Availability Based Tariff (ABT)

Background Basics of ABT Operational part of ABT ABT norms for Sarni Impact of ABT

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POWERGRID - NRLDC

Pre ABT Settlement system

The payment to Central Generating Station by a constituent - proportion to total energy Recommendation of K.P.Rao energy drawal Based on Monthly Regional Energy Account- REA drawal Committee Report.

Both Fixed and Variable charge was payable as per

Conventional Meter Readings

Fixed cost recoverable with deemed generation ( generation not made available) Incentive payable after accounting for deemed

generation

Although a two part tariff- Single part for constituent

Inherent Disadvantage
No incentives for generators /utilities to respond to dispatch orders for issues like frequency control
No Incentive for helping the grid No disincentive for hurting the grid

No signal to generators to match availability with system needs Did not promote Grid Discipline No signal for trading of power.

Overall economy was lost.

EFFECT
Backing down of cheaper CS generation Caused high per unit cost Dumping of energy by other utility at high frequency/off peak hours-

additional

fixed

cost

liability

for

generation & transmission. More payment Liability - Even when helped the grid

Ultimate Effect
Grid Indiscipline Low Frequency during peak High Frequency during off peak

Control Instructions
Subjective decisions Not based on overall economy

Perpetual Operational & Commercial Dispute amongst Utilities/Central Generators Poor Supply quality to consumers/industries
Damage to equipments Shifting of Industries/Investments

Multi-year tariff regime

Electricity distribution system is a capital-intensive infrastructure requiring large investments made in anticipation of future demand Investors need to raise funds to construct/renovate network and contract generation, which becomes difficult if future cash flow is unpredictable and risky Under such circumstances, a multi-year tariff regime, where the guidelines, rules and method for determining tariff are well established would be beneficial in minimizing risk and building confidence for the investors It also helps to promote efficiency and for consumers, improvement in efficiency translates into more cost-effective tariff.

ABC of ABT
ABT is a 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

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Equation business PROFIT = EARNING-EXPENDITURE

Capacity Ch. + Energy Ch. UI

Availability based Tariffs (ABT)

A fixed charge (FC) in Rs/MW payable every month by
each beneficiary to the generator for making capacity available for use
The FC is not the same for each beneficiary. It varies with the share of a beneficiary in a generators capacity. The FC, payable by each beneficiary, will also vary with the level of availability achieved by a generator.

Availability based Tariffs (ABT)

An energy charge per kwh of energy supplied as per a pre-committed schedule of supply drawn upon a daily basis
Generators give their day ahead availability schedule on 15 min basis, and all the beneficiaries provide their demand day ahead on 15 min basis. RLDC matches the demand and supply and provided a final drawl schedule to the beneficiaries But in actual practice, there is a mismatch between generators declared availability and actual availability and beneficiaries final drawl schedule and actual drawl.

Availability based Tariffs (ABT)

ABT allows for an imbalance pool with a frequency based administered pricing mechanism
It levies a charge for Unscheduled Interchange (UI charge) for the supply and consumption of energy in variation from the pre-committed daily schedule This charge varies inversely with the system frequency prevailing at the time of supply/consumption Any over-generation by generators and under-drawal by states is considered as contributions to the Unscheduled Interchanges (UI) energy pool while under-generation by generators and over-drawal by states is considered as a drawal from the UI energy pool The rate of such sale or purchase of UI is a pre-determined function of the grid frequency during a defined 15-minute time block

ABC of ABT
Frequency actuated signal
Signal transmitted at the speed of dynamics to be controlled

Real time pricing stretched to its physical limits

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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INTER STATE GRID

CS - 1 CS - 2 IPP

Regional Grid

RLDC Coordinates

State - A State - B

State - C
CS: Central Sector

Control Areas

INTRA STATE GRID

STATE IPP
STATE GENR. CENTRAL SHARE

SEBs Grid
Trading Trading

SLDC Coordinates Directs

Discom - A
Consumer

Discom - C Discom - B

Decentralized Scheduling Regional Level

Time
10:00 11:00 15:00 17:00 22:00 23:00 Availability Declaration Entitlements
Requisition & Bilateral Agreements

I S G S

Injection Schedule Revision in DC Final Injection Schedule

R L D C

Drawal Schedule Revision in Requisition Final Drawal Schedule

S L D C

0 to 24 hours

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Revisions during Current day

POWERGRID - NRLDC

Revisions during Current day

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Decentralized Scheduling State Level

S T A T E GEN ISGS SHARES DC
ENTITLEMENTS

REQUISITION INJECT SCH DRAWL SCH

D I S C O M

R L D C
S T A T E IPP
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REQUISITION

S L D C

Entitlements of Discos In ISGS & State Gen Worked out by SLDC

DRAWL SCH D I S C O M

ENTITLEMENTS

DC

REQUISITION DRAWL SCH

INJECT SCH

17

Balancing market guiding vector

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ABT
Introduction of ABT has resulted in encouraging merit order dispatch and discouraging costly power as long as cheaper power is available In the scheduling of power, generating units with a high variable cost are being asked to back down during off peak hours

ABT is also encouraging power trading as overdrawing from the grid has now become expensive
In pre-ABT period, whether or not the SEBs drew their entire scheduled power, they paid only for the actual withdrawal However, with a fixed charge now to be paid weather or not SEBs draw power, they are selling surplus power to the deficit states.

UI RATE ~ INCREMENTAL COST (PAISA/kWh)

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Fixed cost recovery

FC recovery at 79.37 % DC Incentive linked to DC (earlier PLF) FC recovery including incentive= (dc/79.37)*FC

DC IN CASE OF FUEL SHORTAGE

In case of fuel shortage Gen station can declare DC in for peak hours ,in that case Max SG during any block in Peak hours will be considered as deemed DC for the whole day

National Tariff Policy (NTP)

Section 3 (1) of the Electricity Act 2003 empowers the Central Government to formulate the tariff policy. Section 3 (3) of the Act enables the Central Government to review or revise the tariff policy from time to time The Act also requires that the CERC and SERCs shall be guided by the tariff policy in discharging their functions including framing the regulations under section 61 of the Act

Section 61 of the Act provides that Regulatory Commissions shall be guided by the principles and methodologies specified by the Central Commission for determination of tariff applicable to generating companies and transmission licensees The Forum of Regulators has been constituted by the Central Government under the provisions of the Act which would facilitate consistency in approach specially in the area of distribution.

ADVANTAGES ABT & UI

Inculcates self discipline among participants
Incentives to those who help the grid Disincentives to those who harm the grid

Is scientific commercial mechanism Brings in economy and efficiency Achieves natural merit order in generation Conducive for competition in power sector Provides platform for power market to flourish

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Improvement in Frequency Profile

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Thank you

UI mechanism
Maximizes social welfare Transparent, neutral & rigging proof Diffuses market power Ultimate open access Facilitates reforms in the sector Encourages trade and bilateral exchanges Facilitates arbitrage with other regional power pools Offers alternative tariff mechanism for independent power producers and merchant plants

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The End Result .

Frequency is
collectively controlled democratically stabilized

Wholesale market is workably competitive

allocative efficiency productive efficiency

Economic signal available for

optimum utilization of resource investments in generation capacity

Settlement is
streamlined dispute-free
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Accounting
Regional Energy Account
An energy only account Capacity Charges Energy Charges Periodicity of Issue : Monthly Issuing Agency : concerned RPC

UI Pool Account Reactive Energy Account

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UI Pool Account
Operated by the RLDC Account issued weekly (week: Monday through Sunday) Players in the regional pool
Drawee utilities Generators

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