The Hindu Business Line : TN power regulatory panel seeks public views on new tariff plan

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TN power regulatory panel seeks public views on new tariff plan

R.Y. Narayanan

Effort to maintain grid discipline, use resources optimally

Available factors
Performance-based tariff and new system of scheduling and dispatch
Encouraging grid discipline by making pricing frequency-dependent
Promoting trade in energy and capacity, economic load despatch

Coimbatore , Jan. 1

The Tamil Nadu Electricity Regulatory Commission (TNERC) has decided to conduct a public hearing on the issue of introducing intra-state Availability Based Tariff (ABT) as part of efforts to maintain grid discipline and for optimal utilisation of system resources.

It has also decided to issue suo motu proceedings to the Tamil Nadu Electricity Board (TNEB) for initiating a time-bound programme to establish the required infrastructure as a prelude to the introduction of intra-state ABT.

In a consultative paper on `Implementation of intra-state ABT in Tamil Nadu' posted on its Web site, the TNERC said the introduction of inter-state ABT had "brought about substantial improvement in the grid operation resulting in grid discipline and optimal utilisation of the generation capacities''.

The National Electricity Policy advised the State electricity regulatory commissions to introduce the ABT regime at the state-level. It also said itshould be introduced at the state-level and "Appropriate Commission may also introduce differential rates of fixed charges for peak and off-peak hours for better management of load''.

The TNERC said that in line with the above policy directions, the commission had to initiate measures for implementation of intra-state ABT mechanism in Tamil Nadu. The paper said that ABT, particularly in the Indian context, "stands for a rational tariff structure for power supply from generating stations'' on a contracted basis.

It is a performance-based tariff for supply of electricity and a new system of scheduling and dispatch that requires both generators and beneficiaries to "commit to day-ahead schedules''. It is also a system of rewards and penalties to enforce pre-committed schedules, though variations are allowed, if notified early.

One of the main reasons for implementing ABT is to encourage grid discipline by making pricing of power frequency-dependent thereby forcing state participants to improve procedures for forecasting, scheduling and load despatch. The other objectives are promotion of trade in energy and capacity, economic load despatch and encouragement of higher availability.

Referring to the benefits to the power system, the consultative paper said that ABT brought grid discipline by maintaining frequency in "technically feasible narrow band''. Grid frequency has "dramatically improved'' from the range of 48-52Hz to 49-50.5Hz for most of the time. Because of the built-in incentives to maximise generation during peak hours, higher consumer demand is met and it ensures optimal utilisation of available resources and generation capacities.

It encourages power generators to maximise generation during peak hours with incentives and discourages the same during off-peak hours with penalties. The utilities are compelled to draw power as per schedule drawal, failing which they have to fork out Unscheduled Interchange (UI) charges. The licensees and end users also benefit from the system.

The intra-state ABT would be applicable to suppliers and drawers involved in the state grid who are required to give daily schedules to State Load Despatch Centre and have agreed to pay as per ABT for any deviation from schedule.

All generating stations except those covered by inter-state ABT, nuclear, wind and solar power stations, hydro stations, power plants of capacity below 10 MW and CPPs and co-generating stations would be covered by intra-state ABT.

Basic need

The paper said that the "basic requirement'' for implementing ABT was a three-part power tariff comprising fixed charges, variable charges and UI charges. While fixed charge would be linked to availability and variable charges to scheduled energy, the UI charges would be applicable for the deviations from the schedule.

In order to implement the intra-state ABT, a "two-part tariff should be implemented for all the generating stations within the state'' barring the non-conventional energy sources and the TNEB would have to take action to convert the existing single part tariff to two-part tariff in respect of all the stations concerned. The board also would have to upgrade the facilities at the State Load Despatch Centres and establish Area Load Despatch Centres. TNEB has initiated measures for modernising the system.

The TNERC noted that the TNEB was at present a vertically integrated utility and with the present unbundled structure, the scope of implementing ABT mechanism in Tamil Nadu "may appear not to yield any major benefits to TNEB/consumers''.

It had been pointed out during the discussion in a Forum of Indian Regulators meeting on November 10, 2006 that unbundling was necessary pre-condition for introducing intra-state ABT.

But even under an integrated set-up, the TNEB has to "necessarily move towards establishment of profit centre concepts and under such a scenario, self discipline, proper accounting and optimum use of its energy resources will be automatic with intra-state ABT''.

The commission said that in fact, this "cannot be postponed indefinitely and we should not be lagging behind when the situation warrants such arrangements to be in place at the appropriate time''.

It further observed that "the intention of the Commission is that the TNEB should immediately start establishing the left over infrastructure and other facilities with a time frame and to the extent possible''.

The TNERC said that taking into consideration the necessity for introducing intra-state ABT, the benefits, present status of required infrastructure, the additional expenditure TNEB had to incur that would have to be "allowed as a pass through in the future tariff'', the Commission had decided to invite the public opinion through the consultative paper.

It has decided to conduct a public hearing and issue suo motu proceedings to TNEB to initiate a time-bound programme for establishing the infrastructure and other requirements needed for introducing intra-state ABT at an appropriate period on a later date after these works were completedIt said comments/suggestions on the consultative paper should be sent on or before January 31.

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