regulatory aspects of cerc by s.c.shrivastava, joint chief (engg) cerc, new delhi 6/6/20141cerc
TRANSCRIPT
Regulatory Aspects of CERC
By
S.C.SHRIVASTAVA, Joint Chief (Engg) CERC, New Delhi
04/10/23 1CERC
• Till 1998
– By Govt.
• Since Aug. 1998
– By Central & State Regulatory Commissions under ERC Act 1998
• Since 2003
– By Central & State Regulatory Commissions under EA 2003
Tariff Regulation In India
04/10/23 2CERC
Tariff Setting In India
• Prior to 1992-
– Single part Tariff Cost plus on actuals (Schedule 6
of E(S) Act 1948)
• Since 1992 to 2001-
– For SEBs- Single part Cost plus on actuals
– For CPSUs & IPPs- Two part Cost Plus with
performance based rate making (KP Rao
Committee)
04/10/23 3CERC
Tariff Setting In India
• Since 2001 to 2003-
– For SEBs- Single part Cost plus on actuals
– For CPSUs & IPPs- Availability Based Tariff (ABT)
Cost Plus with performance based rate making
(CERC Regulation)
• Since 2003 onward-
– Availability Based Tariff (ABT) Cost Plus with
performance based rate making
– Competitively Bid Tariff
04/10/23 4CERC
Objective- EA 2003
“An Act to consolidate the laws…for taking measures
conducive to
– development of electricity industry,
– promoting competition therein,
– protecting interests of consumers
– supply of electricity to all areas
04/10/23 5CERC
Statutory Provisions in EA 2003
Section 3 & 4Regulatory Commissions to be guided by the NEP and TP.
Section 61 Regulatory Commissions to formulate “Terms and Conditions of Tariff” for determination of Tariff under Section 62 duly considering:– The factors which would encourage competition,
efficiency, economical use of the resources, good performance and optimum investments;
– The principles rewarding efficiency in performance;
– The promotion of co-generation and generation of electricity from renewable sources of energy;
04/10/23 6CERC
Statutory Provisions in EA 2003
•Section 62: Provide for determination of Tariff for sale
of power from a generating company to distribution
licensees
•Section 63: “Notwithstanding anything contained in
section 62, the Appropriate Commission shall adopt
the tariff if such tariff has been determined through
transparent process of bidding in accordance with the
guidelines issued by the Central Government”
04/10/23 7CERC
Provisions in Tariff Policy• All future requirement of power should be procured
competitively by distribution licensees
• Expansion of existing projects of State controlled/owned companies exempted
• Expansion of generating capacity by private developers for this purpose restricted to one time addition of not more than 50% of the existing capacity.
• New projects of State controlled/owned companies exempted for five years or more till the situation is found ripe to introduce such competition by the Regulatory Commissions.
04/10/23 8CERC
Provisions in Tariff Policy
• Clarification issued by the MoP on 9.12.2010 on Clauses 5.1 and 7.1 exempting following types of PSUs/CPSUs projects from competitive bidding route:
– Expansion projects of already Commission
projects
– Projects for which PPA has been sign on or before
5.1.2011
• No such relaxation for Pvt Sector
04/10/23 9CERC
• From State PSUs/ CPSUs at Cost plus tariff • Procurement through competitive bidding route
under case-1 and Case-2• Procure power from traders and discoms under
bilateral arrangements though Open access• Procure Power at the power exchanges through
collective transactions though Open access(Day ahead Market)
• Procure Power though UI (Real time market up to grid frequency 49.7 Hz)
Procurement Options for the Discoms
04/10/23 10CERC
Cost of Service based on performance linked norms– Balancing the interest of Generators on one hand
& beneficiaries on the other– Transparency– Light handed regulation – Encourage efficiency & Economy– Encourage Investment– System of incentive and disincentive for
performance
Regulatory Approach in Cost plus Tariff setting
04/10/23 11CERC
– Annual Fixed Charge (Capacity Charges)- Payment
Linked to availability
– Energy Charge- Payment linked to scheduled
generation
– Unscheduled Interchange (UI) Charge- payment
linked to grid frequency for deviation from the
schedule
– Incentive- For Ex-bus generation in excess of ex-bus
generation corresponding to the availability Norm
Availability Based Tariff
04/10/23 12CERC
• Provided for Pre-Tax Return on Equity• Tightened efficiency norms for the thermal power stations
– For existing 500 MW units Station heat rate norm reduced from 2450 kCal/kWh to 2425 kCal/kWH
– For New units operating margin in Station heat rate norm reduced from 9% to 6.5% from the design heat rate values
• Raised performance norms of availability from 80% to 85% coupled with incentive linked to availability
• Reduced aux energy consumption norm by 0.5% point for thermal generating stations.
• Provide for efficiency & performance norms for super critical technology units
• Provide for sharing of benefit of savings in secondary fuel oil consumption
CERC’s Terms and Condition of tariff for 2009-14
04/10/23 13CERC
04/10/23 CERC 14
Renovation & Modernization of Thermal power Plants
• Distinct activity recognized in Tariff Policy• Aimed at improved efficiency and performance• Suggesting Phasing out of very old and
inefficient units• Special allowance after useful life for
sustaining efficiency and performance parameters in well maintained stations Rs.5lakh.MW/Year with effect from 2009-10 escalated every year at 5.72%.
CERC’s Terms and Condition of tariff for 2009-14
04/10/23 14CERC
ABT-Thermal
Incentive/Disincentive Curve
0102030405060708090
100110120
0 10 20 30 40 50 60 70 80 90 100
Availability
% o
f F
ixe
d C
ha
rge
Old Stations
New Stations
04/10/23 15CERC
• Reasonable and achievable • Commensurate with technology, unit size,
fuel used and operating conditions• With due regard to industries performance• Wherever scope for improvement a
reasonable time to be allowed
Rationalisation of Performance/Operational Norms
04/10/23 16CERC
• Scope is limited• Approval of quantum of capacity/Energy to be
purchased and approval of fuel price in case of fuel specific enquiry
• Approval of Deviations from the guidelines• Notification of escalation indices for evaluation and
for payment purposes• Scrutiny of the process to see whether it conforms
to the competitive bidding guidelines• Approval of the tariff implications arising out of
change of law
Regulatory Scope Under Competitive bidding Route
04/10/23 17CERC
Escalation indices for EvaluationS.No Description Annual Escalation Rates
for Bid Evaluation
1 Escalation rate for domestic coal 6.16%
2 Escalation rate for domestic gas 0.96%
3 Escalation rates for different escalable sub-components of energy charge for plants based on imported coal
3.1 Escalation Rate for coal sub-component 11.11%
3.2 Escalation Rate for transportation sub-component 19.83%
3.3 Escalation Rate for inland handling sub-component 4.87%
4 Escalation rate for inland transportation charges for coal
4.1 Upto 100 Km distance 2.58%
4.2 Upto 500 Km distance 2.25%
4.3 Upto 1000 Km distance 2.03%
4.4 Upto 2000 Km distance 2.5 1%
4.5 Beyond 2000 Km distance 2.61%
5 Escalation rate for inland transportation charges for gas
3.08%
6 Escalation rates for different escalable sub-components of energy charge for plants based on imported gas
6.1 Escalation Rate for gas sub-component 11.47%
6.2 Escalation Rate for transportation of gas sub-component
19.83%
6.3 Escalation Rate for inland handling sub-component 4.87%
7 Inflation rate to be applied to indexed capacity charge Component
4.87%
8 Inflation rate to be applied to indexed energy charge component in cases of captive fuel source
5.05%
9 Discount rate to be used for bid evaluation 9.35%
10 Dollar-Rupee exchange variation rate 1.17%
11 Escalation for normative transmission charges 4.05%
04/10/23 18CERC
Escalation indices for paymentS.No Description Annual Escalation
Rates for Payment
1 Escalation rate for domestic coal 18.00%
2 Escalation rate for domestic gas 46.18%
3 Escalation rates for different escalable sub-components of energy charge for plants based on imported coal
3.1 Escalation Rate for imported coal 42.07%
3.2 Escalation Rate for transportation of imported coal -1.99%
3.3 Escalation Rate for inland handling of imported coal 9.22%
4 Escalation rates for inland transportation charges for coal
4.1 Upto 100 Km distance 0.00%
4.2 Upto 500 Km distance 0.00%
4.3 Upto 1000 Km distance 0.00%
4.4 Upto 2000 Km distance 0.00%
4.5 Beyond 2000 Km distance 0.00%
5 Escalation rates for inland transportation charges for gas -21.52%
6 Escalation rates for different escalable sub-components of energy charge for plants based on imported gas
6.1 Escalation Rate for imported gas 30.50%
6.2 Escalation Rate for transportation of imported gas -1.99%
6.3 Escalation Rate for inland handling of imported gas 9.22%
7 Inflation rate to be applied to indexed capacity charge component.
9.22%
8 Inflation rate to be applied to indexed energy charge component in cases of captive fuel source
8.51%
04/10/23 19CERC
Transmission Charges and Losses Matrix
S.No Name of the Region Transmission Charges (Rs/Unit)
Transmission Losses (%)
1 Northern Region 0.16 3.84
2 Western Region 0.15 4.86
3 Eastern Region 0.17 3.30
4 North-Eastern Region 0.35 3.81
5 Southern Region 0.23 3.90
04/10/23 20CERC
CERC Regulated TariffsSl. No.
Name of theGenerating Station
Fixed charges
Energy Charges as in January,2010
Total Cost of
Electricity
Coal Based thermal generating Stations of NTPC
A. Pit head Generating Stations
1 Rihand STPS St-I 54 117 171
2 Rihand STPS St-II 81 120 201
3 Singrauli STPS 27 118 145
4 Vindhyachal STPSSt-I
37 129 166
5 Vindhyachal STPSSt-II
62 124 186
6 Vindhyachal STPSSt-III
94 124 218
7 Korba STPS 31 82 113
8 Ramagundam STPS St-I & II
35 160 195
9 Ramagundam STPS St-III
81 147 228
10 Talcher TPS 64 92 156
11 Talcher STPS St-I 61 112 173
12 Talcher STPS St-II 67 112 179
13 Sipat-II 108 95 203
04/10/23 21CERC
CERC Regulated TariffsSl. No.
Name of theGenerating Station
Fixed charges
Energy Charges as in January,2010
Total Cost of
Electricity
B. Non-Pit head Generating Stations
14 FGUTPP TPS St-I 53 179 232
15 FGUTPP St-II 66 176 242
16 FGUTPP St-III 111 176 287
17 NCTP Dadri 60 234 294
18 Farrakka STPS 50 231 281
19 Tanda TPS 64 241 305
20 Badarpur TPS 49 265 314
21 Kahalgaon STPS St-I
65 182 247
22 Kahalgaon STPS St-III
80 188 268
23 Simhadri 72 163 235
04/10/23 22CERC
Competitive Bid Tariffss. No.
Project Size Status State Developer COD Date: 1* Unit
Levelized Tariff (Rs/kWh) as per Competitive Bidding
1 Talwandi Sabo 3 x 660 MW Tariff Approved
Punjab/Case 2
Sterlite Aug 2012 2.8643
2 Rajpura 2 X 660 MW Tariff Approved
Punjab/Case 2
L&T Jan 2014 2.89
3 Kamalanga 3 X 350 MW Tariff Approved
Haryana, Case 1
PTC/GMR Oct. 2011 2.54, Bus bar#
4 Babandh 4 X 660MW Approved Haryana, Case 1
LANCO July 2012 2.075, Bus bar#
5 Jhajjar 2 X 660 MW Approved Haryana, Case 2
CLP Power Nov-Dec, 2012
2.996
6 Mandva 2 X 660 MW Approved Maharashtra, Casel
LANCO Mahanadi
Oct. 2012 * 2.70
7 TirodaPh.l 2 X 660 MW Approved Maharashtra, Case 1
Adani Maharashtra
Aug. 2012 2.642
8 Chitrangi. Ph 1 3 X 660 MW Petition MP, Case 1 Reliance June, 2012 2.45
04/10/23 23CERC
Competitive Bid Tariffs
s. No.
Project Size Status State Developer COD Date: 1" Unit
Levelized Tariff (Rs/kWh) as per Competitive Bidding
9 Mahan 2 X 600 MW Petition MP, Case 1 Essar May, 2011* 2.45 10 Nandgaonpeth 2 X 660MW Petition Maharashtra,
Casel India Bulls Mar. 2014 3.26
11 Tiroda Ph. 2 2 X 660 MW Petition Maharashtra, Case 1
Adani Maharashtra
Power
Sept. 2014 3.28
12 Mahanadi 3 X 600 MW Petition Gujarat KSK Energy Mar. 2015 2.345
13 Prayagraj 3 X 660MW Petition UP, Case 2 JP Associates
July 2014 3.02
14 Sangam 2 X 660 MW Petition UP, Case 2 JP Associates
Jan, 2014 2.97
04/10/23 24CERC
Price of Electricity in Bilaterals/PXs/UI
04/10/23 25CERC
• Presently the prices in the PXs are going as high as Rs. 14 in the southern Region
The reasons?• Desperate buying by Tamil Nadu due to
– Increase in Peak Demand by about 10%– No capacity addition – Unable to over draw from the grid as UI– Transmission congestion leading to increase in
prices by Rs. 3 due to congestion charges
Price of Electricity in Bilaterals/PXs/UI
04/10/23 26CERC
• Conducive Environment
• Uniform bidding guidelines
• Standard bid documents and PPA
• Equitable sharing of risk between procurer and generator
• Reasonable penalty and risk mitigation
• Regulatory certainty
• State support in getting land, fuel, water, and environment clearances
• Success of bidding process demonstrated in 3 UMPP Sasan,Mudra and Krishnapatanam
Success of Competitive Bidding
04/10/23 27CERC
• Extent of State support in future• Manner of tackling situations arising out of
Change of law• Abnormal fuel price escalations• Development of transmission corridors• To early to say that price discovery is
competitive enough to beat the cost plus prices• There is need for advance action by the States
to start the procurement process with regard to their demand projections.
Challenges
04/10/23 28CERC