Article Positives of availability based tariff for. bulk power bela te fda) amen: A401 oe Introduction Power generation and distribution in India enter the twenty-first century. With sustained efforts over the decades, the power generation scenario in India presents a rich and composite mixture of hydro, nuclear, thermal, wind and solar generation. It is identified as key area for our development. How well we can manage this vast infrastructure and how close itcan keep pace with our increasing eneray demands will be a crucial deciding factor in achieving our dream of an annual double digit growth. Operation of regional grids in India, as you would be aware, has undergone a sea change since 2002, primarily due to introduction of Availability Tariff, which started on 1st July 2002 for Western Region, on 1st December 2002 for Northern Region, and ontst January 2003, for southern Region. The Indian Electricity Grid Code (IEGC) and the Availabilty Based Tariff (ABT) have provided a certain direction on the issues of scheduling, metering, accounting and poo! settlement. Now a days, almost inall the regional grids of india, the Availablity Based Tariff (ABT) has been implemented, which actually aims at bringing responsibility, accountability in 70 . power generation and also schemes of incentives and disincentives for consumption by frequency dependent pricing. ABT (Availability Based Tariff) along with the Electricity Act of 2003 is perhaps the most significant and definitive step taken in the Indian power sector so far to bring more efficiency and focus to this vital infrastructure. The fact that the ABT regime was introduced to replace the Electricity Supplies Act of ‘1948 would perhaps be an indicator of how overdue reforms were. This review article is an attempt to Introduce the significant objectives and clauses of ABT in a concise manner. Pre ABT Tariff structure The power plants have normally two types of costs. © Fixed cost © Variable cost. ‘The fixed cost elements are interest on loan, return on equity (ROE), depreciation, O&M expenses, insurance, taxes and interest on working capital. The variable cost comprises of the fuel cost, .¢., coal and January 2009 (BMG yournalArticle «il in case of thermal plants and nuclear fuel in case of nuclear plants. Under the two-part tariff regime, there Was no bifurcation between fixed and variable charges. Both were bundled together and payable in proportion to the actual energy drawn by the consumer during a particular period. (e.g. say beneficiary is state/SEBs), Before introducing ABT, the total amount payable to the generating company over a year towards the ‘fixed cost depends on the average availablity (MW delivering capabilty) of the plant over the year. In ‘case the average availablity actualy achieved over the year is higher than the specified norm for plant availabilty, the generating company gets a higher payment. In case the average availabilty achieved is lower, the payment is also lower. If a beneficiary over draws a portion of the other beneficiary's share of power, there was no penalty on those who get the benefit or there was no compensation for those who suffered. In this two tariff regime, capacity charges are payable against the 62.79% (deemed) PLF (Plant Load Factor) of the station. 50% full charges are payable for 0% deemed PLF and full fixed charges (100%) are payable at achieving a PLF of 68.49%, ‘and above 68.49% PLF incentive is payable at 1 paise/KWh for each 1% increase in PLF ©. This tai ‘mechanism did not provide any incentive for either backing down generation during oftpeak hours or {or reducing consumer load/ enhancing generation uring peak-load hours. In fact, it was proftable to go on generating at a increasing rate even when the consumer demand had fallen down, In other words, this pre ABT tarif mechanisms encouraged tid indisciptine. What is ABT? ABT particularly in the Indian context stands for fa techno-economic tool for bringing rational tariff structure for supply of electricity from generating station to beneficiaries on a contracted basis. I a new system of scheduling and dispatch, With rewards and penalties seeking to enforce day-ahead re-committed schedules for both generators and beneficiaries though variations are permitted ifnotiied fone and one and halt-hours in advance. ABT tries to improve the quality of power and curtail the following disruptive trends: '® Unacceptable rapid and high frequency deviations causing damage and disruptions. © Frequent grid disturbances resulting in generators. tripping, power outages and grid instability. ABT includes: > Scheduling and load dispatch (current day, day ahead scheduling) > Tariff structure (fixed charges, schedule or energy charges, unscheduled interchange) i@ema journal Janay 2000 ABT splits the existing monolithic energy charge: structure into three basic components. By treating both fixed and variable cost components separately. Availability Based tariff component - Capacity charges (fixed): Towards reimbursement of the fixed cost ofthe plant, linked to the plant's declared ‘capacity to supply MWS, iis linked to availabilty of the generating station. Thats, its capablity to deliver MWs on a day-by-day basis. At zero availabilty, no capacity charges shall be payable. ‘Availabilty for any specific time-period defined as the ratio of the average send out capability (SOC) for all ime blocks of the time-period to the rated ‘SOC. Thus availabilty can be expressed using the formula: Avaebity = (2: y=p$0Gbras +] yo T= TAUKDTIOO LC. = Installed Capacity of the station in MW ‘$0Ci = SOC of the ith time block of the period n= Number of time blocks during the period AUX = Normative Auxiliary consumption as a percentage of gross generation. h = Number of hrs during the period = n/4 CL = Gross MWH units of capacity kept closed. fon account of generating scheduling order. Capacity charges of the generators shall be payable by users on the capacity allocated to them, ltrespective of the quantum of power they draw or scheduled to draw. Fixed charges are payable in two parts: (1) Fixed charges excluding ROE is payable on a prorated basis for 0-30% availability. (2) Fixed charges with Prorated ROE is payable from 30-70% availabilty, Then incentive given to generating station beyond 70% availabilty @ 0.4% of equity for each percentage increase between 70-85%. Beyond 85%, it is 0.39% this decrement in incentive is to discourage the generating facility from overloading the units at the Cost of maintenance and equipment life [3]. Also Penalty given to generating utility for over/under declaration of the availability. Energy charges (variable): Energy charge is reim- bbursement of the fuel cost for scheduled generation, Energy charges or variable charges shall be payable by every user on the scheduled energy irespective of actual drawal UI (unscheduled interchange) charges: It is ‘a payment for deviations from schedule at a rate 7Article dependent on system conditions (frequency) at that time. The deviation from schedule is technically termed as unscheduled interchange (UI) in Availabilty ‘Tariff terminology. This component would be negative in case the power plant is delivering less power than scheduled, For example, if a power plant delivers 600 MW while it was scheduled to supply only 500 MW, the energy charge payment would be for the scheduled generation (500 MW) only, and the excess generation (100 MW) would be paid for at a certain rate. if the grid has surplus power at that time and frequency is above 50.0 Hz, the rate would be small. Ifthe excess ‘generation is at the time of generation deficit in the system ({requency below 50.0 Hz), the payment for extra generation would be at a higher rate. As long as the actual generation/drawal is equal to the given schedule, payment on account ofthis component of ‘Availabilty Tariff is zero. The relationship between the Ul rate and grid frequency, forthe inter-state system, is specified by CERC. For e.g. the relationship, applicable from. 10.2004 is shown in figure - 1. Figure: 1 Ul rates vis grid frequency Se ga ee ee eee eee The Ul charges are payable /receivable it, © Abeneficiary overdraws power, thus by decreasing the frequency. © A beneficiary under draws power, thus by increasing the frequency. © A generator generates more than the schedule, thereby increasing the frequency. © A generator generates less than the schedule, there by decreasing the frequency. How UI mechanism works Refer Table | & I System operation in India © Atregional levelFive RLDCs viz. NRLDC, SRLDC, ERLDC, WRLDC and NERLDC. © SRLDCS in each state. ® LDCs have been modernized with modem Energy Managentent System tools. © SLDCs carry out the optimum scheduling of the state generating units and the RLDCs are responsible for scheduling of the Central Sector Generating Units only. © SLDGs send the requisition to the RLDCs against thelr entitlements out of available power from Central Sector Generation and the RLDCs allocate total available power to various states in the ratio oftheir entitlements Objectives of ABT at regional level © To Encourage grid aisciptine © Promote trade in energy and capacity eC ea ey Commercial incentive to ‘Generating [Over energy (G5. wl get pay ssaion | svontyto gta mento lf ur. | beck down generation FE : plus energy sdoiy._ | ding high frequency [Generang [Under energy |NA Positve |Lowerorni JS. wl pay back eaten [supoiyio and or ni for decont eray supply at ower ato, Beneicary [NA (Ove erersy | Negaive Lower ornit | Stata vl oot era Advised to back down 35 State! drawal tom ower at lower ato 88 own costor gonort SEBS grid |then scheduled rate. |ing station Beneficiary [NA Under energy Postive [Lower ori [State wil get pay | Advio toro ls State) éraval rom back for energy not | schedule orto increase 56s one awn at ower rato | ts crawal and also hast pay as pr acheter Unnecessary fr drawal ener. 2 January 2009 WeING journalArticle co Average Freqiiency Condition for one time block: (lower then 50'H2) ul le Comapany | Energy suppy| Energy drawal “ulate for ut |” Remark | Advise o company by een f Energy (Ret fgt) | | regional grid Generating [Over eneray [NA Negative | Higher ratemighest |G. wil get pay. |Advise to maximize ts ger station | supply to grid ment for surplus eration uring tow frequency energy supply. | period (Generating | Under eneray [NA Postive [Higher oF highest |S. wil pay station | supply to gid back for defcent ‘ ener supply at higher rate Benoticlany [NA [Over eneray [Negative | Higher ratoighest| State wil got | Advised to reduce Wi drawal 2s Site) erawal rom fra energy at _| rom grid by maximizing SeB8 nd higher rate then | ther own generation ofand is scheculed | cutaling thir consumer rate toad requirement Benotiany [NA Under eneray_|Postive Higher raterighest| State wil aot pay [Advise to maximize Fs Own 2s Stato! erawal rom back for energy. | ganoraion hence hep fo SEBS, lara rot crawn at |improve gi frequency. & higher rate © Economic load dispatch. '® Encourage higher generation availabilty. Scheduling and Load Dispatching under ABT at regional level !3571 ® Each day’of 24 hours starting from 0.00 hour is being divided in to 96 time blocks of 15 minutes duration. © Each generating station shall make advance declaration of the capacity available for generation in terms of MW delivery of ex-bus in each time block of next day. In addition, the total ex-bus ‘MWh, which can actually be delivered during the Gay, will also be declared in case of hydro stations. These shall constitute the basis of generation ‘scheduling. The generator shall also ensure that, the capacity available during peak hours is not less than the capacity available during off-peak hours. However, exception to this rule shall be allowed in case of trippingiresynchronization of units as a result of forced outage of ut © Based on the declaration of the generating station, the RLDG shall communicate to the beneficiary ‘SEBs, regarding their respective share of the available capacity. © The beneficiary shall prepare their schedules from the above, based on the internal generation availabilty (intra state capacity), variable cost of generation of their own thermal stations, power Purchase facility from other sources and the cost, system constraints and limitations etc, ® Based on the request from the beneficiaries as i@ema journal Janay 2009 Well as declaration from the generators, the RLDC shall prepare the generation schedules and crawal ‘schedules from the CPS (central power sector) for each time blocks after taking into account the transmission constraints and other systems constraints if any. The schedule of actual generation shall be quantified on ex-bus basis, whereas for beneficiaries, scheduled drawals shall be Quantified at their respective receiving points. For calculating the drawal schedule for benefcares, transmission losses shall be apportioned among the beneficiaries in proportion of their drawal. In the case of any constraints lke forced outage of € unit, or in case of any transmission bottleneck, the RLDC have right to revise the schedule, Which shall become effective from 4th time block. Counting the time block in which the revision is advised by the generator, to be the 1st one. The generator and beneficiaries are also allowed to revise their schedule during a day, but such revisions shall be effective oniy from the 6th time block reckoned in the manner as already stated LOC is also entitled to reviso (if need be), the schedules during the day in the interest of better system operation. These revised schedules shall become effective from the 4th time block counting the time of issue of revised schedule as the tst time block. In the event of any grid disturbance, the schedules of both generation and drawal shall be deemed to have been revised to be equal to their actual generation/crawal. The grid disturbance and its duration shall be certified by RLDC. The schedules issued/revised by RLDC shall be 73Article ctfective from designated time block, irrespective of communication success or failure. Benefits of ABT Y By bifurcating the method of charging Capacity Charges (fixed) and Energy Charges (variable), the incentive for trading in power is enhanced. Y The beneficiaries have a claim on the capacity, which they can trade elther within or outside the region ¥ By isolating the variable charge, a beneficiary can again trade such power depending upon its needs, market demand and the economics of power in the home state. Facilitates Merit Order Dispatch. Means because of clear separation between ficed and variable charges, generation according to metitorder is ‘encouraged and pithead stations do not have to bbaok down normally. The overall generation cost accordingly comes down, Y Help to enforce grid discipline by maintaining frequency in prescribed band (49.5-50.5H2) and control frequency excursions And equipment damage correspondingly also reduced. Enfianced arid disciptine will pave the way for higher quality ower with more reliability and availabilty Y More relevant incentives and disincentives encourage better performance by giving scope for encouraging competition among generators. Y Improved scheduling by all the participants- Generators and Beneficiaries and ensures the optimum utilization of available generation capabilities. Also enables efficient Load Management through their own Area -Load Dispatch Centers ¥ Commercial and operational disputes resolved. Y High quality metering and on line connectivity enabling the Syste operator to know the actual flows and taking appropriate action ¥ Transparency and sharing of the information to all participants-improved trust. Faster settlement process. Y Voltages improved, Transmission losses reduced, Transmission capacity increased. REFERENCES 4) Aprimer on avaabty based tart By Bhusan Bhanu, June 2005, 2) Discussion Paper on introduction of Availity Based Tart (ABT) regime at State lovel wihin Maharashtra and related issues, Noverbor 2006, 9) Availabilty Based Tarif, KALKI communication Pvt Lid Bangalore 4) Avwhite paper on ABT to deregulated power market, KALKI ‘communication Pvt Ltd Bangalore 74 5) Presentation on intra state ABT By G M (SLOG Delhi December 2007) 16) Frequency Linked Dispatch and Electcty Pricing - Key speech note2 BY Bhusan Bhanu, January 2004 7) Avalabilty based tar detalls of southern grid (KSEB) 8) hp: swe kalkitech.com 8) inp:/oercind.govin Scrutineer’s Comments & Author's Reply Scrutineer's Comments The availability tariff has been in operation for last over 5-6 years and is fairly known to the power engineers. The grid disciplines have improved. However news paper reports indicate that overdrawals are still not controlled and states were given notices that supply will be disconnected if overdrawal persists. ‘Such cases need to be discussed in the article. A large amount opower is now being supplied to the grid through Power Trading Companies and Captive Power Plants. These: companies take advantage of ABT during power shortages. This aspect of Power trading vis @ vis the ABT needs to be incorporated in the article. Since the heading of the article states that itis “a review,” additional information as stated above will make the article a useful one for publication. ‘Author's Reply Though ABT Is treated as a stepping stone towards fully competitive pricing, | agree that in our ‘country due to lack of compete transmission facities and constraints in power trading act as a hindrance for hundred percent utilization of ABT technique, ERC has already taken a step movement to rectify an overdraal problem. First solution is power ‘exchange; second viable alternative in such case is generation, which can be located directly near the load centers. These could be captive power plants Of various industrial units, IPP (Independent Power Producer), distributed generation which would pump ower into the grid at high peak demands, This will defer transmission and distribution (T&D) expansion, improve the frequency ‘and voltage profile of the system and reduce line losses. Following tables indicate frequency regime of Indian power grid for above and under standard frequency: 6 (rear 2005- 2007) Por 0.32% ‘Above S0sHe January 2009 ema journalArticle The table shows that under/over frequency | Condition for northern grid during the current year, which has been improved compared to previous year, Frequency remained at 89.15% of time in the normal band Of 49.00-50.50Hz. It has been recorded that there is substantial reduction in over drawal below 49 Hz by Northern Region as a whole during the month of May and June (up to 18.06.2008), 2008, However, there was over-drawal by some of the NR States... Below 40,0H2 | ‘Above 50.52 ‘Above table shows that under frequency condition for western grid during the current year which has been di proved (due to more over drawal) compare to Previous year hence also load shedding, Frequency emained at 88.32% of time in the normal band of 49.0-50.50HHz.") This analysis has shown that there is wide gap bbotween available peak generation and demand, due to which states, were given notice that supply wll be disconnected if oyerdrawal persists This could be solved either by proper power exchange or by alternative solution to generation Near peak load demand center. Also proper implementations of ABT at intra state level controls the over drawal situation. PowerGrid reports showed that due to weather condition some unpredicted Outages ware there which again increased generation demand gap and hence overdrawal problem. During such condition, due to lack of DG andior power exchange agreement, states were given notice to cut the supply. Power Exchange: Power exchange is a proven mechanism for efficient and transparent trading, CERC has permitted the establishment of power exchange from 2007 with the intention to promote free trading of power. It is expected that power exchange would trigger fresh generating capacity and help in ‘meeting the shortfall in power by considering the issues related to transmission charges, losses, and availabilty of capacity ® On 27 June 2008 the first PX was launched and on 22 October 2008 the second PX has also become operational, Distributed Generation: DG, which includes the pplication of small modular dispersed generators Scattered throughout the distribution network and also Near the load centers at sub transmission network, feema journal sanary 2009 offers a valuable alternative to traditional sources of clectric power for industrial and residential applications. This will defer T&D expansion, improve the voltage Profile ofthe system and reduce line losses. The intra- ‘State ABT mechanism encourages additional amount Of generation locally near the load centers. DG can be operated selectively, such as during peak oad conditions or when the probability of outages are highest or when there are some continuous process customers which may get affected adversely due to ‘outages. DG can also be used as a backup for highly Sensitive loads like hospitals ralhways, etc, Alternatively, DG can be operated continuously either in parallel with the electric power system to provide a portion of Rormal demand, or as a complete standalone source of power to satisty total demand. DG can also be implemented directly at the customer site. *! tis already stated in an article under the heading benefits of ABT that it would help to hamess captive ower and co-generation during the over drawal when frequency is below normal value, This generation is automatically regulated by third component of intra state ABT that is UI rates for intra state. These CPP andor the generating station of power trading company are mostly located near load-centers and have a higher variable cost as compared to Central stations, which are mostly pi-head. Inthe earlier regime (pre-ABT), in ‘case an SEB reduced its drawal from Central stations, its payment liability came down at the composite rate (fixed + variable cost) of those stations, But as now ABT has been implemented at intra state in various state, SEB now compares only variable cost and ask intra-state stations to back down during off peak hours. Also, states would be able to achieve maximum ‘optimization in their own operation. ‘ABT mechanism for CPP / IPP and other Co-Generation Now days the demand - supply gap in the country has been bridged substantially by harnessing the existing captive and co-generation into the grid Energy trom such plants into the grid (to the extent Not covered under a contract with the SEB / locally would be paid for as per the frequency-linked Ul Tate. Such energy with other things within the State. Temaining unchanged, would either reduce the State's Over-drawal from the regional grid or increase its Uunder-drawal, MW for MW. For each by captive/co-generation, the State would financially gain with respect to regional grid at the prevailing Ul rate. This can be passed on to the supplier of that energy. UI Charge component ofthe Intra-State ABT wil bbe applicable oniy for the following €. All CPPS injecting their generation for wheeling ‘excluding wind and mini hydro generator b, All generators having total capacity not less 75Article than 5 MW and up to 15 MW those have opted for Injection into the grid for sale through Unscheduled Interchanges (UI) rate. &! Unscheduled Interchange (UN) rates calculation for intra-state: UL rates under intra-state ABT shall be the rates 4s specified by CERC for Western Region for each frequency block adjusted as under to account for inter-state transmission losses. UIS = UIR/(I-L) where UIS = Intra-state ABT rate for a frequency step; UIR UI rate applicable for Western Region for that frequency step; L = inter-state transmission losses ‘of Western Region in per unit. Scheduling Procedure for Intra State: All suppliers shall comply with the scheduling and dispatch requirements specified in the state grid code to meet the demand of allocated capacity to the users. The process of communicating the available capacity and load schedule for the day, shall be completed at least 2 hrs. before, commencement of the day by the SLDC. The SLDC shall evolve the practicable procedure in line with the “Scheduling and Dispatch Procedure” prescribed in Grid Code for reporting availability and schedule such that all the scheduling dispatch activities are completed by 23:00 hrs. including notifying the spare capacity available in the State to effect its optimum use. REFERENCES: 1 htipynpe.gouin and htp:erpe-goviny 2] Final Orders on Development of a common platform for electricity trading, By Central Electricity Regulatory ‘Commission, December 2006. 3] htp:/wwipowerexindia. com); http: wwwiexinda.com! 4] Distributed Generation Opportunity under Availablity Based ‘Tat and Rekbilly Considerations, By A P Agalgaonkar, S V Kulkarni, $ A Khaparde, A Soman. International ‘Journal of Emerging Electic Power Systems vol issue 1, 2008. Before Gujarat Electricity Regulatory Commission Ahmedabad, By Shei“ Subba Rao, Chairman, Shri K P Gupta - Member, ‘Shi Man Mohan - Member, Order no 3 of 2006 (11th August) Shit Pujara “lect Dept, SIE Vasad