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Open Access and Pricing of Power 17 th July’14

Open Access and Pricing of Power 17 th July’14. Rohit Bajaj V.P. (Business Development). In this presentation. Indian Power Market: Present Status. Long Term. Power Purchase Agreements. 89%. Upto 25 Years. OTC Licensed traders (61). Medium Term. 6%. 3 months- 3years.

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Open Access and Pricing of Power 17 th July’14

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  1. Open Access and Pricing of Power17th July’14 Rohit Bajaj V.P. (Business Development)

  2. In this presentation

  3. Indian Power Market: Present Status Long Term Power Purchase Agreements 89% Upto 25 Years OTC Licensed traders (61) Medium Term 6% 3 months- 3years OTC Intraday- 3 months Short-Term Exchanges Intraday - 3 months 1. Intra-day 2. DAM 3. DAC 4. Daily 5. Weekly 3% Balancing Market Unscheduled Interchange 2% Real Time

  4. Growth Trend of Short Term Power Markets Source: Monthly MMC Reports

  5. Status of Open Access

  6. State wise Status of OA Consumers FY13-14

  7. Share of OA Consumer in Total Purchase 2.80

  8. Participation Increasing Participation

  9. Industrial Segment Participating at IEX As on 30th June’14

  10. Company Snapshot 95% Market Share ~80,000MWhaverage dailytrade 3000+ Participants 2100+ Industries Transparency Liquidity Competition

  11. IEX Market SegmentsDelivery-based Contracts Day-Ahead Market since June,08 Closed , Double-sided Auction 10-12 am bidding Each 15-min block , 0.1 MW min NOC required Term-Ahead Market since Sep,09 Day-Ahead Contingency – Another window 3-5pm Intra-Day -for the same day starting 2 pm Daily-for rolling seven days (delivery starting after 4 days) Weekly-for 1 week (Monday-Sunday) Renewable Energy Certificates since Feb,11 Green Attributes as Certificates Sellers : RE generators not under feed in tariffs Buyers: Obligated entities 1MWh equivalent to 1 REC Next… Energy Saving Certificates Auction Continuous

  12. Features of Day Ahead Market N1 N3 A2 N2 N2 A1 E1 W1 W3 W2 E2 S1 S2 12 Bid Areas

  13. DAM Trading Process 10:00 am to 12:00 pm 12:00 pm to 1:00 pm 1:00 pm to 2:00 pm 3:00 pm 5:30 pm 6:00 pm • Bids for 15- min each or block bids can be placed MCP &MCV calculated Corridor availability and funds verified Final ACV and ACP calculated. Market splitting if congestion Collective transaction confirmation by NLDC Final Schedule sent to RLDC for incorporation

  14. Prices in the Day-Ahead Market at IEX • Diverse participation led to high liquidity and most competitive prices • Prices smoothened gradually depicting the true market scenario • DAM prices emerged as the benchmark price for a short term trading

  15. Cleared Volume vs. MCP at IEX

  16. Open Access Charges: What a consumer pays

  17. Open Access: What a consumer paysLosses • An open access consumer has to bear in kind the following losses as defined by the relevant regulations

  18. Case : GujaratLanded Cost for Open Access Consumer *Assumption: Buy Quantity is 10 MW for 24 hours and 1000 Portfolios are selected everyday **IEX W2 Avg Price FY 13-14

  19. Case : GujaratCost Benefit Analysis- Retail vs. Open Access Industrial Consumer (Connected Load: 66kV) Retail Consumer Open Access Consumer Retail Tariff: INR 5.75/unit Landed Cost: INR 3.76/unit Cost Effective Measure for Power Supply is Open Access, offering savings of INR 1.99/unit

  20. Open Access Charges Losses and Charges in select States at 33 kV level * Additional Surcharge in case of Haryana is Rs 0.50/unit

  21. Landed Cost to Consumer Accessing DAM at IEX (33 kV, 1 MW, RTC) • Assumptions: • Consumer connected at 33kV level • Consumer load = 1 MW • Average Price at which procured from IEX = Rs 2.5/kWh for all • Calculating landed cost after adding POC, STU & Wheeling Charges & losses, NLDC operating & application charges, SLDC charges, IEX transaction charges

  22. Average Area Prices in DAM at IEX(Apr’13-Mar’14) Area DAM Prices (RTC) N1 N3 A2 N2 N2 A1 E1 W1 W3 W2 E2 S1 S2 12 Bid Areas

  23. Cost saving for Industries Procuring Power through IEX Case study of some industrial units shows the monthly cost saving as a result of procuring power from IEX instead of resorting to costly power from DG sets or Discom

  24. Barriers to Open Access

  25. States allowing open access • Haryana: High CSS and additional surcharge of 50 p/unit • Punjab: High CSS and high wheeling charges (same for all voltage) • Gujarat Charges applicable on the reserved quantum (OA requested) & additional surcharge of 42p/unit • Rajasthan- No issue • Tamil Nadu: OA not allowed to Sellers, Sec-11 invoked

  26. Restrictive Open Access • High Open Access charges: • Chhattisgarh, Orissa, Assam – High CSS • Meghalaya: OA charges for full day on highest quantum in a time block, • Approvals and additional requirements: • Maharashtra: Power through Exchange permissible only on week ahead basis or higher and not on Day-Ahead basis. • Himachal : Requires exact schedule a day in advance for purchase through Discom • MP: Approval from Discom • Karnataka: Imposed Sec 11 briefly. Consumers OA is possible. • Infrastructure Constraints: • Tripura, Mizoram, Manipur, Nagaland, J&K

  27. States not allowing open access • SLDC Hindrance • Uttar Pradesh, Bihar, Jharkhand - Approvals not given • Absence of adequate regulatory framework • Sikkim: Regulatory inadequacy • Open Access made unviable through high charges • West Bengal: High CSS and flat tariff • Jharkhand: High CSS • Delhi: Either Discom or OA

  28. General Issues and resolution • Financial Settlement • Delay in Energy Credits (Haryana ) • UI Settlement – • No credits for under drawals • NoC for longer periods (3-6m) • Same NoC applicable for intra-day transactions • Procedures to be issued by NLDC

  29. Thank You for your attention www.iexindia.com

  30. Open Access Registry FrameworkProposal for implementation Stakeholders Financial Institutions (in future) OA Applicants • This will bring in transparency and facilitate faster transactions using automatic rule-based open access clearance while removing manual discretions • Integrated IT based system • All OA approvals automated • Function as an interacting medium between the OA Participants, Trade Intermediaries/PXs and National/Regional and State LDCs. • Record of Information will be available to CERC, System Operators, OA Customers, Traders and PXs OAR LDCs Regulators • Store information of all OA granted • Info on inter-state corridor available for STOA as uploaded by NLDC/RLDC • Info on availed STOA corridor

  31. Proposed amendment in the Electricity Act, 2003Separation of Carriage & Content • Broad Principles • Distribution and Supply shall be recognized as separate licensed activity • Distribution Licensee: To be responsible for development, operation and maintenance of distribution network business and shall have an obligation to provide connection on demand to any consumer in its area of distribution • Supply Licensee: Clear unbundling from existing distribution licensee • Responsible for arranging supply of electricity to all consumers in the area of supply. The areas of supply for the incumbent supply licensee to be the same as area of distribution for the distribution licensee • Competition among suppliers for eligible customers (1MW+) • We need to deal with India-specific issues • Cross subsidy elimination Roadmap • T&D Loss Treatment (Supplier Vs Distributor) • Exempt small utilities from Unbundling

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