Information Tariffs

Electricity tariffs for large-users in the Emirate of Abu Dhabi

The Abu Dhabi electricity sector
ADWEC purchase and sale of electricity

The structure of the water and electricity sector promotes competition in non-monopoly activities, such as generation, and promotes independent economic regulation of the network monopoly companies. The supply chain has separate processes that allow each company to focus on defined responsibilities.

AADC T R A N S C O ADDC

Generation

Customers

The Sector operates a single-buyer model and all generators sell their output to ADWEC, who sells on to the distribution companies. TRANSCO transmits the electricity from production plants to the distribution networks. At present, there are two distribution companies (AADC and ADDC) that sell (supply) electricity to the end customer. The economic and technical regulator for the sector is the Regulation and Supervision Bureau (the Bureau). All the companies in the sector are licensed by us.

flow of electricity flow of bill payments and payments to generators

Types of customer connections

Standard connections
Distribution company

Extra high voltage (400123 kV)

High voltage (33-11 kV) Metering Distribution primary

Low voltage (below 11kv) Metering Distribution secondary

Billing hiddenword Meter reading Supply business

Generation

Transmission

The distribution network operates at different voltage levels. The majority of customers, including all domestic customers, are connected to the low-voltage distribution network.

Customer connection

flow of electricity bill payments

Non-standard connections
Distribution primary Distribution secondary Supply business

Generation

Transmission

Customer connection

Customer connection

flow of electricity bill payments

For some customers, their demand levels and individual supply requirements necessitate non standard connections. For example are to the transmission system or high-voltage distribution network. Currently, the law in the Emirate of Abu Dhabi prohibits customers taking a direct connection with generation stations, known as a by-pass sale.

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Tariff structures
All sector costs pass through to the distribution companies. ADWEC charges them for the output of the generation companies, using the Bulk Supply Tariff (BST). The BST consists of a demand charge and a system marginal price (SMP). TRANSCO charges for transmitting electricity via Transmission Use of System (TUoS) charges. The distribution companies incur Distribution Use of System (DUoS) costs and sales (supply) costs. The distribution companies recover all the sectors costs either from consumer tariffs or government subsidy. The diagram shows how the sectors costs would feed through to the unit-cost without subsidy. All charges require approval from the Bureau. As the independent regulator, the Bureau incentivises efficiency to control costs and improve services.

Sales DUoS

TUoS ADWEC operations

SMP

Generation

Fuel

Demand charge

Generation

BST

Transmission

Distribution

Sales

Unit cost

Tariff components
BST = Bulk supply tariff ADWEC charge for generation costs to distribution companies TRANSCO charge for transmission network activities Distribution company charge distribution network activities Distribution company charge for meter reading and billing Direct payment to distribution companies. Allows Government to decide tariffs

TUoS

= Transmission use of system

DUoS = Distribution use of system

The table summarises the components that decide the unit price of the standard electricity tariff. The unit-cost consists of the first four elements. The final part, government subsidy, makes up the difference between the actual unit-cost and the tariff paid by the customer. The BST has two components:
demand charge a peak-driven charge SMP variable charge that changes with time.

Sale

= Cost from serving customer

GS

= Government subsidy

BST demand charge incidence of peak demand

2010

2005

2000

1995

The BST demand charge applies to each unit of connected load (level of demand) at the time of three separate system peaks. This reflects that generation is installed to meet peak demand. Expansion of the Abu Dhabi economy means that the level of these peaks continues to grow.

1990

1985

1980 01-Jul

01-Aug

01-Sep

Date of peak demand

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BST system marginal price

8 7 6 5 fils/kWh 4 3 2 1 0 AM PM AM PM AM PM AM PM AM PM AM PM AM PM AM PM AM PM AM PM AM PM AM PM Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

The SMPs reflect that electricity is more expensive at when demand is higher, such as the summer and between noon and midnight. The graph shows the profile of SMP charges in 2009. Customers that pay the SMP have a strong incentive to move demand away from the times when the SMP is higher to times when it is cheaper.

Standard tariffs
BST + TUoS + DUoS + Sale - GS = Standard tariff

The formula summarises the calculation of the standard tariff. The tariff is a flat rate it does not vary with time, season or consumption. It incorporates the subsidy paid by the Government of Abu Dhabi.

Customer group UAE-national domestic (remote areas) UAE-national domestic (other areas) Ex-pat domestic Commercial Industrial Farms

Tariff (fils/kWh) 3 5 15 15 15 3

The government varies the subsidy across customer groups. This determines the standard tariffs (see table).

Non-standard tariffs
Customer with high-voltage distribution connection
BST + TUoS + DUoS + Sale = Bespoke tariff

The distribution companies licences enable them to offer special supply terms to large customers those with consumption over 1 MW. For accurate billing, the distribution company must make sure such a customer has time of-day metering. There is no government subsidy for non-standard tariffs a customer pays the full economic cost. Despite this, non-standard tariffs can be more economic for some customers.

Customer connected directly to transmission system

BST + TUoS + Sale = Bespoke tariff

Customers connected to the high-voltage distribution network can avoid a proportion of DUoS charges. Those connecting with the transmission system avoid all DUoS charges. Both types of customer will further reduce BST-related costs if they can manage their consumption away from the times of peak demand. Non-standard tariffs require approval from the Bureau.

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Setting non-standard tariffs

Identifying the costs to recover
To reflect costs accurately over the year, a nonstandard tariff seeks to recover the costs incurred by a customers consumption. The customer then bears the consequences of actions that raise or reduce their contribution to sector costs. The expected annual cost is calculated from a customers expected total consumption and loadprofile. The BST demand charge, TUoS and, if applicable, DUoS all reflect a customers share of demand at the peak. They are priced in AED per kW. The SMP charges for every unit sold to the customer. The charge varies throughout the year and from AM to PM. For customers with non-standard tariffs there are considerable benefits from reducing demand at the system peaks. Such action reduces the demand charge and consumes fewer units at the highest SMPs. Each customer should have its costs reviewed periodically. This will make sure the tariff continues to reflect costs over time. Longer-term agreements may be considered, with approval from the Bureau

Structure
Currently, eligible customers may choose their preferred structure for a non-standard tariff. All tariffs are estimated on the basis of underlying costs and ultimately approved by the Bureau. Three options are available: Time-of-day tariff A time-of-day tariff has a peak rate, with a lower offpeak tariff. The rates shown are for a flat-load customer connected directly to the transmission system. The higher rate reflects the additional costs of supplying electricity at peak times. This gives an efficiency incentive to customers. Moving consumption off peak will lower the bill for the same volume of electricity. The sector benefits by avoiding the need to build and run plants and networks purely to meet the summer peak.
time-of-day tariff single-rate averaged tariff BST and network charges tariff

Applicable tariffs in 2008 (fils/kWh)

AM PM Jun-Sep 10 15 Oct-May 10 10

Single-rate averaged tariff Year 1: In the first year, the single-rate average tariff is based on a forecast of a customers demand and load profile. From this, calculations are made of the expected BST costs, transmission costs and, if applicable, primary DUoS costs. A proportion is added to cover supply costs (sales). The per-kWh tariff is derived by dividing the expected annual cost by the forecast annual demand Year 2 onwards: In subsequent years, the tariff can be recalculated. If such a change is necessary, the recalculation will use the previous years actual load-profile and the total demand forecast for the coming year.

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BST and network charges tariff

BST demand charge TUoS demand charge DUoS demand charge

Fixed charge

Supply charge

Variable charge

BST system marginal price

A customers bill has fixed and variable charges. The fixed charge recovers, month-by-month, the annual costs of BST demand and network demand charges. The variable charge applies to each unit of electricity consumed by the customer and is charged at the BSTs corresponding system marginal price. With this tariff, there is no need to forecast annual consumption and forecast load profiles.

Process for non-standard connections and tariffs

1. Customers seeking a non-standard connection or a non-standard tariff should approach their local distribution company for a Supply Agreement. By licence, only AADC and ADDC sell electricity in the Emirate. Non-standard connections also require a Connection and Interface Agreement. This is between the customer and the company with whom they connect. Normally, this is the distribution company, but it is TRANSCO for those connecting directly to the transmission system. The agreement details ownership and operational responsibilities, metering arrangements and compliance with industry codes. All non-standard tariffs are subject to approval by the Bureau. The Bureau also has powers to determine any disputes.

Contact details
TRANSCO AADC ADDC Bureau Managing Director Managing Director Managing Director Director General PO Box 173 PO Box 1065 PO Box 219 PO Box 32800 Abu Dhabi Al Ain Abu Dhabi Abu Dhabi customercare@aadc.ae contactcentre@addc.ae bureau@rsb.gov.ae 02 641 4000 03 762 9949 02 642 3000 02 443 9333

2.

3.

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