate Commission.

What is Wheeling “Means the operation whereby the distribution system and associated facilities of a transmission licensee or distribution licensee are used by another person for the conveyance of electricity on payment of charges” .

DEFINITION OF “OPEN ACCESS” “Enabling of non-discriminatory sale/ purchase of electric power/energy between two parties utilizing the system of an in.between (third party). and not blocking it on unreasonable grounds” .

LT -Long Term and ST.Nodal Agency Nodal Agency for LT customer shall be CTU in whose system the point of drawl of electricity is situated. Nodal Agency for the ST customer shall be RLDC of the region where the point of drawl of electricity is situated.Short Term-may be .

Process of Power Trading .

Schematic of Power Trading System Operator Surplus Utility Trader Deficit Utility Transmission Utility Contract Power Flow P Payment Flow .

Power Trading Process Map Data Analysis by NVVN to decide to Buy or Sell Acceptance of offer Decide Route for power flow & Delivery point PPA with Buyer & Seller Apply for Open Access by NVVN to Nodal RR Approval of Open Access by Nodal RLDC Acceptance of Open Access by NVVN Request for Schdule to Nodal RLDC Power Flow & Metering Bill by NVVN to Buyer & Seller Realisation of payments Closing of Contract .

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Regional Losses POI POD POD NER (4.29%) NR (3%) ER (LOSS=3.1%) POD = Point of Delivery POI = Point of Injection POD = Point of Drawal WR (5%) SR (4%) .

Commercial Issues .

•Trading is uncertain & risky but Profitable •Payment Security Mechanism •Fixation of Trading Margin .

Payment Security Mechanism Letter of Credit to be Opened by Buyer for Trader (An amount equal to 18 days of Average Billing) Letter of Credit to be Opened by Trader for Seller (An amount equal to 14days of Average Billing) Letter of Credit to be Opened by Trader for RLDC .

Thank you .