Open Access and Trading

Trading

“Trading" means purchase of electricity for resale thereof”• Any person is allowed to undertake trading in electricity provided he has authorized licence issued

under Section 14 or is exempted under Section 13• Appropriate Commission may specify trading margin,

if needed. CERC has specified 4 paise/kwh as trading margin

• 27 Traders have been issued Trading Licenses by CERC for carrying out Inter State Trading.

Legal Framework For Trading

Section 12 : No person shall undertake trading in electricity unless he is authorized to

do so by license issued under Section 14, or is exempt under Section 13.

Section 13 : The provisions of Section 12 shall not apply to any local authority, Panchayat Institution, users’ association, co-operative societies, non-governmental organizations, or Franchisees.

Section 14 : The Appropriate Commission may, on application made to it, grant any

person license to any person to undertake Trading in electricity as an electricity trader in any area which may be specified in the license.

Legal Framework For Trading

Section 52 :

1. The Appropriate Commission may specify the

technical requirement, capital adequacy requirement and credit worthiness for being an electricity trader.

2. Every electricity trader shall discharge such duties, in relation to supply and trading in electricity, as may be specified by the Appropriate Commission.

Highlights of Regulations for Inter State Trading

• Allows Bilateral Trading between the Generating Company including CPP, Distribution Licensee and Electricity Trader on the one hand and the electricity trader and the distribution licensee on the other

• The Inter-State Trading Licence shall be granted for 25 years• The application fee is Rs. 1.00 lakh which is subject to

adjustment after the same is prescribed by the Central Government

• Specifies the methodology for publication of the licence application

Contd …

• The technical; requirements for being an electricity trader stipulates having at least one full time professional each with experience in

- Power System Operations and commercial

aspects of power transfers

- Finance, Commerce and Accounts

• Six Categories of Trading Licences

CAPITAL ADEQUACY REQUIREMENT

Sl. No. Category of the Trading Licence

Vol. of Electricity Proposed to be Traded Per Annum (in Units)

Net Worth (Rs. in Crore)

1. A Up to 100 million 1.5

2. B 100-200 million 3.0

3. C 200-500 million 7.5

4. D 500-700 million 10.0

5. E 700-1000 million 15.0

6. F Above 1000 million 20.0

Trading Relationship

Generating Cos.

Traders

Distribution Cos.

DEFINITION OF “OPEN ACCESS” IN THE ELECTRICITY ACT, 2003

“The non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission”

INTRODUCTION

• Open Access is necessary for utilization of short time surpluses.

• Open Access will also create options for distribution companies to buy power.

• Open Access will provide means to the traders/buyers/sellers.• Non- discriminatory / Transparent Process• Freedom to buy/sell power• Efficient Market Mechanism to address supply / demand

mismatches• Encourage investment in Transmission

Legal Framework

SECTION 38: (CTU Function)• CTU to provide open access to Licensee or Generating

Company on payment of transmission charge

• Any consumer when open access is provided by State Commission on payment of surcharge in addition to transmission charges.

• Surcharge shall be for meeting cross subsidy, and to be progressively reduced and eliminated.

• Surcharge not payable in case of captive generation and Distribution Companies.

• CTU can not engage in generation and trading

Legal Framework

Sections 39, 40 and 41• Similar provisions for STU and Transmission Licensee.• STU can not engage in trading.• Transmission Licensee can not engage in trading

Section 42• State Commission to provide Open Access to all consumers

who required supply more than 1 MW in 5 years.

Agencies involved in Short-Term Open Access Transaction

• RLDC (s)

• SLDC (s)

• CTU

• STU (s)

• Buyer

• Seller

• Trader

Open Access – CERC Regulations, 2008

Open Access Regulations, 2008• Regulation notified dated 25.01.2008, (scheduling w.e.f.

01.04.2008 as per New Regulation)• Regulations , 2004 are now being repealed w.e.f 1st

April,2008• Procedure for Bilateral Transaction

– POWERGRID/CTU -submitted on 28.01.2008– CERC Approval on 31.01.2008– Posting of Approved Procedure on RLDC websites – 31.01.2008

• New regulation also cater for transaction through Power Exchange (Px)

• Procedure for Collective Transaction– POWERGRID/CTU -submitted on 12.02.2008

• Regulations cover only Short-term Open Access• Earlier Products of Short-Term retained under Bilateral

Transactions

• Transactions categorized as Bilateral and Collective (through Px)• Nodal Agency

– Bilateral : RLDCs– Collective : NLDC

• Transmission Charges moved from “Contract Path” to “Point of Connection”

• Both Buyers and Sellers of Collective transactions to bear transmission charges and absorb transmission losses

• Inter-Regional links -No Separate treatment. • Emphasis on “Scheduling” rather than “Reservation”• SLDC consent mandated along with application• In case of Congestion – e-Bidding without Price Cap• Exit Option provided with payment of up to 5 days open access

charges.• Moving towards empowerment of SLDCs

Comparison of CERC Regulations on Short-Term Open Access (Regulation 2004, Amendment 2005 and Regulations 2008))

S. No.

Old Regulations

(06.05.2004 to 31.03.2005)

Amended Regulations

(w.e.f. 01.04.2005)

Regulations, 2008

(w.e.f. 01.04.2008)

1. Transmission Charges

a. Intra Regional – 25% of

Long Term Charges

b. Inter Regional – 25% of

Long Term Charges

Transmission Charges

a. Intra Regional – 25% of Long Term Charges

b. Inter-Regional - 50% of

Long Term Charges

Transmission Charges: Bilateral:

- Rs.30/MWh – intra- regional

- Rs.60/MWh – Between adjacent regions

- Rs90/MWh – Wheeling through one or more region

Collective Transactions (Px):

-Rs. 30/MWh for each point of injection and drawal

2.

Retention by CTU

a. Intra Regional – 25% of

Charges collected

b. Inter Regional – 25% of

Charges collected

c. Balance disbursed to States

Retention by CTU

a. Intra Regional - 25% of Charges Collected

b. Inter Regional - 12.5% of Charges collected

c. Balance disbursed to States

Retention by CTU

- 25% to be retained by CTU

- Balance disbursed to States

3. RLDC Charges

a. Application fee – Rs. 5000/-

b. Scheduling Charges

– Rs. 3000/day for each RLDC involved

c. Handling &Service Charges

- 2% of total charges

RLDC Charges

a. Application fee – Rs. 5000/-

b. Scheduling Charges

– Rs. 3000/day for each RLDC involved

c. Handling & Service Charges

– Nil

RLDC Charges :

Bilateral:

a. Application fee – Rs. 5000/-

b. Scheduling Charges

– Rs. 2000/day for each RLDC involved

c. Handling & Service Charges

– Nil

Collective Transactions:

a. Application fee – Rs. 5000/-

b. Scheduling Charges

– Rs. 5000/day to NLDC for each State involved

-NLDC to Share with RLDCs

4. Open Access Duration

- Up to One year maximum

- single application possible

Open Access Duration

- Up to Three Months max.

- single application possible

Open Access Duration

Bilateral

-Up to 3 months

- separate application for each month

- Collective:

- Only Day ahead

5. ST Rate

- in Rs/MW/Day

- Min. Charges for one day

ST Rate

- in Rs./MW/Day

-Charges as per continuous block of upto 6 hours, 12 hours and more than 12 hours

Rate

-in Rs/MWh

- Based on Scheduled Energy

6. Congestion Management

- E-Bid without price cap

Congestion Management

- E-Bid with price cap

Congestion Management

Bilateral:

- E-Bid without price cap

Collective:

- NLDC in coordination with Px

Intra-Region Existing Rate

(Paisa per unit)

Proposed Rate

(Paisa per unit)

Northern 2.5 3

Western 1.5 3

Southern 3.5 3

Eastern 2.7 3

North-Eastern 3.9 3

Inter-Regional

ER-NR 8 6

ER-WR 5.7 6

WR-NR 6.5 6

SR-WR 10.5 6

ER-SR 14.2 6

ER-NER 9.1 6

Multi-Regions 10.7 to 32.5 9

Short-Term Open Access transactionby Captive Power Plants

A typical example:From : SAIL Durgapur Steel Plant (DVC), To : SAIL Bhilai Steel Plant (CSEB)Quantum : 20 MW

Source : SAIL

Network Involved

Transmission Losses

Transmission and System Operation Charges

Procedure for Scheduling of Open Access (Bilateral Transaction)

Outline

• CERC Regulations on Open Access in inter-State Transmission, 2008 – Provisions 4,

• Applicable for Scheduling of Open Access (Bilateral Transactions)– w.e.f. 01.04.2008

SUBMISSION OF APPLICATION

• Nodal Agency – RLDC where point of drawal is situated

• Application Contents– Details -Buyer /Seller /Point of injection/point of

drawal/Contracted power at supplier interface/date/time period

• Application Fee (Rs. 5000/-)– Along with application – With in 3 working days ( for same day or next day

transaction)• Endorsement

– Concerned RLDCs/SLDCs

CONCURRENCE OF GRID OPERATORS

• Available Transfer Capability

• SLDC – ( congestion in intra-State TS)– concurrence -along with Application

• RLDC - ( congestion in Regional TS)– To be obtained by Nodal RLDCs

• Refusals /Curtailed Concurrence– Reasons to be mentioned in writing

ADVANCE SCHEDULING• Advance Scheduling – 3 months in advance• Separate Application –

– Month wise - each transaction

• Time Line for submission– Last date for submission ( -10 / -5 / 0 days prior to end of current

month MO – for transaction in M1, M2, M3)– Cut-off time : 17:30 Hrs. of last day (Day 0)– Request for concurrence (RLDC) – by 12:00 Hr. next day (Day 1)– Concurrence - by 20:00 Hrs (Day 1)– Congestion Information to Applicant – next day 12:00 Hrs (Day 2)– Revised Request – next day 11:00 HRs. (Day3)– E-bidding – in case of Congestion (next day) (Day 4)– Acceptance/Refusal of Scheduling Request – (Day 5)

Time Line for Advance Scheduling

M0 M1 M2 M3510 5

Last Day for submission of Applications for transactions in M1, M2, M3

Processing time for RLDCs

e-Bidding Procedure• Invitation of Bids

– period of congestion– RTS/IR corridor – overstressed

• Only Registered Users – User ID & Password– Electronic submission – website of CTU– Bid Closing time as specified – Single Price Bid – No Modification/withdrawal once submitted

• Bid Price - in addition to Open Access Transmission Charges• Multiples of Rs. 10/ MWh . ( Min. Rs. 10/MWh)• Mandatory - Non-participation – Rejection of Application• Acceptance - Decreasing order of Price Quoted• Equal Price Bids – Pro-rata• Part Acceptance – Price as quoted by the bidder• Full Acceptance – Price quoted by last bidder getting full acceptance

“FIRST-COME-FIRST-SERVED” BASIS • Scope

– Current Month– Next Month ( during last 10 days of end of current month)

• Separate Application for each month• To be submitted 4 days prior to date of Scheduling• Processing time – 3 days• Processed on FCFS basis• Application Received in a day to be processed

together – same priority• Application Received after 17:30 Hrs. - next day• Congestion Management – pro-rata

DAY-AHEAD BILATERAL TRANSACTION

• Applications received within 3 days prior to the day of Scheduling and up to 15:00 Hrs. of the day immediately preceding the day of scheduling shall be treated as having been received together for processing and shall have same priority.

• Processing only after processing of the Collective Transactions of the Power Exchange (s).

• Congestion Management – Pro-rata

SCHEDULING OF BILATERAL TRANSACTION IN A CONTINGENCY

• Only Buying Utility to make an Application to the Nodal RLDC.

• To be considered after 1500 hrs of the day immediately preceding the day of scheduling.

• In case of intra- day – scheduling from 6th time block

• Congestion Management – Pro-rata

INCORPORATION IN DAILY SCHEDULES

• RLDCs to incorporate in Daily Schedules of the Regional Entities

• Average energy losses -estimated on weekly basis – RLDCs – ISTS – SLDC – intra-State TS

• resolution of 0.01 MW at each State/inter-Regional boundaries.

• ramp-up – at the time of commencement of the transaction

• ramp-down – at the time of termination of the transaction

REVISON OF SCHEDULE

• Only in case of “Advance Scheduling” or “First-Cum-First Served basis”

• minimum five (5) days notice

• Transmission Charges and Operating Charges for 5 days

• Margin Available – could be utilized for scheduling of other Open Access Transactions

Example:• Say an Applicant has been scheduled for 10 days from 21st day of a

month to 30th day of a month for 100 MW on round the clock basis (i.e. for 2400 MWh per day). If this Applicant, on or before 15th day of that month, submits request for revision of schedule to 50MW on round the clock basis (i.e. 1200 MWh per day), the revised schedule will get implemented from the beginning of the transactions (i.e. 21st day of the month). The Applicant shall pay the Transmission Charges for 2400 MWh per day for the period from 21st to 25th day of the month. Whereas for the period from 26th day to 30th day of the month, Transmission Charges shall be payable for 1200MWh per day.

• However, if the Applicant requests for such revision on 17th day of the month, his request will be implemented from 23rd day of the month. He shall pay Transmission charges for 2400 MWh per day for 5 days i.e. from 23rd to 27th day of the month and for the remaining period he shall pay the Transmission Charges based on 1200MWh per day.

CURTAILMENT IN CASE OF TRANSMISSION CONSTRAINTS

• Allocation/Reallocation of ISGS power • Transmission constraint or to maintain grid

security • curtailed in the manner, which in the opinion of

RLDC, would relieve transmission constraints/ enhance grid security

• Open Access Bilateral Transactions would generally be curtailed first followed by the Collective Transactions

• Rerouting allowed without curtailment• Pro-rata refund of Transmission Charges

COMMERCIAL CONDITIONS

• All Payment related to Open Access Charges– by Applicant to the Nodal RLDC – within three working days from the date of acceptance

• Application Fees (as per Para 7 of Regulation)– non-refundable fee of Rupees five thousand (Rs.5000/-) only

• Transmission charges (Para 16 of Regulation) – Intra-region (Rs.30/MWh)– Adjacent Region (Rs. 60/MWh)– Wheeling (Rs.90/MWh)– STS charges – as specified by respective SERCs or Rs. 30/MWh

• Operating charges (as per Para 17 of Regulation) – Rs. 2000/- per day each RLDCs/SLDCs involved

DEFAULT IN PAYMENT OF OPEN ACCESS CHARGES

• nodal RLDC, at its discretion – may not schedule the transaction or

– may cancel the scheduling of already scheduled transaction or

– may not entertain any Application of such Applicant in future until such time the default is cured.

• simple interest at the rate of 0.04 % for each day of default from the Due Date of Payment

• Cheque has been dishonored – No cheque payment - next three (3) months

DISBURSAL OF PAYMENT

• Reconcile the Open Access Charges – 10th day of the current month

• Transmission Charges and Operating Charges – for State System– Concerned STUs/SLDCs

• For ISTS – 25% to be retained by CTU– 75% to be utilized for reduction of Transmission charges

of Long Term customers• Refund due to curtailment

– 15th day of the current month

GENERAL CONDITIONS

• “One- Time” information as per enclosed format • Application - through Post/fax • Any amendment/modification

– fresh Application • Applications not been accorded the Acceptance

– stand disposed off with suitable intimation to the concerned Applicant(s)

• incomplete/vague Application – summarily rejected

• The Applicant shall abide by the provisions of The Electricity Act, 2003, Indian Electricity Grid Code and CERC Regulations, as amended from time to time

• Applicant shall keep each of the SLDCs/ RLDCs indemnified

Short-Term Open Access

-Experience so far

OPEN ACCESS IN INTER-STATE TRANSMISSION• Implemented w.e.f. 6-May-2004• Products –

– Long term Access– Short term Access

• Monthly– Advance– First Come First Serve

• Day ahead • Intra day transactions

• Permits usage of spare transmission capacity through a transparent process

• Offers choice and freedom to buy & sell power• Provides signals for investment.

200

700

1200

1700

2200

2700

YEAR 05-06YEAR 06-07YEAR 07-08

ENERGY APPROVED(MU) - (Nodal RLDC-NRLDC)

0

100

200

300

400

500

600

700

800

APRIL MAY JUNE JULY AUG SEP OCT NOV DEC JAN FEB MAR

YEAR 05-06YEAR 06-07YEAR 07-08

SOUTHERN REGION ENERGY APPROVED(MU)

ENERGY APPROVED(MUs)-YEAR 2004-07

1000

1500

2000

2500

3000

3500

MAY '0

4SEP

JAN '0

5

MAY'05 SEP

JAN'06

MAY'06 SEP

JAN'07

MAY'07 SEP

JAN

TOTAL TRANSACTIONS ( 2004-07)

0

200

400

600

800

1000

1200

MAY'04

SEPT

JAN'05

MAY'05

SEPJA

N

MAY'06

SEPJA

N

MAY'07

SEPJA

N

NO

. O

F T

RA

NS

AC

TIO

NS

<--Introduction of Day-Ahead Product from May,2005

YEAR 2007-08 (Upto DEC'07)

INTER61%

INTRA39%

INTER REGIONAL Vs INTRA REGIONAL ENERGY APPROVED (ALL INDIA)

Short Term Open Access Market Share

3.0

3.5

4.0

4.5

5.0

5.5

6.0

JAN'06 APR'06 JULY'06 OCT'06 JAN'07 APR'07 JULY'07 OCT'07

%of

Ene

rgy

App

rove

d (S

TOA

) vs

Ene

rgy

Met

Trade under Short-Term Open Access

17

2324

31

0.8

3.9

5.9

9.0

12

14

16

18

20

22

24

26

28

30

32

2004-05 2005-06 2006-07 2007-08(Projected)

En

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y (B

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1.0

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6.0

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Volume of trade (BUs) No. of transactions

Actual Upto Jan.,’08

Energy –26 BUsNo. - 7289

Energy traded in STOA per transaction

24.2

17.8

1.1 0.50

5

10

15

20

25

30

Advance First-come-First-served

Day ahead Same day

STOA Products

Mill

ion

Un

its

pe

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pp

rov

ed

tra

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ac

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Energy Traded in STOA per Transaction (2006-07)

No. of Transactions vis a vis energy traded (2007-08 - upto Jan.'08).

11915

7831

6030

176405 303

6191

3310

2000

4000

6000

8000

10000

12000

14000

Advance FCFS Day-Ahead Same-Day

STOA Products

Ap

pro

ve

d E

ne

rgy

(MU

s)

0

1000

2000

3000

4000

5000

6000

7000

No

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Energy Traded Per Transactions ( 2007-08, upto Jan.'08)

29.4

25.8

1.0 0.50.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Advance FCFS Day-Ahead Same-Day

STOA Products

MU

s/T

ran

sact

iosn

Number of Trading License issued by CERC

13

27

22

19

12

4

7 9

0

5

10

15

20

25

30

2004-05 2005-06 2006-07 2007-08

Approved

Active

Typical Approvals- Captive Power Plants  Captive Power Plant Quantum( MW)

Eastern Region

NBVL(OPTCL) 27

SAIL-DSP(DVC) 20

TISCO(DVC) 60

Bhushan Steel 25

J.P Cement (Rewa) 5

Western RegionIndo Rama synthetics 22

PSKL 10-30

Southern Region

Renuka Sugar 25

Vishwanath Sugar 7.5

Godavari Sugar 25

Ugar Sugar 25

Jindal Steel 200

Nav Bharat 50

NCS Sugar 13

Typical Refusals- Captive Power PlantsCaptive Plant Drawee Utility Quantum

(MW)Refusal by SLDCs

MMS Steel & Power [SR] BSES Rajdhani 7 Tamilnadu

Tata Sponge Iron Ltd. [ER] Noida Power Co. 12 Orissa

Renuka Sugars Ltd [SR] Punjab 5 Karnataka

DCM Shreeram [NR] Chandigarh 25 Rajasthan

Neelachal Ispat Nigam[ER] Haryana 10 Orissa

Vishwanath Sugar [SR] Gujarat 7.5 Karnataka

Ugar Sugar Works [SR] Gujarat 25 Karnataka

Real Ispat & Power Ltd. HPSEB 12 CSEB

Nav Bharat Ventures [ER] MP 27 Orissa

Typical Reasons for Refusal

• Transmission Charges• Cross-subsidy surcharge• Stand by charge• PPAs• Telemetry• Metering• Scheduling• Balancing Mechanism• Consent by STU/DISCOM• Functional Autonomy of SLDC

STOA – Success Story • Developed in consultation with all stakeholders• Applications Processed (Since Beginning) > 16,000 No.• Volume (Energy) of Trade (Since Beginning) > 85BUs• Applications Approved > 95 %

– Refusal/Non-consent by SLDCs - 3 to 4 %– Refusal due to system constraints < 1 %

• Curtailment in real time < 1%• Near Dispute free implementation• Logistics/infrastructure -In-house• Robust Financial Settlement System• Confidence Building & Dissemination of knowledge

STOA – Encouraging facts• Transactions between extreme corners of the country

– Kerala to Punjab– Nagaland, Arunachal, Tripura to Maharashtra, UP

• Most of the States participated.• Market Players – Simultaneous Buy & Sell on same day

– Delhi – Buy in Peak, sell in off-peak• Transactions from few MW to hundreds of MW

– 2 MW (JP Cement Rewa,MP – JP Cement, Ayodhya,UP)– 800 MW (BSES Rajdhani to UP)

• Surplus during Weekend/Holidays utilised– Budge-Budge of CESC : National Award for PLF of 99.6% in 2005-06

• Improved performance of Generating Plants – Kayamkulam GPS (PLF Improved, in 2006-07 – 57% and 2007-08- 82%)

• Diversity being gainfully utilized