POWER GRID CORPORATION OF INDIA LTD

1. POWER GRID CORPORATION OF INDIA LTD 2nd MEETING OF COMMERCIAL SUB COMMITTEE OF SRPC 07TH DECEMBER 2006 BANGALORE SOUTHERN REGIONAL LOAD DESPATCH CENTRE

2. AGENDA 4.0COMPUTATION OF UI EXCHANGES BETWEEN ER-SR 5.iiiCOMPUTATION OF TALCHER STPS-II INJECTION 6.0 LOSS ESTIMATION METHODOLOGY

3. Computation of Talcher STPS-II Injection

4. Computation of Talcher STPS-II Injection • The computation of actual injection of Talcher STPS-II for accounting purposes was done using SEMs installed on the out going feeders till 31.03.2006. • Clause 7.4.6 of revised IEGC effective from 1st April 2006, provided actual injection of Talcher STPS-II shall be metered on 400 kV side of Generator transformers of Talcher STPS-II units. • CEA has issued (installation and operation of meters) Regulations, 2006 to become effective from 22.03.06 (came to notice in May, 2005). CEA REGU IEGC AMENDMENTS BY SRLDC GT vis a vis Feedres Inj MINUTES OF 1st COMM. NTPC LETTER 070906 SRLDC REPLY 111006 SRLDC REPLY 110806 NTPC LETTER 020806

5. Computation of UI Exchanges between ER - SR

6. The methodology adopted by SRLDC for computation of UI between ER-SR during the period 03.04.06 to 27.08.06 was based on the following stipulations made in IEGC (effective from 1.4.2006): 7.6.1 The regional boundaries for scheduling, metering and UI accounting of inter-regional exchanges between ER & SR shall be as follows:  400 kV Bus couplers between Talcher-I and Talcher-II  400 kV East bus of Gazuwaka HVDC. 7.6.3. No attempt shall be made to split the inter-regional schedules into linkwise schedules (where two regions have two or more interconnections).

7. As regards to the UI computation of Talcher Stage II, the following provisions as stated in IEGC were also taken into consideration: 7.4.2. For a clear demarcation of responsibilities and minimal to-and-fro coordination, the scheduling of Talcher-II shall be coordinated by SRLDC, and the 400 kV AC bus-couplers between Talcher-I (2x500 MW) and Talcher-II (4x500 MW) shall be treated as the interface between ER and SR. 7.4.6. …… The difference between the actual injection of Talcher II and the dispatch schedule shall constitute the UI of Talcher-II, for which payments shall be made from/into the UI pool account of Southern region operated by SRLDC, but at the UI rate corresponding to ER repeat ER frequency. The energy accounting for Talcher-II STPS shall be carried out by SRLDC. 7.4.7. While the dispatch schedule for Talcher-II shall be as advised by SRLDC, the actual generation at Talcher-II may be varied by station operators depending on ER frequency, as long as the resulting UI does not cause a transmission constraint in ER. In case of a transmission constraint being caused in ER by the UI of Talcher-II, ERLDC may advise Talcher-II to curtail its UI under intimation to SRLDC. Any such advise shall be immediately complied with by Talcher-II.

8. Specific Issues related to UI exchange betweenSR & ERvis-à-vis betweenTalcher Stage II to ER : • Any UI exchange is carried outwith the consent of SRLDC/ERLDC control rooms to move power mainly from surplus to deficit region • The direction and quantum of UI between woulddependon the generation level maintained by Talcher II - irrespective of regions status • Any UI exchange is carried out depending on the frequency of both the regions and thereby resulting into positive differential UI • Talcher II may inject UI irrespective of the frequency relationship of the two regions and thereby at times resulting into negative differential UI Annexure-I • Any UI exchange gives equitable benefits to the constituents in both the regions • Injection of UI by Talcher II if clubbed with SR to ER UI, may not result in such equitable scenario Annexure-II

9. METHODOLOGY FOR ACCOUNTING OF UI BETWEEN TALCHER II AND ER • It may therefore be seen that in view of the specific location of Talcher II vis-à-vis other ISGSs, the UI computation in respect of Talcher II is required to be followed in a manner which would be based on the IEGC provisions as stated above and at the same time it would not defeat the basic UI philosophy which stipulates that the UI exchange between two agencies/ regions should benefit both the parties. • In order to achieve this, whenever UI transactions are there in respect of Talcher II with ER, the UI calculations have to be carried out as per the IEGC provisions (clause 7.4.6 ) i.e. at ER frequency. • However as per this clause, as the payment for this UI to Talcher II has to be made from the UI pool account operated by SR, it is natural that SR UI pool must be suitably compensated by getting the equivalent amount from the UI pool operated by ER. • Furthermore by following this methodology as no differential gets generated in SR/ER UI pool on this account, there cannot be any sharing of accumulated differential UI. therefore the possible viable approach within the framework of IEGC regulations could be: --- to treat this transaction as a UI only between Talcher II and ER and --- while accounting these amounts (as it is) these can be routed through the SR weekly UI accounts

10. Payable by ER RS. 4.3 Lakhs Receivable by SR Rs. 6.2 Lakhs Negative Differential UI Rs.2.9 Lakhs

13. Annexure -I CASE – 1 UI from Talcher Stage II to ER when SR frequency < ER frequency Base Case: Talcher Stage II UI =0 MW SR Freq = 49.16 Hz UI Rate= Rs.5/ SR Freq = 49.16 Hz UI Rate= Rs.5/ ER Freq = 49.6 Hz UI Rate= Rs.3/ ER Freq = 49.6 Hz UI Rate= Rs.3/ 0 MW UI (from SR to ER) 0 MW UI (from SR to ER) UI (SR to ER) 0 MW UI (SR to ER) 0 MW Talcher Stage I & II I/C Talcher Stage I & II I/C 0 MW ER 50 MW ER Talcher Stage II Gen: 1650 Schd: 1600 Talcher Stage II Gen: 1600 Schd: 1600 SR SR 1600 MW 1600 MW Base Case +Talcher Stage II 50 MW UI (Talcher Stage 2 actual Generation = 1650 MW against Schd. of 1600 MW) • Issues • Considering the variable cost of Talcher Stage II as around 80 paisa it would be beneficial for Talcher Stage II to generate positive UI as the ER UI rate is more than its variable cost. • For every unit of power exported to ER, Talcher Stage II would get a price of Rs 3/Unit. • However if the UI by Talcher Stage II to ER is considered as UI from SR to ER, then it would be a case of –ve UI • For every unit of power exported , SR would expect a price of Rs 5/Unit while ER would be able to give a price of Rs 3/Unit only. • Such transactions accumulated during that periods could cause commercial implications. • In order to address this issue ,the UI transactions can be considered between Talcher Stage II and ER, however the accounts can be routed through SR.

15. 500 SR INTER-REGIONAL TRANSFER TALHER STAGE II UI = 0 ER COLLECTS RS 500 FROM ITS CONSTITUENTS EASTERN REGION ER FREQ ~49.16 Hz ER RATE = RS 5/ 200 100 OF THE REMAINING RS 200/- 50% IS PAID TO SR AND 50% IS RETAINED BY ER 100 EASTERN REGION SR TO ER 100 UNITS OF UI ENERGY IS TRANSACTED RS 300 IS PAID TO SR SR FREQ ~ 49.60 Hz/ SR RATE = RS 3/ 300 400

16. SR INTER-REGIONAL TRANSFER THERE COULD BE TWO METHODOLOGIES TO COMPUTE UIs METHODOLGY 1 EASTERN REGION ER FREQ ~49.16 Hz ER-SR UI AND TALCHER STAGE II UI IS COMBINED ER RATE = RS 5/ METHODOLGY 2 ER-SR UI AND TALCHER STAGE II UI IS ACCOUNTED SEPERATELY 50 100 EASTERN REGION TALCHER STAGE II TALHER STAGE II UI = 50 UNITS SR FREQ ~ 49.60 Hz/ SR RATE = RS 3/ SR TO ER 100 UNITS OF UI ENERGY IS TRANSACTED

17. 300 200 750 350 250 450 150 150 SR INTER-REGIONAL TRANSFER METHODOLGY 1 ER-SR UI AND TALCHER STAGE II UI IS COMBINED EASTERN REGION ER FREQ ~49.16 Hz ER RATE = RS 5/ ER COLLECTS RS 750 FROM ITS CONSTITUENTS 150 OF THE REMAINING RS 300/- 50% IS PAID TO SR AND 50% IS RETAINED BY ER 50 100 EASTERN REGION TALCHER STAGE II SR PAYS TO TALCHER STAGE II RS 250 FOR 50 UNITS UI RS 450 IS PAID TO SR TALHER STAGE II UI = 50 UNITS SR FREQ ~ 49.60 Hz/ SR RATE = RS 3/ SR TO ER 100 UNITS OF UI ENERGY IS TRANSACTED

18. 450 750 250 SR INTER-REGIONAL TRANSFER METHODOLGY 2 TALHER STAGE II UI = 50 ER-SR UI AND TALCHER STAGE II UI IS ACCOUNTED SEPERATELY EASTERN REGION ER FREQ ~49.16 Hz ER COLLETS RS 250 FOR 50 UNITS UI OF TALCHER STAGE II AND PAYS TO SR & SR IN TURN PAYS TO TALCHER STAGE II ER RATE = RS 5/ ER COLLECTS RS 750 FROM ITS CONSTITUENTS 200 100 50 100 OF THE REMAINING RS 200/- 50% IS PAID TO SR AND 50% IS RETAINED BY ER EASTERN REGION TALCHER STAGE II SR TO ER 100 UNITS OF UI ENERGY IS TRANSACTED RS 300 IS PAID TO SR SR FREQ ~ 49.60 Hz/ SR RATE = RS 3/ 300 400

19. SR TO ER UI = 100 Units, TALCHER STAGE II UI = 0 Units ER Rate = Rs. 5/- SR Rate = Rs. 3 /- All in Rs. SR TO ER UI = 100 Units, TALCHER STAGE II UI = 50 Units ER Rate = Rs. 5/- SR Rate = Rs. 3 /- METHODOLOGY 1 METHODOLOGY 2

20. Loss Estimation Methodology

21. LOSS ESTIMATION • Presently the notional transmission loss is taken as average actual loss in the system computed from the SEMs for the 2nd week prior to the current week. • At times though the weekly average actual loss may come out to be quite close to the weekly average estimated loss, still there may be a large difference between payables and receivables because in real time as the system parameters (frequency) and hence the UI rate will vary. IEGC CLAUSE DETAILS Extract from National Electricity Policy

22. DIFFERENCE BETWEEN PAYABLES AND RECEIVABLES Contributing factors • Drawal patterns of states • Interregional exchanges ( Scheduled or UI) • Geographical availability of generation • Network availability

23. DIFFERENCE BETWEEN PAYABLES AND RECEIVABLES Presently as per 126th SREB decision, the minimum of the payables and receivables in a week is taken by keeping interregional payments/receivables taken as constant and first charge basis.

24. DIFFERENCE BETWEEN PAYABLES AND RECEIVABLES Following alternatives may be considered Alternative 1 Option 1 By keeping Inter regional Payments constant, the beneficiaries and ISGS payments may be modified by taking average of the payables and receivables in a 15 minute time block. Option 2 The same procedure of 1 may be carried out in day wise instead of 15 minute time block Option 3 The same procedure of 1 may be carried out in week wise instead of 15 minute time block

25. DIFFERENCE BETWEEN PAYABLES AND RECEIVABLES Following alternatives may be considered Alternative 2 Option 1 By keeping ISGS and Inter regional Payments constant, the beneficiaries payments may be modified by taking average of the payables and receivables in a 15 minute time block. Option 2 The same procedure of option 1 may be carried out in day wise instead of 15 minute time block Option 3 The same procedure of option 1 may be carried out in week wise instead of 15 minute time block

26. As per IEGC Clause 6.5.6 of II The “net drawal schedule” to each beneficiary, in MW for different hours, for the next day. The summation of the station-wise expower plant drawal schedules for all ISGS and drawal from regional grid consequent to bilateral interchanges, after deducting the transmission losses (estimated), shall constitute the State-wise drawal schedule.

27. As per National Electricity Policy 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. A well planned and strong transmission system will ensure not only optimal utilization of transmission capacities but also of generation facilities and would facilitate achieving ultimate objective of cost effective delivery of power. 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. As far as possible, consistency needs to be maintained in transmission pricing framework in inter-State and intra-State systems. Further it should be ensured that the present network deficiencies do not result in unreasonable transmission loss compensation requirements.