RAJIV GANDHI COLLEGE OF ENGINEERING AND TECHNOLOGY

DEPARTMENT OF ELECTRICAL AND ELECTRONICS ENGINEERING

Question Bank

Subject Name : POWER SYSTEM RESTRUCTURING AND DEREGULATION

Year/Semester : IV/VII

Unit-1 (Fundamentals Of Power Market)

1. What is meant by regulation?

Regulation means government has set down laws and rules that puts limits on and
defines how a particular industry or company can operate.

2. What is Deregulation?

Electric deregulation is the process of changing rules and regulations that control
the electric industry to provide customers the choice of electricity suppliers who
are either retailers or traders by allowing competition.

3. State some advantages of deregulation?

 Encourage privatization
 Increase competition
 Increase efficient power generation
 Increase efficient transmission
 Increase efficient distribution
 Restructure Indian power network
 Public and private sector coordination
 Reduce power cost

4. List the Objectives of restructured power market?

 To provide electricity for all reasonable demands.

 To promote competition in the generation and supply of electricity.
  To protect the interests of electricity customers in respect to prices charged,
continuity of supply and the quality of services provided.
 To Promote efficiency and economy on the part of licensees in
supplying and transmitting electricity
1. List some benefits of deregulation?

 Systems will operate closer to their capacity.

 Introduction of a market will optimize energy supply.
 Price signals will become clearer.
 Restructuring will bring improved consumer choice.
 Good technologies will be incorporated sooner, while bad technologies will
be ignored or phased out faster.
 Prices are expected to reduce.
Improved price signals after restructuring will improve the efficiency of
consumer usage

6. State roles and responsibilities of Independent System Operators?

 Entity responsible for ensuring reliability, security & efficient

operation
 Administers transmission tariffs
 Coordinates maintenance scheduling
 Independent supreme entity
 Does not participate in electricity market trades
 Has authority to commit and redispatch the system resources and to
curtail load for maintaining system security
 Helps functionality of TDCMS-Transmission Dispatch and
Congestion Management System
  Can procure ancillary services e.g. supply of emergency reserves,
reactive power from other entities to maintain reliability
 Does not have any financial interest and association with participants

2. What is meant by Power Exchange?

Handles electric power pool which provides a forum to match electric

energy supply and demand based on bid process.

3. What is meant by Scheduling Coordinators?

Aggregate participants in trading and free to use protocols that may differ
from pool rules.

9. Define Wheeling?

Transmission of power from a seller to a buyer via third party network.

10. What is bilateral wheeling transaction?

Bilateral exchange of power between a buying and selling entity.

11. What is multilateral wheeling transaction?

Power injection at many buses and taken out at other various buses
simultaneously.

12. What is Transmission Open Access (TOA)?

Entity which does not have its own line is granted to use line of other for
competition creation.
13. What is unbundling?

Segregation of genco,disco and transco is called as unbundling.

14. Write the Elements Of Restructured Power System?

Genco
Disco
Transco
Power exchange
Scheduled co-coordinators
ISO
Consumer
Part B(11 marks)
1.How the utility market in different countries are classified?
2.Explain the terms unbundling,wheeling and deregulation
3.explain the various types of ISO&their role and responsibility in
implementationof deregulation of electrical power system?
4.dicuss in detail the different restructuring models in a power system.
5.Describe the competitive market structure of England and wales
electricity pools
6.Explaint the different auction mechanism employed in competitive
electricity markets?
7.Explain the reform motivation and fundamentals of deregulated
market?
 Unit-3(congestion management and ancillary services)

1. What is meant by congestion?

When producer and consumer of electric energy desires to produce and

consume energy in the amount that would cause transmission system to operate
beyond its transfer limit, the system is said to be congested.

2. State the Scope of congestion management?

 It defines a set of rules to ensure control over generators and loads in order
to maintain acceptable level of system security and reliability.

 It also ensures market efficiency maximization with short term as well as

long term horizons.

 The robustness of rule set is important as under open market structure a set
of players.

3. What are the methods available to tackle transmission Congestion?

 Price Area congestion management employed in Nordic pool (Norway,

Sweden, Denmark and Finland).

 Available Transfer capability (ATC) based congestion management system

employed in US.

 Optimal Power Flow (OPF) based congestion management system

employed in UK.

4. Define available transfer capability (ATC)

ATC is defined as the maximum amount of additional MW transfer possible

between two parts of a power system.

(OR)

Mathematically, ATC is defined as the Total Transfer Capability (TTC) less

the Transmission Reliability Margin (TRM), less the sum of existing
transmission commitments and the Capacity Benefit Margin (CBM).

ATC = TTC – TRM – “Existing (TC and CBM)”.

 1. State the purpose of ATC?

1. To deliver electric power reliably.

2. To provide flexibility for changing system conditions.

3. To give the indication about the additional amount of power transfer.

4. To allow trading of electric power among systems.

6. Define total Transfer Capability (TTC)

Total Transfer Capability (TTC) is defined as the amount of electric power

that can be transferred over the interconnected transmission network in a
reliable manner under specified conditions.

7. Define Transmission Reliability Margin (TRM)

It is defined as that amount of transmission transfer capability necessary to

ensure that the interconnected transmission network is secure under a
reasonable range of uncertainties in system conditions.

8. Define Capacity Benefit Margin (CBM)

It is defined as that amount of transmission transfer capability reserved by

load serving entities to ensure access to generation from interconnected
systems to meet generation reliability requirements.

9. Locational Marginal Pricing (LMP)

LMP mechanism is one of the most commonly employed tools for market
settlement in the deregulated power system environment. The Locational
Marginal Price (LMP) at a bus signifies the cost of supplying the next
increment of load at that bus. The LMP is the sum of supplying energy
marginal cost, cost of losses due to the increment and transmission
congestion cost, if any, arising from the increment. and congestion, if any,
arising from that increment. The LMP is the true indicator of marginal
pricing of energy.
10. Ancillary services

Ancillary services are defined as all those activities on the interconnected

grid that are necessary to support the transmission of power while
maintaining reliable operation and ensuring the required degree of quality
and safety. It becomes clear that the ancillary services may include
scheduling and dispatch, frequency regulation, voltage control, generation
reserves, etc.

11. Functions of ancillary services.

1. Regulation
2. Load Following
3. Energy Imbalance
4. Operating Reserve (Spinning)
5. Operating Reserve (Supplemental)
6. Backup Supply
7. System Control
8. Dynamic Scheduling
9. Reactive Power and Voltage Control Support
10. Real Power Transmission Losses
11. Network Stability Services from Generation Sources
12. System Black Start Capability
Part-B(11 Mark)
1.What is Meant by congestion in power system?Explain the concept of
Congestion management?
2.Compare and contrast inter and intra Zonal Congestion?
3.With the neat diagram Explain the constituents of generation
rescheduling in congestion management
4.describe the cost recovery method involving in transmission pricing
services
5.Write a detailed notes on buying and selling ancillary services
6.Explain the various pricing options related to transmission
 UNIT-IV: TRANSMISSION PRICING
1. What is transmission pricing?

Transmission pricing is nothing but fixing the price of transmitted power

from generator to load.

2. Principles of transmission pricing?

 The transmission prices should be devised so as to promote the

efficiency of day-to-day operation of bulk power market.
 The transmission prices should signal locational advantages for
investment in generation and demand.
 They should signal the need for investment in the transmission
system.
 The transmission prices should recover the costs of existing
transmission assets.
 Transmission pricing mechanism should be simple and transparent.
 The mechanism should be politically implementable.

3. Classification of transmission pricing methods?

 Rolled-in (embedded) transmission pricing
 Marginal transmission Pricing
 Composite transmission pricing

4. What is meant by ex-ante and ex-post transmission pricing?

In the ex-ante schemes, the entities taking part into the power market
activities know the transmission prices a priori. While, in ex-post
schemes, the transmission charges are calculated only after the real
time has elapsed and power flow snap-shot is available.

5. What is meant by transaction & non transaction transmission pricing?

 The transaction based schemes essentially should have a defined source
point and a sink point (bilateral transaction). On the other hand, non-
transaction based schemes refer to the power exchange (PX) trades, where it
is not possible to identify source-sink pair.

6. What is rolled in pricing method?

In rolled in pricing method, all the costs incurred during building the
infrastructure and the future investment, operating, maintenance costs are
summed up (rolled-in) together and then are allocated to various wheeling
customers on various basis. Such pricing method is called as rolled in pricing
method.

7. Classification of rolled in pricing methods?

 Postage Stamp Method (transaction / non-transaction)
 Contract Path Method (transaction based)
 Distance Based MW-Mile Method (transaction based)
 Power Flow Based MW-Mile Method (transaction based)
 Power flow tracing based on proportionate sharing principle (non-
transaction)
 Equivalent bilateral exchange (EBE) method (non-transaction)
 Zbus based method (non-transaction)

8. State the advantages of postage stamp method?

 The method is simple and easy to implement.
 It is transparent and is easily understood by all.
There is no mathematical rigor involved.
 Recovers sunk cost of transmission system.
 Being very simple and straightforward, it is easy to get political backing
for it to be implemented.
8. State the disadvantages of postage stamp method?

 Pancaking: In case a transaction takes place such that the power is

transmitted through multiple intermittent utilities or zones, pancaking
of access charges takes place.
  No economic signal: With regard to the principles discussed in the
earlier sections, postage stamp allocation does not create an economic
signal associated with the effect of a particular transaction.
 No extent of use of network: Postage stamp allocation does not take
into consideration the extent of use of the network by a particular
transaction. The transmission charges paid by two loads, out of which,
one is very near to a generator, while the other is miles apart, is the
same. It is obvious that transmission network use by the other load is
more than the first.

9. is contract path method of transmission pricing?

This method is based on charging the transacting entities between two
points, based on a pre-defined path. To define formally, contract path is the
shortest route formed by a series of transmission lines which can carry the
contract power between the take-off point and injection point.

10. State the advantages of contract path method of transmission pricing?

 This method is simple to implement, though not as simple as postage
stamp rate method.
 Directly or indirectly, the method takes into account the distance
involved in wheeling.
 Avoids pancaking to a large extent.
11. What is meant by MW-Mile method?
MW-Mile method is classified into two types
i) Distance based MW-Mile method
ii) Power flow based MW-Mile method
Distance based MW-Mile method evaluates the usage of each user according
to the product of the quantity of the transacted power and the geographical
distance between the source and sink. This is quite a rough method. In
practice, due to the effect of meshed network, there is no fixed relationship
between the geographical distance and the actual costs.
 Power flow based MW-Mile method takes into account both the quantity of
transacted power and the electrical distance between source and sink and
allocates the total costs in proportion to the MW-Mile of transactions.
11. State the advantages of MW-Mile method of transmission pricing?
 It is insensitive to the order of wheeling transactions. This is because
every transaction is treated separately by considering only those
generators and loads that are associated with that transaction. Hence,
there will be no dispute about the order in which the transactions
should be considered.
 It gives a correct signal to both short distance and long distance
entities, unlike in postage stamp case.
 The method is intuitively logical and conceptually straightforward.

12. What are costs associated during transmission pricing?

 Operating cost
 Recovery (or) capital cost
 Opportunity cost
 System expansion cost

13. What is meant by operating cost?

It includes transmission losses, costs incurred by generation redispatch due
to operating constraints such as transmission and bus voltage limits. Costs
incurred in ancillary services and maintenance expenses.

14. What is meant by nodal pricing?

Nodal pricing method is most complicated but accurate pricing method
derived from marginal cost theory. Nodal pricing may be short-run marginal
cost based or long -run marginal cost based, depending on whether the
recovery of operating cost, capital costs and expansion cost is desired.

15. What is meant by zonal pricing?

This pricing method represents a combination of postage stamp
method and the nodal pricing method and attempts to simplify the pricing
process and at the same time to reflect the varying cost of supplying power
to different areas.

16. State the disadvantages of nodal pricing?

  Real time computational effort required
 Incentive problem arises
 Dramatic volatility of the price exists

17. Define SRMC

It is defined as the product of difference in the incremental costs of
producing additional megawatt at each bus and the magnitude of transaction.

SRMC = (ʎi- ʎj)*AT

Part _B(11 Mark)

1.explain any two pricing method

2.Explain the transmission pricing in open access system

3.Explain the detail about spot pricing and uniform pricing with suitable
examples

4.Explain the various methods available to compute Available Transfer

Capability?

5.Describe the concept of congestion management in deregulated power

system

6.Explain the how the Ancillarry services procuring important consideration

in the new environment of the power system?

7.Describe the location marginal pricing and congestion management

8.Explain the short run marginal cost method of increamental cost based
transmission pricing?

UNIT-II: TRANSMISSION CHALLENGES

1. Name the different phases in evolution of the role of transmission planning?

i) Dependent phase
 ii) Passive phase

iii) Active phase

2. What are the three models of electricity markets?

 Multilateral transaction model

 Mandatory system operator model

 Voluntary system operator model

3. State the functions of transmission provider (TP)?

 It plays a role of sole supplier and sole consumer.

 It meets out the demand with scarce transmission capacity.

 It connects both supplier and consumer.

4. What are the problems associated with transmission planning in

bilateral contracts?
 Risks associated with future electricity prices, because
participants enter into the contracts in advance, they are
exposed to the risk of future energy prices set by the TP on
which the strike price is determined.
 Risks associated with transmission capacity, because when
the transmission capacity is scarce owing to a high level of
demand, energy transfers from certain parts of the
transmission system to certain other parts are not possible.
5. What are the methods available to compute transfer capability?
 Continuation power flow method
 Optimum power flow method
  Repeated power flow method
6. What are the methods available to compute available transfer
capability?
 DC power flow method
 AC power flow method
 The Power Transfer Distribution Factor (PTDF)
 Using Line Outage Distribution Factor (LODF)
7. Define available transfer capability (ATC)

ATC is defined as the maximum amount of additional MW transfer possible

between two parts of a power system.

(OR)

Mathematically, ATC is defined as the Total Transfer Capability (TTC) less

the Transmission Reliability Margin (TRM), less the sum of existing
transmission commitments and the Capacity Benefit Margin (CBM).

ATC = TTC – TRM – “Existing (TC and CBM)”.

8. Define total Transfer Capability (TTC)

Total Transfer Capability (TTC) is defined as the amount of electric power

that can be transferred over the interconnected transmission network in a
reliable manner under specified conditions.

9. Define Transmission Reliability Margin (TRM)

It is defined as that amount of transmission transfer capability necessary to

ensure that the interconnected transmission network is secure under a
reasonable range of uncertainties in system conditions.

10. Define Capacity Benefit Margin (CBM)

It is defined as that amount of transmission transfer capability reserved by

load serving entities to ensure access to generation from interconnected
systems to meet generation reliability requirements.

11. List the process involved in reform motivation?

  Privatization

 Introduce competition in generation with a centrally operated

transmission system

12. What are motivations of reform in power system?

Efficicient operation is essential to profit making and inefficiency is

eradicated through competition.

13. What is the main objective of retail competition?

The benefit of the average wholesale generator prices should pass to small
consumers rather than be captured by monopoly distribution companies or
retailers.
14. List the minimum criteria required for achieving greater market
efficiency?
 Assuring open access

 Maintaining adequate reliability

 Planning necessary transmission system expansion.

Part B (11 marks)

1.Explain the methods to calculate ATC in detail

2.write the short notes on any two:

a.Total transfer capability

b.CBM-Capacity benefit Margin

c.TRM-total reliability Margin

3.Explain in detail about Static and Dynamic ATC

4.Discuss about the role of transmission planning and financial

transmission rights
 5.With the necessary equations,Explain the role of transmission
planning in vertically intergrated utility?

6.discuss the structure of multilateral trades in the new environment

of power system?

7.Discuss the the three models of electricity markets involving in the

transmission planning?

8.By using the structure arrangement,Explain the trading of power

pool with the bilateral contracts?

UNIT-V: INDIAN POWER MARKET

1. What are the three components of ABT?
 Capacity charges
 Energy charges
 Unscheduled Interchange (UI) (or) Payment if any deviation
occurs
2. What is ABT?

ABT is a rational tariff structure for power supply from plants on

contracted basis. It consists of three components. Major payment
comes from capacity charge, as, station’s availability rather than
how much MW/MVA it generates. Second component comprises
of variable cost, which is, fuel cost for the energy generated as per
given schedule for the day. Third component is for deviation from
schedule, tariff as per system conditions.
(A) CAPACITY CHARGE
(B) ENERGY CHARGE
(C) ADJUSTMENT FOR DEVIATIONS (U I CHARGE)
 TOTAL PAYMENT FOR THE DAY = (A) + (B) ± (C)

3. Give the salient features of Indian electricity act 2003?

 Open access mandatory in phased manner
 Multiple licensees in distribution.
 There will be parallel network by different distribution licensees
servicing the same area
 Trading permitted as distinct activity; Transco’s cannot engage in
trading
 Compulsory metering within two years
 Serc made mandatory
 Tariff to be rationalized and cross subsidies to be eliminated over a
period of time;
 Multi-year tariff framework introduced
 Commission has power for granting licenses as well as for tariff
fixation
 Creation of appellate tribunal over commissions for speedy dispute
resolution
 Systematic Unbundling of the SEBs into horizontal separate
entities
 Creating independent profit centers.
4. What is a tariff?

It is the average of all costs the different services including generation,

transmission & distribution.
5. Bring out the important factor which determines the electric price.
Prices are determined in relation to real time situation and the second
one is that prices are determined through market based competition.
6. State Electricity Regulatory Commission (SERC)?

• Tariff to progressively reflect cost of supply at an improving level

of efficiency.
• Issue licenses for transmission and distribution
• Regulate the operations of the licensees
• Fix and regulate tariff
• Promote competitiveness
• Create environment for private sector participation
• Ensure fair deal to customers
• Aid and advise government on all aspects of electricity industry
• Issue/revoke licenses.
• Approve/modify/reject tariff change proposal.
• Set technical standards and standards for consumer protection.
• Arbitrate between operators.
• Issue enforceable orders.

4. Central Electricity Regulatory Commission (CERC)

 To regulate the Inter-State transmission of energy including

tariff of the transmission utilities.
 To promote competition, efficiency and economy in the
activities of the electricity industry.
  To aid and advise the Central Government in the formulation
of Tariff Policy which shall be
1.1.1. Fair to the consumers
1.1.2. Facilitate mobilization of adequate resources
for the power sector
 Generation and Transmission Companies shall adopt such
principles as to earn adequate return.

Part B(11 marks)

1.Explain the salient features of electricity act 2003

2.Explain the opportunities for IPPs andCPPs under the electricity act 2003

3.Explain the three models of electricity markets

4.Describe the working mechanism of tariff and day scheduling processes

5.Breif the current scenario of power market

6.Explain the electricity Restructuring

7.Brief the current Scenario of Indian power market

8.Explain the various regulatory authorities and policy developments are

made in power sector of Indian constitution