Sharing of Inter-State

Transmission Charges and

Losses (PoC Regime)

Abbhimanyu Gartia,
Dy General Manager, WRLDC, MUMBAI

In this Presentation
Historical Background

Evolution
Regional Postage Stamp Method

Drivers of Change
POC Mechanism Features
Issues
Regulation Amendment and Related Orders

Historical Background

Historical Background

Evolution of Transmission Pricing

Implicit transmission pricing model

Transmission charges were clubbed with generation tariff

Unbundling of generation and transmission

Transmission pricing model changed from implicit to

explicit

Transmission charges were apportioned on the basis of net

energy drawn

Evolution of Transmission Pricing

Late 1970s: Regional generation projects by CPSUs

Development of associated regional transmission schemes

to enable drawal of respective shares by regional beneficiaries

Regional Postage Stamp method to suit above arrangement

Pooling of Transmission Charges of associated transmission

schemes and sharing on the basis of allocation

Neutral to distance and direction

Evolution of Transmission Pricing

Regional Postage Stamp Method: Interregional

allocation

Pan caking of regional transmission charges and losses

Beneficiary states were to pay

transmission charges of other region in which generation

source located
Transmission charges of intermediate regions involved in

case generation source located which is not adjacent

(pancacking and cross subsidisation)

o

Pancaking in Losses

5%

Drawee
Entity in NR
88.46 MW

4%

ER-NR
Boundary
93.12 MW

3%

NER-ER
Boundary
97 MW

Generation
Located in
NER
100 MW

Drivers of Change

Drivers for Change

Holding Pattern: Risk Mitigation

76

47

Network Size Complexities

Buses

4830

Generating Stations

557

Generating Units

1148

Loads

2672

Branches

Transformers

DC Lines

765 kV

400 kV

622

220 kV

3034

132 kV

5130

Total

8795
2031

National Transmission Pricing

Framework

National Transmission Pricing

Framework
As per mandate of NEP/ TP
Sensitivity to distance and direction
Avoids pan- caking of charges
Addresses multiple transmission licensee regime
Provides economic signal for locating generation and

load
New Pricing Framework
a necessity rather than a choice

Policy Mandate
Provisions of National Electricity Policy

Section 5.3.2
Network expansion should be planned and
implemented keeping in view the anticipated
transmission needs that would be incident on
the system in the open access regime. Prior
agreement with the beneficiaries would not be a
pre-condition for network expansion. CTU/STU
should undertake network expansion after
identifying the requirements in consultation
with stakeholders and taking up the execution
after due regulatory approvals.

Policy Mandate
Section 5.3.5

To facilitate orderly growth and development of the

power sector and also for secure and reliable
operation of the grid, adequate margins in
transmission system should be created. The
transmission capacity would be planned and built to
cater to both the redundancy levels and margins
keeping in view international standards and
practices.
To facilitate cost effective transmission of power
across the region, a national transmission tariff
framework needs to be implemented by CERC. The
tariff mechanism would be sensitive to distance,
direction and related to quantum of flow.

Policy Mandate
Provisions of Tariff Policy

Section 7.1(2)
The National Electricity Policy mandates
that
the
national
tariff
framework
implemented should be sensitive to
distance, direction and related to quantum
of power flow. This would be developed by
CERC taking into consideration the advice
of the CEA. Such tariff mechanism should
be implemented by 1st April 2006

Policy Mandate
Section 7.1(2)
Transmission charges, under this framework,

can be determined on MW per circuit kilometer

basis, zonal postage stamp basis, or some
other pragmatic variant, the ultimate objective
being to get the transmission system users to
share the total transmission cost in proportion
to
their
respective
utilization
of
the
transmission system. The overall tariff
framework should be such as not to inhibit
planned development / augmentation of the
transmission system, but should discourage
non-optimal transmission investment.

Policy Mandate
Section 7.1(4)

In view of the approach laid down by the

NEP, prior agreement with the beneficiaries
would not be a pre-condition for network
expansion. CTU/STU should undertake
network expansion after identifying the
requirements in consonance with the
National Electricity Plan and in consultation
with stakeholders, and taking up the
execution after due regulatory approvals.

Policy Mandate
Section 7.1(7)

After coming into effect the CERC regulation on the

framework for the inter-state transmission, a similar
approach should be implemented by SERCs in next
two years for the intra state transmission, duly
considering factors like voltage, distance, direction
and quantum of flow.

Policy Mandate
Section 7.2

Transmission Losses
Transactions should be charged on the
basis of average losses arrived at after
appropriately considering the distance and
directional sensitivity, as applicable to
relevant voltage level, on the transmission
system. Based on the methodology laid
down by the CERC in this regard for interstate
transmission,
the
Forum
of
Regulators may evolve a similar approach
for intra-state transmission.

Regulatory Initiatives
Discussion Paper on Sharing of Charges and losses

in Inter-State Transmission System (ISTS)

(2007)

Approach Paper on Formulating Pricing Methodology

for Inter-State Transmission in India (May 2009)

Draft

Regulation
on
Sharing
of
Inter-State
Transmission Charges and Losses (February 2010)

Regulation on Sharing of Inter-State Transmission

Charges and Losses (June 2010)

25th February 2011

NLDC

22

PoC Mechanism

Distance Sensitivity
Direction Sensitivity
Quantum Sensitivity

Methodology Proposed in India

Point of Connection (PoC) Charges
In Rs. per MW per month
Nodal / Zonal Charges
Separate Injection & Withdrawal Charge
Usage Based Methodology
Based on Load Flow Studies
Hybrid of Average Participation and Marginal Participation methods
PoC Charges
To be made known upfront
To be applied on Medium Term and Short Term Trades
Handling Transition
To begin with 50% Uniform Charges and 50% PoC Charges
Gradual movement towards 100% PoC Charges
NLDC

Average Participation
Tracing of Power

Load Tracing
Generator Tracing

25th February 2011

NLDC

25

Marginal Participation
Marginal Participation
The charges are based on incremental utilization of
network assessed through load flows.

25th February 2011

NLDC

26

Hybrid Methodology
Hybrid of

Average Participation
Marginal Participation

Average Participation

Used to identify slack (responding) buses for each node

Marginal Participation

To compute the participation factor of each node on each

line.

25th February 2011

NLDC

27

Distance Sensitivity
Flow of electricity

Based on Laws of Physics

Independent of Contract Path

Electrical Distance is captured in PoC Mechanism

Conductor Impedance
Charges of Transmission Lines

Direction Sensitivity

ZONE A

Withdrawal PoC Rate

(Rs 70000 per MW)
Injection PoC Rate
(Rs 100000 per MW)

Separate PoC Rates for Withdrawal and Injection

Generation Hub

High Injection PoC Rate

Demand Met from Local Generation

Low Withdrawal PoC Rate

Quantum Sensitivity
Access vs Usage
Planning based on Access
Usage reflected in PoC Rates
Access is reflected in charges payable

Process of Computation of PoC Rates

Input Data from
various
stakeholders

Preparation of
Basic Network &
Load Flow
Studies

Scaling of PoC
Rates to Recover
Total Charges

Zoning of Nodes
(Generation Nodes
and Demand
Nodes)

PoC Rates Slabs

Network
Truncation &
Load Flow
Studies on
Truncated
Network

Computation of
Nodal Charges
(Average and
Marginal
Participation)

 Zones are made out of nodes

Nodes are the substations appearing in the truncated

network
400 kV & above substations in NR,WR,SR,ER and 132 kV &
above substations in NER

Nodal Charges are computed from Hybrid Method

ZoningSample Case

Bus
Name

Owner

BAWANA
DEL_TH
-G
BAMNOL
DEL_STU
4
BAWANA
DEL_STU
4
MAHARA
NR_PGCIL
NI
MANDOL
NR_PGCIL
A
PANIPAT
BBMB
*
Total

Generati
on
Charges

Load
Charges

Generati
on

Load

31242888

388

59138840

645

39132218

425

17697566

295

77146314

793

10870697

163

31242888

203985637

388

2321

Computation of Zonal PoC Rate

Zonal Withdrawal PoC Rate =
(Rs/MW/Month)

Total Charges
Total LTA

Zonal Withdrawal PoC Rate of Delhi: =Rs 203985635 / 356

= 57244 Rs/MW/Month
Zonal Injection PoC Rate of Delhi:= Rs 31242888 / 420 MW
= 74388 Rs/MW/Month

Computation of Zonal PoC Rate

Uniform Rate (Rs/MW/Month) =
Total MTC
----------------------------------------------------------------------------------(Sum of Approved Injection + Sum of Approved Withdrawal +
Sum of Approved Additional Medium Term Injection +
Sum of Approved Additional Medium Term Withdrawal)
= Rs 5957754576 (MTC of NEW Grid) / (40161 + 33751) MW
=80606 Rs/MW/Month

Computation of Zonal PoC Rate

Net PoC Rate = 50% PoC + 50% Uniform

Rate
Net Injection PoC Rate: 0.5*82495 + 0.5*80606
=81550 Rs/MW/Month
Net Withdarwal PoC Rate: 0.5*63482 + 0.5*80606
=72044 Rs/MW/Month
Injection PoC Slab Rate of Delhi : Rs 85000 Rs/MW/Month
Withdrawal PoC Slab Rate of Delhi : Rs 70000 Rs/MW/Month

Approved Slab Rates (Rs/MW/Month)

Slab for PoC rates approved by CERC

100000

110000

85000

95000

70000

80000

NEW Grid

SR Grid

Slab rates for PoC Losses approved by

CERC

Average Los + 0.3%

Average Loss

Average Loss - 0.3%

PoC Charges Slab Rates..(1)

Envy Free Allocation
Min-Max Theory
Principle of Minimum Regret

Certainty in Transmission Rate

Transmission Rate in Postage Stamp Method

= Total Regional ISTS Charges

(Total LTA of all states of a region)+ (Export LTA)
Variation in Total Regional ISTS Charges

Approval of tariff of new assets by the Commission

Variation in Total LTA

Commissioning of new generators
PoC Mechanism

Single PoC Rate

Year Ahead Declaration

Siting Signals
Hydro Generation Location

Depends upon availability of water head

Fixed

Liquid Fuel or Coal Fired generation

Freight Charges vs Electron Carriage Charges

Postage Stamp method

Signal for investment near buyer

PoC Method

Signal for investment at efficient locations

41

Point of Connection Mechanism

In Rs. per MW per month
Nodal / Zonal Charges
Separate Injection & Withdrawal Charges
To be made known upfront
To be applied on Long Term, Medium Term and Short
Term Trades
Based on Load Flow Studies
Hybrid of Average Participation and
Marginal Participation methods

To begin with 50% Uniform Charges and 50%

PoC Charges
Introduction of Slabs

Important Numbers 2011-12

Total Yearly Transmission Charges : 8700 Cr

(approx)
Total LTA : 47000 MW (approx)
Total Zones : 71 (Nodes: 500 approx)
Uniform Rate
NEW Grid : 80000 Rs/MW/Month
SR Grid : 90000 Rs/MW/Month
20/12/15

POSOCO

43

ISSUES

Change in Transmission Charges

Change in CERC norms

Tariff based on 2009-14 norms

Provisional Tariff approved by the Commission

Inclusion of tariff of transmission system expected to be

commissioned up to 30th September 2011.

Avoidance of Pancaking

Transmission Line Vintage

Transmission is a service

Same service offered by old and new lines

Power flow independent of vintage

Comparison with other cybernetics

Same tariff in rail, road and air transport irrespective of

vintage of carrier.

Transmission Line Vintage

Uniform Charge Component

Regulation provides

50% Uniform Charge in total PoC Rate

Discussed in SOR

3.3.62 : This is a transition mechanism adopted to

avoid tariff shock to any beneficiary. This may be
reconsidered by the Commission after two years
Fallout of 100 % PoC

Wide variation in PoC Rates

Shock during transition

National Pool vs Regional Pool

Uniform Charge Computed separately for NEW and SR

Grid
Regional boundaries losing significance
Trans Regional ISGS
Increasing Inter Regional Flows
Meshed Network
Regional Pool
Signal for planning
NEP 2005 and Tariff Policy 2006

National transmission tariff framework

Single Scenario
Unavailability of Data
Adjustment Prone/Gaming/Disputes
Authentic Data Published by CEA
Single PoC Rate

Easy to Comprehend

Stable Signal

Market Friendly

RPC Certified Lines

Charges of RPC Certified Lines

Charges shared before 15.6.2010 considered

Criteria for certifying new lines

50% or more inter state power flow

Unavailability of approved Tariff

RPC Certified lines charges

Should be excluded from ARR of STUs

Way Forward
Implement, Gain Experience & Ramp Up
Improvements in PoC mechanism based on the

experience gained
Similar Mechanism to be replicated in states.
Section 7.1(7) of the amended Tariff Policy:
After coming into effect of the CERC Regulation on the framework
for inter-State transmission, a similar approach should be
implemented by the SERCs in next two years for the intra-State
transmission, duly considering factors like voltage, distance,
direction and quantum of flow.

CERC (Sharing of Inter State Transmission

Charges and Losses) (First Amendment)
Regulations 2011

Amendment to Regulation 2 of Principal

Regulations (2)

Amendment to Regulation 2 of Principal

Regulations (3)
Definition of DIC

DISCOMs/ Designated Agency in State prior to PoC

implementation to be treated as DIC in that State for preparation
of RTA and for Billing & Collection
After Implementation, States may designate any agency as DIC

Definition of Target Region after sub-clause (t) of

Regulation 2 inserted as:

"(ti) 'Target Region' means the region to which a generator
proposes to sell power after obtaining Long-term Access from the
CTU and for which beneficiaries in the said region have not been
identified."

CERC (Sharing of Inter State Transmission Charges

and Losses) (First Amendment) Regulations 2011

Definition of YTC:
Sub-clause (y) of clause (1) of Regulation 2
substituted as:

(y) Yearly Transmission Charge (YTC) means the Annual

Transmission Charges for the existing and new transmission
assets of the transmission licensees and deemed ISTS
Licensees including non-ISTS lines certified by Regional
Power Committees for carrying inter-State power,
determined by the Appropriate Commission under section 62
of the Act or adopted by the Appropriate Commission under
section 63 of the Act or as otherwise provided in these
Regulations

Amendment to Regulation 7 of Principal

Regulations
Amendment to Clause (1)(l) of Regulation 7:

YTC to be revised on six monthly basis i.e., on 1st April and

1st October in first year
Subsequently, revision on Quarterly basis i.e., 1st April, 1st
July, 1st October and 1st December

Sub-Clause (m) of Clause (1) of Regulation 7

(allocation of YTC of sub-stations to transmission

lines) to be deleted

Amendment to Regulation 11 of
Principal Regulations
Revenue collected from Approved Additional MTOA in a

synchronous grid to be reimbursed to DICs in same

synchronously connected grid having LTA in following month

Injection PoC and Demand PoC charges for MTOA to target

region to be adjusted against Injection PoC and Demand PoC

Charges for LTA to target region without identified beneficiaries
and not against LTA granted to any other target region without
identified beneficiaries

Generator with LTA to a target region without identified

beneficiaries

Injection PoC Charges plus lowest of Demand PoC Charge among all
DICs in target region for remaining quantum after offsetting MTOA

Adjustment not allowed for Collective and Bilateral transactions

Amendment to Regulation 11 of
Principal Regulations
Injection PoC and Demand PoC charges for STOA to

target region to be adjusted against Injection PoC and

Demand PoC Charges for LTA to target region without
identified beneficiaries and not against LTA granted to
any other target region without identified beneficiaries
Generator with LTA to a target region without

identified beneficiaries

Injection PoC Charges plus lowest of Demand PoC Charge

among all DICs in target region for remaining quantum after
offsetting MTOA and STOA

Amendment to Annexure of Principal

Regulations
YTC computed for assets at each Voltage level and for each

Conductor configuration based on Indicative Cost submitted

by CTU
YTC for RPC certified non-ISTS lines

To be approved by Appropriate Commission

Average YTC to be used if tariff not approved by Appropriate
Commission

Common methodology to be adopted by NLDC for certifying

non-ISTS lines carrying Inter-State power

Recovery of YTC of assets to be commissioned in
Application period based on Approved/Provisional tariff
Disbursement to owners of RPC certified non-ISTS lines only
after tariff is approved by Appropriate Commission

Amendment to Annexure of Principal

Regulations
Following to be added after first paragraph in Step 4

of Clause (2) under Para 2.7

The charges of the HVDC back to back inter-regional
links at Chandrapur and Gazuwaka shall be included in
the YTC of the NEW grid and the SR grid in the ratio of
1:1 and charges for TalcherKolar HVDC bi-pole link
shall be shared by DICs of SR only.

Thank You