Short Term Power Procurement Practices Across

Indian States

CAPSTONE PROJECT
DRAFT

SAI BARATH SUNDAR

Contents
Introduction ........................................................................................................................................... 2
Power Market in India ......................................................................................................................... 2
Need for Short term Power Market and Planning............................................................................. 3
1. Uncertainty in demand for power ............................................................................................... 3
2. Uncertainty in available capacity ................................................................................................ 4
3. Availability of cheaper power or surplus power ........................................................................ 5
Short term power market in India ...................................................................................................... 6
1. Power Exchanges .......................................................................................................................... 6
2. Competitive bidding...................................................................................................................... 6
3. Unscheduled Interchange (UI) or Deviation Settlement Mechanism (DSM) .......................... 7
Overview of short term transactions ............................................................................................... 7
Regulations for short term power procurement ................................................................................ 9
Study of latest retail tariff for short term power procurement ...................................................... 10
1. Quantum of energy purchase ................................................................................................. 11
2. Quantum of energy transaction through banking ............................................................... 12
3. Quantum of surplus energy sale ............................................................................................ 13
4. Average power purchase cost................................................................................................. 13
5. Average variable cost of power purchase ............................................................................. 14
6. Ceiling rate for short term purchase ..................................................................................... 15
7. Floor price for surplus energy sale ........................................................................................ 16
8. Merit Order Despatch ............................................................................................................ 17
Introduction

Starting from the Electricity Act of 2003, various reforms have been put into place to modernise
the power sector in India. These policies have predominantly looked at improving the last mile
electricity delivery i.e the state of distribution companies (DISCOMs). In 2015, the government
of India introduced Ujwal DISCOM Assurance Yojana (UDAY) scheme to address the
cumulative outstanding debt of all DISCOMs to the tune of nearly Rs. 4.3 lakh crore and
accumulated losses to the tune of nearly Rs. 3.8 lakh crore (as on March’15) [1] . One of the
objectives of the scheme is to reduce the cost of power purchase. This is because approximately
75% of the expenditure of DISCOMs is the cost incurred to purchase power. Adding to this is
the increasing requirement of DISCOMs to purchase renewable energy which is costlier in
comparison to conventional sources of power. Thus there is a need for the DISCOMs to be
prudent when it comes to optimising their portfolio of power purchase.

Power Market in India

The ministry of power notified in the year 2005 the ‘Guidelines for Determination of Tariff by
Bidding Process for Procurement of Power by Distribution Licensees’. In 2012 the ministry
notified the ‘Guidelines for Short Term Procurement of Electricity by DISCOMs’. These
guidelines were introduced to develop the power market and reduce cost of power procurement
through competition. The guidelines provide for the following types of contracts which the
DISCOMs can enter into:

Type of contract Duration of Contract

Long term Greater than 7 years and up to 25 years
Medium term Greater than 1 year and up to 7 years
Short term Less than 1 year

This would thus enable the DISCOMs to plan ahead of time for meeting the state’s power
requirements as they account for variations in base load and peak load demand over different
durations of time. Additionally these guidelines do not specify any mechanism for procurement
through banking of power as well as through power exchanges. The ‘Open Access Regulations
for Inter-State transmission’ notified by the Central Electricity Regulatory Commission
(CERC) in 2008 provide provisions for procurement through power exchanges. Power
Exchanges allow for procurement for durations ranging from one day ahead to 3 months in
advance.

Need for Short term Power Market and Planning

There are primarily three reasons for the need for a short term power market:
1. Uncertainty in demand for power
2. Uncertainty in available capacity
3. Availability of cheaper power

1. Uncertainty in demand for power

In real time the demand for power fluctuates as per consumers’ drawals. This means that the
demand varies at every point in time. Hence the requirement for real time scheduling of power.
However when we look at the average demand for power for a period of time, we can find
certain patterns based on the time period we are observing. This can be shown with the help of
the example given below:

Figure 1: Madhya Pradesh Drawal Schedules (Excluding RE)

12000
Final Drawal Schedule in MW

11000
10000
9000
8000
7000
6000

Time
14th Nov-17 13th Nov-17 8th Nov-17

Source – Madhya Pradesh State Load Despatch Centre; (RE – Renewable energy)
 Figure 2: Madhya Pradesh demand variation over the year 2015
8000
7500
Demand in MW

7000
6500
6000
5500
5000
4500
4000

Time
Jan-15 Apr-15 Jul-15

Source – Madhya Pradesh State Load Despatch Centre

Figure 1 shows the variation in electricity demand catered to by conventional energy sources
for the state of Madhya Pradesh over three days in the month of November of 2017. In all three
days, the drawal has been above the minimum of 8000 MW. Above the minimum, the demand
seems to be following the same pattern for the three day period albeit with some variations.
From the given data points we could say that there is certain demand of 8000 MW but above
which there is a pattern being followed but with uncertain variations.

If the time period is further drilled up to look at aggregate demand over different months, as
shown in Figure 2, we see that the load curves (or demand curves) are not the similar. Thus to
address the uncertainty over different time horizons, there is a need for power procurement
contracts that are based on these time horizons – including short term.

2. Uncertainty in available capacity

Power plants do not always function at the rated capacity. There are various reasons which can
prevent the power plant from making available the rated capacity. For example, hydroelectric
power plants rely on the availability of flow of water; which can vary over the course of the
year. Hence the available capacity in summer can be less compared to the time in monsoon.
Apart from fuel, maintenance can be a factor which reduces plant availability.
The example below illustrates this:

Thermal Power Plants in MP PAF% in Sep'17 PAF% in Oct'17

AMARKANTAK -III (210 MW) 100 100

SATPURA II+III 40 26

SATPURA IV 45 51

SGTPS I & II 50 62

SGTPS III (500MW) 67 85

SHRI SINGAJI TPP 40 28

Table 1: Plant Availability Factors for a few thermal power plants in Madhya Pradesh. Source
– MP SLDC

3. Availability of cheaper power or surplus power

Another important factor is the availability of cheaper power that could have been contracted.
It may be possible that the marginal price of power purchase at two states are different at any
given day. Thus it could be possible for the state currently procuring at higher marginal price
(maybe due to high demand) to procure power from the other state rather than from its own
generation. Additionally this would help optimize utilization of available capacity at lower
cost. This is illustrated with the example below:

Figure 3: Marginal Cost (Rs/Unit) across Indian states on 1st of March

2018
10
8
6
4
2
Madhya…

Uttarakh…
Daman…
Andhra…

Himachal…
Jammu…
Dadra…

Maharas…

Uttar…

West…
Chhattisg…

0
Bihar
Chandigarh

Puducherry
Goa
Gujarat

Meghalaya
Mizoram

Punjab
Jharkhand

Nagaland
Odisha

Sikkim
Rajasthan

Telangana
Manipur

Tripura
Assam

Haryana

Karnataka
Kerala
Delhi

Tamil Nadu

Source: Merit India

Capacity additions are made to address the peak power requirement. This hence creates surplus
available situation at non-peak seasons/durations. Due to geographical and demographical
differences, demand patterns vary widely across states, creating opportunities where one state
can sell its surplus to a state in need of immediate power. In order to optimally allocate
resources and costs it becomes necessary to have an effective mechanism for procuring power
in the short term. We shall further examine the current short term market in India as well as
regulatory practices for short term procurement across the states in India.

Short term power market in India

The short term transactions in India are carried out in one of the three sources listed below:

1. Power Exchanges
2. Competitive bidding (primarily through traders)
3. Unscheduled Interchange (UI) or Deviation Settlement Mechanism (DSM) market

1. Power Exchanges

The introduction of open access transactions i.e the ability to purchase power directly from
generation, has paved way for setting up of two power exchanges: Indian Energy Exchange
(IEX) and Power Exchange of India (PXI). These have been in operation since 2008 allowing
trade in multiple products. Currently IEX provides the following products – Intraday, Day
Ahead, Daily and Weekly (i.e from intraday up to 11 days in advance).

2. Competitive bidding

Various trading licensees also transact directly (bilateral) with the distribution licensees
through competitive bidding platform provided by the ministry of power. Competitive bidding
allows distribution licensees to plan for a broader period of time compared to power exchanges.
Contracts for a period ranging from one day to one year can be made through the bidding
process.
 3. Unscheduled Interchange (UI) or Deviation Settlement Mechanism (DSM)

Unscheduled Interchange (UI) or Deviation settlement mechanism (DSM) is a mechanism in

place to address real time deviations in supply and demand of power. Both utilities and
producers provide forecasts for consumption and supply on a day ahead basis (for every 15
minutes i.e 96 blocks per day). State load despatch centres (SLDC) schedule accordingly to
match demand and supply while ensuring to procure from the plants with lower variable cost
first (Merit Order Dispatch). Any deviations from the schedules would result in a change in the
system frequency from the normal operating frequency of 50Hz. To maintain the system
frequency at 50Hz, the demand and supply need to match. Hence any entity causing a negative
impact on the system is balanced by an entity providing a positive impact. The UI/DSM
mechanism ensures penalties and incentives in order to maintain optimal system operation. At
real time though deviations are unavoidable due to uncertainties. Thus the penalty/incentive
starts acting like buy/sell instruments to even out supply and demand in real time.

Overview of short term transactions

Volume of Short-term Volume of Short-term

Total Electricity
Year Transactions of Electricity Transactions of Electricity as %
Generation (BU)
(BU) of Total Electricity Generation
2009-10 65.90 768.43 9%
2010-11 81.56 811.14 10%
2011-12 94.51 876.89 11%
2012-13 98.94 912.06 11%
2013-14 104.64 967.15 11%
2014-15 98.99 1048.67 9%
2015-16 115.23 1107.82 10%
2016-17 119.23 1157.94 10%
Table 2: Quantum of short term transactions from FY10 to FY17 (All India). Source - Report
on Short-term Power Market in India: 2016-17 - CERC
 Short term market has accounted for not more than 11% of power purchase till date. Thus a
large quantum of energy is still being procured as a result of long term power purchase
agreements. The DISCOMs are hence tied up with un-revised prices for a longer duration.

Electricity Electricity
Volume of
Transacted % of Transacted % of % of
Electricity Other Total
through total through total total
Year Transacted short Short
trading short Power short short
through term term
Licensees term Exchanges term term
DSM (BU)
(BU) (BU)
2009-10 26.72 41% 7.19 11% 25.81 39% 6.18 65.9
2010-11 27.7 34% 15.52 19% 28.08 34% 10.26 81.56
2011-12 35.84 38% 15.54 16% 27.76 29% 15.37 94.51
2012-13 36.12 37% 23.54 24% 24.76 25% 14.52 98.94
2013-14 35.11 34% 30.67 29% 21.47 21% 17.39 104.64
2014-15 34.56 35% 29.40 30% 19.45 20% 15.58 98.99
2015-16 35.43 31% 35.01 30% 20.75 18% 24.04 115.23
2016-17 33.51 28% 41.12 34% 23.22 19% 21.38 119.23
Table 3: Breakup of short term transactions from FY10 to FY17 (All India). Source - Report
on Short-term Power Market in India: 2016-17 – CERC

Table 3 shows the breakup of short term transactions. It is evident that the quantum of
electricity traded through power exchanges has increased from ~11% of total short term
transaction to ~34%. The participation in exchanges has thus seen an improvement. At the
same time the quantum of energy traded through DSM as a percentage of total short has
decreased from ~39% to ~19%. Thus the system as a whole seems to have improved in terms
of deviations from target schedules.
 Price of Electricity Price of Electricity
Price of Electricity
Transacted through Transacted through
Year Transacted through
Trading licensees Power Exchanges
DSM (`/kWh)
(`/kWh) (`/kWh)
2009-10 5.26 4.96 4.62
2010-11 4.79 3.47 3.91
2011-12 4.18 3.57 4.09
2012-13 4.33 3.67 3.86
2013-14 4.29 2.90 2.05
2014-15 4.28 3.50 2.26
2015-16 4.11 2.72 1.93
2016-17 3.53 2.50 1.76
Table 4: Price of electricity traded through short term transactions from FY10 to FY17 (All
India). Source - Report on Short-term Power Market in India: 2016-17 – CERC

The average price of electricity per unit traded in short term has also undergone continuous
reduction in prices over the years as seen from Table 4. This provides a better scope for
DISCOMs to optimise the cost of power purchase by engaging further in short-term markets.

Regulations for short term power procurement

The objective for any regulation or guideline concerning short term power procurement is to
provide an effective mechanism to reduce power purchase costs while ensuring availability of
uninterrupted power. Many of the state electricity regulatory authorities have introduced either
guidelines or regulations for short term power procurement.
The following is the current status of short term power procurement regulations across the
states in India:

Current Status States

Maharashtra, Madhya Pradesh, Uttar Pradesh, J&K, Punjab, Rajasthan,

Regulation
Uttarakhand, West Bengal, Manipur & Mizoram, Meghalaya, Assam

Guideline Andhra Pradesh, Telangana, Chhattisgarh, Himachal Pradesh, Gujarat

Draft Bihar, Kerala

Sikkim, Jharkhand, Tamil Nadu, Karnataka, Orissa, Nagaland, Tripura,

Not in place
Andhra Pradesh

Table 5: Status of short term power procurement regulations across states in India (as on March
2018)

The regulations/guidelines however only specify a broad set of activities to be undertaken such
as resource planning, approved sources for purchase of electricity, load forecasting techniques,
availability forecasting etc. Specific details are generally provided at the time of filing retail
tariff petitions and in the final retail tariff itself.

Study of latest retail tariff for short term power procurement

In order to plan for short term power procurement, the following parameters are necessary:

1. Quantum of power purchase required in the short term

2. Quantum of power to be sold in the short term
3. Ceiling price for purchase in the short term
4. Floor price for sale of power in the short term
5. DSM rate schedule and allowable quantum/price to transact under DSM
6. Merit Order Dispatch

These parameters are essential and specified often in the yearly tariff order of respective states.
The tariff order provides forecasted demand, availability and costs for the forthcoming year
along with the retail tariff. The state electricity regulatory authorities compute cost of power
purchase in order to fix the retail supply tariff (Cost plus basis) for the distribution licensees.
This process occurs in two stages:

- Utilities file a petition claiming certain costs and tariff

- The SERC computes and approves the appropriate costs and provides a final tariff

Since the tariff is based in forecasts, any deviations result in revenue surplus or gap for the
utilities which are carried forward as ‘true-up’ in the future tariffs.

1. Quantum of energy purchase

Figure 4: Total quantum of energy purchase in MU (FY18 Tariff Orders)

140000
120000
100000
80000
60000
40000
20000
0
Punjab
Maharashtra
Uttar Pradesh

Rajastan

Haryana

Bihar

Orissa

Jharkhand
Gujarat

Andhra Pradesh

Uttarakhand
Madhya Pradesh

Chhattisgarh

Himachal Pradesh
Total Quantum Claimed (MU) Total Quantum Approved (MU)

Figure 4 provides the total quantum of energy purchase claimed by the utilities and approved
by the respective SERC for the tariff order of 2017-18. West Bengal did not file the tariff for
FY18.

As previously seen, short term transactions account for close to 10% of total energy at the
aggregated at the country level. Hence short term transactions should account in similar fashion
when forecasted in the tariff orders. But this is not the case. Most states do not claim or forecast
purchase of short term power.
 State Total Total Short Short Short Short
Quantum Quantum term term term as a term as a
Claimed Approved purchase purchase % of % of
(MU) (MU) Claimed Approved total total
(MU) (MU) claimed approved
Andhra Pradesh 57018 56584 0 196 0.0% 0.3%
Uttar Pradesh 123808 120289 862 862 0.7% 0.7%
Bihar 30599 26648 410 410 1.3% 1.5%
Uttarakhand 14204 14385 173 0 1.2% 0.0%
Chhattisgarh 31412 27679 90 1000 0.3% 3.6%
Table 6: Quantum of energy purchase through short term (FY18 tariff orders) – Either
competitive bidding or through exchange

As per Table 6 even among the states that claim transaction in the short term, it accounts for a
very small fraction of the total power purchase.

2. Quantum of energy transaction through banking

Banking is an informal means for transacting power between states during a year. Banking
does not involve any financial transaction. It proceeds as follows: State A agrees to supply
during surplus availability to State B (when it is in shortage). In return State B would return
the energy to State A at a different point in time when State A is in shortage.

Banking Sale
Banking purchase Banking purchase Banking Sale
State approved
claimed (MU) approved (MU) claimed (MU)
(MU)
Punjab - - 662 (net) 662 (net)
Himachal Pradesh 1610 - 1610 -
899 (218 next
Uttarakhand 851 899 851
FY)
Table 7: Quantum of energy transaction through banking (FY18 tariff orders)

Banking is currently not covered under CERC regulations. Hence the transactions are seldom
tracked. Though states do not claim any specific quantum in their respective tariff orders,
banking is widely practised by states.
 3. Quantum of surplus energy sale

States engage in the sale of surplus energy in order to effectively reduce power purchase
costs (sometimes referred to as fixed cost recovery).

Quantum surplus sale Quantum surplus sale

State
Claimed (MU) Approved (MU)

Andhra Pradesh 2208 0

Madhya Pradesh 9488 14910
Punjab 0 616
Gujarat 1500 1657
Rajastan 7335 3273
Haryana 7131 7131
Chhattisgarh 3290 789
Jharkhand 0 1105
Table 8: Quantum of surplus energy sale (FY18 tariff orders)
The revenue resulting from sale of surplus power effectively helps reduce the tariff. But since
these are merely forecasts, the actual sales may differ. It has been observed that states are not
generally capable to sell surplus to the extent approved in the tariff orders. Since the tariff is
already reduced, the DISCOMs gain less revenue from sale to consumers as well as lesser than
forecasted revenue from surplus sale. This puts the DISCOMs into financial trouble. On the
other hand consumers gain from lesser tariff. Madhya Pradesh is the highest claimant of surplus
energy sale among the states in India.

4. Average power purchase cost

Power purchase costs have two components – Fixed cost (or capacity charge) and Variable
cost (Energy charge). The average power purchase cost, in the total cost (fixed + variable) of
power purchase per unit of energy purchased. The costs widely vary across states. The same
has been represented below.
 Figure 5: Average Power Purchase Cost (Rs/unit) – FY18 tariff orders
5.00
4.13 4.01 3.90 3.89 3.87 3.85 3.80
4.00 3.65 3.60 3.55
3.04
2.77
3.00 2.61 2.55

2.00
1.00
0.00
Maharashtra

Uttar Pradesh

Chhattisgarh

Orissa
Jharkhand

Madhya Pradesh
Himachal Pradesh
Gujarat

Haryana
Punjab

Andhra Pradesh

Bihar

Uttarakhand
Rajastan
APPC (Rs/unit) Claimed APPC (Rs/unit) Approved

Madhya Pradesh showcases the least APPC. This can be directly attributed to the revenue from
surplus energy sales. On the other hand Haryana in spite of claiming significant surplus energy
sale as seen previously, the costs are high. This could be attributed to high capacity tied up in
long term contracts. Gujarat is another example where APPC is high due to large tied up
capacity.

5. Average variable cost of power purchase

Figure 6: Comparison between APPC/unit and AVC/unit (Rs/unit) – FY18

Tariff Orders
5.00 4.13 4.01 3.90 3.89 3.87 3.85 3.80
4.00 3.60
2.86 2.66
3.00 2.40 2.35 2.42 2.50 2.55
2.09 2.25
1.85
2.00
1.00
0.00
Maharashtra

Uttar Pradesh

Jharkhand

Madhya
Gujarat

Pradesh
Haryana
Punjab

Bihar

Pradesh
Andhra

APPC (Rs/unit) Approved Average Variable Cost per unit

The variable costs/energy charge is the cost attributes primarily to the fuel fed into the
generators.
 Figure 6 shows the comparison between average variable cost and the average power purchase
cost. The difference between the two can be attributed to the fixed cost. The large component
of fixed cost in many states is as explained previously due to excessive long term contracts
with generators. For Madhya Pradesh it is evident as stated in the last section, that the claimed
surplus energy sale is offsetting the fixed cost. The large fixed costs associated with redundant
capacity is a sign for needing greater involvement in the short term contracts compared to long
term contracts.

6. Ceiling rate for short term purchase

Figure 7: Ceiling rate for short term purchase vs APPC vs AVC (Rs/unit) – FY18
Tariff Orders
5.00
4 3.89 4.08 4
3.81 3.60
4.00
3.08
3.00 2.50 2.66 2.6 2.6
2.40 2.35 2.42 2.25
2.00

1.00

0.00
Maharashtra

Uttar Pradesh

Chhattisgarh
Haryana
Punjab

Andhra Pradesh

Bihar

Uttarakhand
Rajastan

APPC (Rs/unit) Approved Ceiling Rate for short term puchase

Average Variable Cost per unit

The ceiling rate for short term power purchase specifies the maximum per unit rate at which
the DISCOMs can purchase in the short term. The comparison in Figure 7 shows that the basis
for fixing the ceiling rate is based upon the average power purchase cost. This is to ensure that
the APPC is not exceeded. Exceptional cases include Rajasthan and Andhra Pradesh where the
ceiling rates are higher than the APPC. This can thus result in actual APPC being higher that
forecasted. Since tariff is set based on APPC, it would lead to a revenue gap for the utility.
Ideally the ceiling rate must not exceed the marginal rate existing at the point of time
(Conventional sources only. Renewables are must run and costlier).
 7. Floor price for surplus energy sale

Figure 8: Floor price of surplus power sale vs APPC vs AVC (Rs/unit)

5.00
4.13 3.90 4.00
3.89
4.00 3.65 3.55
3.08
3.00 2.35
2.62.42 2.552.60
2.132.09 2.3
1.85
2.00

1.00

0.00
Gujarat Punjab Haryana Chhattisgarh Rajastan Madhya
Pradesh
APPC (Rs/unit) Approved
Price of surplus power sale (Rs/unit) approved
Average Variable Cost per unit

The idea behind the floor price for selling surplus energy is recover a portion of the fixed cost.
This implies that the floor price should be greater than the average variable cost. The difference
above AVC covers a fraction of the fixed cost. In the case of Madhya radish, the floor price
seems to exceed the APPC due to the fact that Madhya Pradesh claims to sell unreasonably
large units of energy through surplus, effectively bringing down the fixed cost per unit.
Chhattisgarh interestingly engages heavily on surplus sale as well as short term purchase. If
done prudently this would effectively help in building a cost effective portfolio.
 0
1000
2000
3000
4000
5000
6000
2000
4000
6000
8000
10000
12000
14000
16000

0
Renewable… NCE excluding CPP
8.
WR - Tarapur… TAPP 1&2
Gandhi Sagar Dodson I
Pench SSP
Bargi KSTPS III

MU
Bansagar – I* SIPAT TPS 1
Ban Sagar III VSTP III
Marikheda CGPL
Sardar Sarovar
VSTP II

MU

AVC
UPPCL…

APPC
Gadarwara
Merit Order Despatch

Jaiprakash…
EMCO Power
UMPP Sasan,…
Adani Power 1320 MW
UMPP Sasan,…
Chandrapur 9

APPC
WR - Sipat -II
Koradi R U-8
WR-NTPC…
Koradi10
WR-NTPC…
PARAS UNIT-4
WR – KSTPS
Adani Power 1200 MW
WR - VSTPS -…
KhSTPS-II
AVC
WR - VSTPS-I
CHANDRAPUR - 4

FloorPrice
WR-…
CHANDRAPUR - 6
MB Power,…

(Energy in MU vs VC in Rs/unit)
Ceiling rate
GTPS URAN
(Energy in MU vs VC in Rs/unit)

SGTPS Ext…
KORADI - 7
WR - Kawas…
Parli replacement U 8
Satpura…
KHAPARKHEDA -…
Captive
BHUSAWAL 5
ER-DVC…
PARLI UNIT-6

Merit Order Despatch – Madhya Pradesh – FY18 Tariff Order

Energy Charge
WR- NTPC…
Merit Order Despatch – Maharashtra – FY18 Tariff Order

NTPC solapur
Satpura TPS…
Jaypee Bina… BHUSAWAL - 3
Singaji… GANDHAR
PARLI -5

0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
 Merit Order Despatch – Gujarat– FY18 Tariff Order (Energy
in MU vs VC in Rs/unit)
16000 16
14000 14
12000 12
10000 10
8000 8
6000 6
4000 4
2000 2

GSECL Sikka…
NTPC-Mauda Stage…
NTPC-Gadarwara…

Gujarat State Energy…

0 0

Essar Power Bid 2

NTPC-Jhanor
GSECL Kutch Lignite

NTPC-Lara U#2

Mundra UMPP CGPL

Wind Farms

GSECL Utran Expan

Small/Mini Hydal
GSECL Ukai Hydro

NTPC-Korba

Captive Power
ACB India Ltd

BECL

NPC Kakrapar Ext U#1

Solar(New)

NTPC-Sipat - II

GSECL Wanakbori - 7
GSECL Wanakbori 1-6
Others (New)

NPC-Tarapur (1 & 2)

NTPC-Vindhyachal - III

NPC-Tarapur (3 & 4)

GSECL Dhuvaran - 7
GSECL Dhuvaran - 8
NTPC-Vindhyachal - II

NTPC-Vindhyachal - IV

MU AVC APPC Floor Price Energy Charge

By the principle of Merit Order, the scheduling is done such that the cheapest power is schedule
first. But in order to promote renewable energy, these plants are declared as must run. Apart of
them each state specifies certain plants as must run plants. We see that in the examples above
that all must run plants have greater energy charge.

Further we see in the case of Gujarat that the floor price for sale of power in the short term is
significantly below the marginal price. It should thus be taken care that the quantum and
average price of surplus energy sales offsets the negative effect of purchase from plants close
to marginal price.

In the case of Maharashtra the ceiling rate for short term purchase is well over the marginal
price. Hence it is possible that plants within the state’s contracted capacity can provide cheaper
power compared to short term market.