Energy

gy Market Development Program

g

AVAILABILITY BASED TARIFF

An Overview

Dr. S. K. Agrawal, General Manager,

POWERGRID
Colombo : August 22, 2008
1

Chronological Sequence of Implementation of ABT

1990
1993--94
1993

1995-98
19951999
2000
2001--02
2001
2002--03
2002

: K. P. Rao Committee Proposed Two Part Tariff

structure consisting of Fixed and Variable charges
: A structured study by M/s ECC, USA, funded by ADB,
sponsored by WB as a covenant of loans to POWERGRID
Availability Based Tariff (ABT)
: NTF / RTFs, formed for ABT implementation.
: Matter transferred to CERC : Hearings etc.
: CERC Order, but stayed due to petitions
: Problems of regional grid operation continued
: Many
M
i t t bl commercial
intractable
i l disputes
di t also
l arose
:ABT implemented successfully.

AUGUST 2008

SKA

Outline of the presentation

Need for ABT
ABT conceptt
How UI pricing works?
Amendments to UI rates
Payment
y
of capacity
p
y & Energy
gy Charges
g
Many dimensions of UI mechanism
Settlement system and logistics
Impact of ABT
Limitations
Li it ti
and
d way ahead
h d
3

Conditions when ABT was

conceived
i d
Grid indiscipline
No respect for schedule by generating stations
as well as beneficiary SEBs
Poor Frequency regime
Low frequency during peak periods, high
frequency during off-peak
off peak periods
Reason
Perverted incentives in the tariff regime at that
time Recover of capacity charges based on
PLF and no differential payment for deviations
from schedule
4

ABC of ABT

Frequency actuated signal

Real time pricing stretched to its physical limits

Signal transmitted at the speed of dynamics to be

controlled
Quasi-steady state assumption not valid
Merit order
Economic load management

Incentives for helping the grid

Opportunities for a diligent player
Simple, dispute-free weekly settlement system
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Deviations from Schedule - UI

AUGUST 2008

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DECENTRALIZED SCHEDULING

Time
Availability
Declaration (DC)

09:00

Entitlements

10:00

Requisition &
Bilateral Agreements

15:00
17:00
22:00

I
S
G
S

23:00

0 to 24
AUGUST 2008
hours

R
L
D
C

I j
Injection
i
Schedule
S h d l
Revision in DC
Final
Injection Schedule

Revisions during
Current day

S
L
D
C

Drawal Schedule
Revision in Requisition
Final
Drawal Schedule

SKA

Revisions during
Current day

Balancing Market guiding Vector

Unscheduled Interchange (UI) Rate
Applicable only for deviations from contract in real-time
1200

1000

800

600

400

signal to serve m ore

consum er if possible
ibl else
l
save fuel by reducing
generation

Surplus condition
in the Grid

Signal to use all available

generating resources
else reduce energy
consum ption

280
200

AUGUST 2008

Frequency (HZ)--->

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51

50
50
.1
50
.2
50
.3
50
.4
50
.5
50
.6
50
.7
50
.8
50
.9

49
49
.1
49
.2
49
.3
49
.4
49
.5
49
.6
49
.7
49
.8
49
.9

0
48
.5
48
.6
48
.7
48
.8
48
.9

Rate(Paise/KWH)--->

Deficit Condition
in the Grid

8
UI Rate wef 07th Jan 2008

Concept of ABT
Capacity
C
it (fixed)
(fi d) Charge
Ch
recovery off generator
t
linked to Availability
Capacity charges payable by beneficiary based
on capacity allocated
gy ((variable)) charges
g based on scheduled
Energy
energy
A third component known as Unscheduled
I t h
Interchange
(UI) charge
h
i levied
is
l i d for
f deviation
d i ti
from the schedules
Rate of UI Charge is based on frequency
Settlement period of 15 minutes
Applicability - Central Generating Stations and
drawal from the grid by beneficiaries
9

Unscheduled Interchange (UI)

For Generating Station

UI = Actual generation - Scheduled
generation

For beneficiary (getting supply from grid)

UI = Total actual drawal - Total scheduled
d
drawal
l
10

Normal Operating Band specified in IEGC

Kink at 49.8
49 8 Hz

11

How UI pricing works -High

Frequency
Example:
p Generating
g Stations
Energy
gy Charge
g (INR
(
/Kwh)) =
Frequency(Hz) =
UI Rate (INR /Kwh)=

Generating Station
A
B
1.04
0.88
50.2
12
1.2

Gain (Paise/ KWh) for generation below schedule =

0.16
0.32
Conclusion:
G
Generating
ti station
t ti
A should
h ld srartt reducing
d i
generation
ti
if frequency
f
rises
i
beyond
b
d
the level at which UI rate is 1.04 INR/KWh i.e. 50.24 Hz
Generating station B should start reducing generation if frequency rises beyond
the level at which UI rate is 88 INR/KWh i.e. 50.28 Hz
12

How UI pricing works -Low

Frequency
Example: Generating Station
UI Rate (INR /Kwh)=

2.8

Energy charge of the generating station despatched

below availability or having margins

2.4

Gain by generating over the schedule (INR /KWh)

0.4

Conclusion:
This generating station should, if feasible, start generating above
schedule if frequency dips below the level at which UI Rate is equal to
its energy charge i.e. 49.9 Hz.
13

How UI pricing works -High

Frequency
Example: Beneficiary
Frequency (Hz) =

50.1

UI Rate (INR /Kwh)=

1.6

Variable cost of costliest operating generating station

owned by the beneficairy (INR /Kwh)=

2.4

Gain (INR/ KWh) for drawal above schedule (by

reducing generation at own costiliest station)

0.8

Conclusion:
Beneficiary should start reducing generation at the costliest operating
station (and overdraw from the grid) if variable cost of this station exceed
prevailing UI Rate
Rate.
14

How UI pricing works -Low

Frequency
q
y
Example: Beneficiary
Frequency (Hz) =
UI Rate (INR /Kwh)=

49.9
2.4

Variable cost of the cheapest standby generating resource

owned by the beneficairy (INR /Kwh)=

Loss (Paise/ KWh) for each unit of drawal above schedule

(and not harnessing own standby generation)

0.4

Conclusion:
The distribution licensee should start generation at the cheapest standby unit if
frequency dips below the value (50 Hz in this case) at which UI rate becomes
equal to variable cost of this unit.
The distribution licensee should start loadshedding if UI rate is beyond its means
and there is no standby generating resource
resource.
15

Changing UI Rates
10
9
8
7

INR/kWh

6
5
4
3
2
1
0
49

49.1

49.2

49.3

49.4

49.5

49.6

49.7

49.8

49.9

50

50.1

50.2

50.3

50.4

50.5

Frequency (Hz)
upto 31.03.2004

w.e.f. 01.04.2004

w.e.f. 01.10.2004

w.e.f. 01.04.2007

w.e.f. 07.01.2008 16

Determination of Availability : Thermal

Stations
Availability means average of daily
Declared Capacities expressed as % of
Installed capacity
p
y minus Normative
Auxiliary Consumption
p
y taking
g into
Declaration of capacity
account fuel availability
Normative Availability 80% (exception for
some specified generating stations)
Availability to be certified by Member
Secretary of the RPC concerned.
17

Determination of Availability : Hydro

Stations

C
Capacity
it Index
I d (CI) as measure off availability
il bilit
Daily CI = (Declared Capacity/Max available
capacity)*100
p
y)
Declared capacity over peaking hours of next
day (not less than 3 hours each day) taking into
account availability of water, optimum use of
water and availability of machines.
Max. available capacity is the max. capacity in
MW the generating station can generate with all
units running, under the prevailing conditions
of water levels and inflows, over the peaking
hours of next day .
Normative CI: 90% for Purely Run-of-river
(ROR) stations and 85% for Storage and ROR
stations with pondage
CI to be certified by Member Secretary of the 18
RPC concerned.

Energy Charges
Based
on
actually
implemented
scheduled energy
Rate for thermal stations based on
norms of operation
Rate
R t for
f hydro
h d stations
t ti
equall to
t lowest
l
t
energy charge of Central Sector
th
thermal
l station
t ti in
i the
th Region
R i

19

Mitigation of Gaming
Thermal Stations: up to 105% of DC in timeblock and 101% of average
g DC over the day
y
allowed. Generation beyond these limits to be
investigated by RLDC and UI to be made zero if
gaming is found
Hydro Stations: Schedule prepared for Day 4
(based on DC) is adjusted by deviation from the
schedule
h d l on Day
D 1.
1
RLDC
may
ask
generating
station
to
demonstrate DC
Penalty for first mis-declaration equals 2 days
fixed charges
Penalty to be doubled for 2nd mis-declaration
20
and so on and so forth.

Multi-dimensional ABT
A commercial mechanism for settlement of
deviations from the schedule
A commercial mechanism for improving
grid discipline and frequency regime
A commercial mechanism to achieve nearmerit
i order
d operation
i
A default market mechanism for trading

21

Settlement of Deviations
Any market liberalized
liberalized or regulated, needs a
mechanism for balancing to take care of
imbalances arising out of deviations from
contracted
t t d schedules.
h d l
In some markets, there is separate market for
b l
balancing.
i
In India, UI mechanism attempts real-time
balancing.

22

Grid discipline and frequency

profile
Payment of Capacity Charges based on
capacity available rather than energy
generated - Avoidance of unwanted
generation
ti
UI Charges - Load shedding/ increased
generation
ti att low
l
f
frequency
and
d reduction
d ti in
i
generation at high frequency

23

ABT encourages
grid
id
di i li
discipline
leading to better
frequency
y profile
AUGUST 2008

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24

Merit order operation

Strict merit order operation - if generation
scheduling is done for all the generating
stations in the grid by single entity (Centralized
scheduling)
In Indian decentralized scheduling system UI
Rate encourages:
* Backing down of generation in decreasing
order of variable cost as frequency goes up
Picking up of generation in increasing order
of variable cost as frequency goes down

25

Default market for trading

Underdrawals with respect to schedule may be
viewed as supply to the grid (at UI rate) and
vice-versa
Similarly,
Similarly under generation with respect to
schedule may be viewed as drawal from the
grid (at UI rate)
UI rate serves as default rate
f trading
for
t di

.
26

Time Line For UI Settlement

Meter Data download & receipt at RLDC

& preliminary checks

Moonday
22400

Frriday
22400

Tuesday
22400

24000

Saturd
day

Thursday
12000

Su
unday
22400

Tuesday
22400

Settlement week

M
Monday
0000

0.04 % per day

interest on defaulters

Three day grace period

For Bank processing

Disbursement to utilities from the pool account

Data validation, processing and computation

at RLDC. Forwarded to
Regional Power Committee Secretariat

Account
Settled within 21 days

Data cross checking by Regional Power Committee Secretariat

& Issue of Pool Account

Payment by utilities to the pool account managed

by System Operator (RLDC)

Unscheduled Interchange Account

Reactive Energy Account

AUGUST 2008

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27

Settlement System
Settlement period- 15 minutes
Declaration,, scheduling
g and UI accounting
g on
15 minute basis
Special Energy Meters - for time differentiated
measurement of energy
Energy Accounting (capacity
charges)
h
) - on monthly
thl basis
b i

and

energy

UI accounting on weekly basis

UI payments are received in a pool and
payments are made from the pool
28

Logistics
SEMs installed by CTU (POWERGRID)
Meter
M t
readings
di
d
downloaded
l d d and
d sentt to
t
RLDCs every week by staff of generating
stations, POWERGRID and beneficiaries
RLDCs validate and submit data to RPC
Secretariat by Thursday noon for the week
ending midnight of previous Sunday
RPC Secretariat to carry out UI charge
accounting (weekly basis) and energy
accounting (monthly basis)

29

Pooll
P
Accounts
p
byy
Operated
RLDCs.

POWERGRID
co-ordinated and
provided all
infrastructure for ABT
i l
implementation.
i

01.12.2002

01.07.2002

01.01.2003
AUGUST 2008

SKA

01.11.2003
01.04.2003
ABT
implemented
in All Five
Regions.
30

Impact of ABT
Comparison
p
of frequency
q
y profile
p
- Full y
year
after and before ABT
Region

Northern
Western
Southern
Eastern

Percentage
P
t
off time
ti
when
h frequency
f
was
< 49.0 Hz
49.0 - 50.5 Hz
> 50.5
2001-02 2003-04 2001-02 2003-04 2001-02 2003-04
11 2
11.2
48
4.8
76 2
76.2
89 4
89.4
12 6
12.6
58
5.8
31.4
2.8
61.6
89.4
7.0
2.4
78.0
2.3
17.9
97.3
4.1
0.4
2002 03 2003-04
2002-03
2003 04 2002-03
2002 03 2003-04
2003 04 2002-03
2002 03 2003-04
2003 04
13.0
2.9
55.7
95.9
31.3
1.2

31

Impact of ABT
Merit order
Schedules as p
percentage
g of Declared Capability
p
y (DC)
( )

105.0%
100.0%

99.0%
97.5%

pre-ABT (Dec 01-Nov 02)

95 0%
95.0%

95.0%

post-ABT (Dec 02-Nov 03)

89.9%

90.0%

86.7%

90.4%

86 3%
86.3%

85.0%
81.3%

80.0%
75.0%

Pithead

Unchahar-I

+II

Dadri (T)

Combined
cycle
y
ISGS
32

Limitations / Constraints

Shortage conditions
Regular and timely payments to UI pool
Expectation
p
of rational behabiour from
utilities and operating personnel
Demand forecasting
Control over generation level and
demand
33

ABC of ABT

Scientific settlement system

for contracted sale & purchase of power

Has three components

Fixed Charges or capacity charge
Linked to day-ahead declared availability /
subscription

Variable Charges or fuel charges

Linked to before the fact energy schedules

Charges for deviation from commitments

AUGUST 2008

SKA

34

AUGUST 2008

U tta r P ra d e s h
H a ry a n a
P u n jaa b
T a m iln a d u
B ih a r
M a d h y a P ra d e s h
D a d ra & N H
M a h a ra s h tra
C h a n d ig a rh
J h a rk h a n d
D a m a n & D iu
S ik k im
N a g a la n d
T rip u ra
P o n d ic h e rry
R a ja s t h a n
G o a -S R
J & K
D e lh i
A r. P ra d e s h
K e ra la
C h a t t is g a rh
U tt a ra n c h a l
M iz o ra m
M a n ip u r
M e g h a la y a
G oa - WR
K a rn a t a k a
HP
A ssam
W est B engal
A n d h ra P ra d e s h
G u ja ra t
DVC
O ris s a

U I B illin g ( R s . in C ro re s )
40

A Typical week UI Bill-Statewise Pattern

30

20

10

- 10

-20

-30

-40

SKA

35

AUGUST 2008

TALCHER
A U R A IY A G P P
S IN G R A U L I
KO RBA STPS
NATHPA
FARAKKA
NEYVELI TPSTEHRI HEP
V IN D H Y A C H A L
ANTA G PP
RAMAGUN.
NEYVELI TPSV IN D H Y A C H A L
SALAL HEP
V IN D H Y A C H A L
KAHALG AO N
R IH A N D S T P S
RAMAGUN.
DADRI TPS
KAW AS G PP
CHAM ERA HEP
D H A U L IG A N G
U N C H A H A R - II
RANGANADI
CHAM ERA
URI HEP
R IH A N D - II
AGARTALA
U N C H A H A R -I
N E Y V E L I T P S -I
K O P IL I
LO KTAK
B A IR A S IU L
R A N G IT
KHANDONG
TANAKPUR
DO YANG HEP
K O P IL I- II
DADRI G PP
ASSAM G AS
TALCHER
G ANDHAR G PP

U I B illin g ( R s . in C ro re s )

A Typical Week UI Billing For ISGS ( UI Payables(-) / Receivables (+))

3 .5

3 .0

2 .5

2 .0

1.5

1.0

0 .5

0 .0

- 0 .5

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36

The End Result .

Frequency is

Wholesale market is workably competitive

allocative efficiency
productive efficiency

Economic signal available for

collectivelyy controlled
democratically stabilized

optimum utilization of resource

investments in g
generation capacity
p
y

Settlement is

streamlined
dispute-free

AUGUST 2008

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37

What lies ahead?

Intra-State ABT
Modulating
odu at g U
UI p
prices
ces
changing situations

according
acco
d g

to

38

Futuristic Scenario
Adopt operating practices and
commercial mechanism for stricter
frequency control (when shortages are
eliminated?)

AUGUST 2008

SKA

39

THANK YOU

AUGUST 2008

SKA

40