Tariff Discovery through Competitive Bidding-case studies & QualityBy power of

Er NC Goyal Chief Engineer(Retd)

1

Tariff Based Competitive Bidding

The Government has set January 5 as the cut-off date for power projects to shift to a tariff-based competitive bidding regime. The decision taken by a Group of Ministers on power sector issues effectively disallows future generation and transmission projects to enter into power purchase agreements based on the current cost-plus', regulator3

Tariff Based Competitive Bidding

determined tariffs, a move that is expected to bring in transparency in the award of projects and drive down tariffs. The only exceptions, where the continuation of the cost-plus' tariff has been allowed, are the expansion of already commissioned projects and multipurpose hydro projects.
4

Tariff Based Competitive Bidding

States should fully migrate to procurement of power by Discoms (distribution utilities, including State Electricity Boards and private distribution companies) through tariff-based competitive bidding both for public and private sector generation and transmission projects. The clarification by the Ministry proposes the January 5 deadline.

Tariff Based Competitive Bidding

For the sake of abundant clarity, the Power Ministry would issue a clarification regarding the permitted exemptions in the Tariff Policy for the expansion/upgradation of projects, excluding the hydro sector, the decision of the Group of Ministers, headed by the Union Power Minister, Mr Sushilkumar Shinde, had said. The clarification by the Ministry proposes the January 5 deadline.
6

Tariff Based Competitive Bidding

CERC firm The Central Electricity Regulatory Commission (CERC) had in June firmly ruled in favour of shifting to a tariffbased competitive bidding regime for future power projects from January, citing better price discovery and lower retail tariffs.
7

Tariff Based Competitive Bidding

NTPC Ltd, the country's largest power generator, had been lobbying hard for an amendment to the Centre's tariff policy to permit continuation of the cost-plus tariff structure for public sector undertakings beyond the January deadline. Similar requests had also come in from other State-owned units, including NHPC Ltd and Satluj Jal Vidyut Nigam Ltd.
8

Tariff Based Competitive Bidding

The CERC, in response to the Ministry's request in April seeking the Commission's advice on NTPC's request for extending the cost-plus tariff regime, had told the Government that the deadline for the transition to a tariffbased bidding process should not be extended.
9

Tariff Based Competitive Bidding

The Clause 5.1 of the Tariff Policy provides that from next year onwards, all future procurement of power by distribution utilities should be done through tariff-based competitive bidding. The Commission said it carried out an internal preliminary exercise for comparing the tariffs
10

Tariff Based Competitive Bidding

obtained through competitive route and those being allowed under the current cost-plus tariff structure, which indicated that the tariffs obtained through bidding were lower than the levelised tariff under the current cost-plus regime.

11

Tariff Based Competitive Bidding

NTPC, which has been a slow starter in bagging projects offered through competitive bidding, had maintained that it was at a disadvantage compared to its private sector competitors due to the need to disclose its project tariff details and problems in quick decision-making.
12

Tariff Based Competitive Bidding

The CERC has suggested that the Centre should review the various guidelines and other frameworks applicable to PSUs with a view to give them adequate autonomy and decision taking authority so as to enable them effectively participate in tariff-based competitive bidding.
13

Supply of Electricity From the Rajpura Thermal Power Project (RTPP)-A Case Study
1. This petition has been filed by Punjab State Electricity Board (now Powercom) under Section 63 of the Electricity Act 2003 (hereinafter referred to as the Act) for adoption of tariff determined through an international competitive bidding process for supply of electricity from the Rajpura Thermal Power Project (RTPP).
14

Supply of Electricity From the(RTPP)-A Case Study

2. The petitioner (procurer) has submitted that a wholly owned Special Purpose Vehicle (SPV) in the name of Nabha Power Limited (NPL) with its registered office in the PSEB Building, The Mall, Patiala was incorporated on 9.4.2007 under the provisions of the Companies Act 1956
15

Supply of Electricity From the(RTPP)-A Case Study

to develop RTPP with a contracted capacity of 1200 MW 10% on a Build, Own and Operate (BOO) basis through international tariff based competitive bidding as per Guidelines issued by Ministry of Power, Government of India.
16

Supply of Electricity From the(RTPP)-A Case Study

It has been further submitted that NPL completed various preliminary project development activities as per the Guidelines and carried out the bid process in its capacity as the authorized representative of the procurer. It is also stated that in compliance with order dated 27.5.2009 passed by the Commission in Petition No.5 of 2009 filed by the procurer for permission
17

Supply of Electricity From the(RTPP)-A Case Study

to issue a letter of intent to Lanco Infratech Limited, the applicant squeezed the two stage bid process by issuing the Request for Qualification (RFQ) and Request for Financial Proposal (RFP) simultaneously and thereafter conducted another competitive bidding process to select the developer for RTPP.
18

Supply of Electricity From the(RTPP)-A Case Study

3. Giving details of the bidding process, the petitioner has indicated that of the total number of seven bidders only one was disqualified at the RFQ stage. The non-financial bids of the balance six were thereafter opened on 3.11.2009 and on the basis of the recommendations of the Evaluation Committee, the financial bids of the same six qualified bidders were opened on 16.11.2009.
19

Supply of Electricity From the(RTPP)-A Case Study

The bids received were subjected then to an evaluation process by PFC Consulting Limited, who had been appointed as consultants for the purpose of overseeing bid process. The consultants submitted their recommendations to the Evaluation Committee, which after consideration thereof referred the matter to the NPL Board.
20

Supply of Electricity From the(RTPP)-A Case Study

The Board of Directors of the NPL in its 35th meeting held on 17.11.2009 decided that M/s L&T Power Development Limited was the successful bidder. After approval of the Chairman of the then PSEB who was authorized to take all decisions regarding RTPP, a letter of intent was stated to have been issued to M/s L&T Power Development Limited on 19.11.2009 for setting up two thermal units of 660 MW each and the supply of 2x617.10 MW 21 contracted capacity to the petitioner.

Supply of Electricity From the(RTPP)-A Case Study

The letter of intent was duly accepted by M/s L&T Power Development Limited in their letter of 26.11.2009. In accordance with the terms of RFP, the Power Purchase Agreement was signed on 18.1.2010 to procure the entire power generated from this project for a period of 25 years
22

Supply of Electricity From the(RTPP)-A Case Study

The petitioner has also informed that as per financial bid of M/s L&T Power Development Limited, the evaluated levelized tariff is Rs.2.890 per kwh. The petitioner has finally prayed that the tariff quoted by M/s L&T Power Development Limited in respect of RTPP adopted by the Commission under section 63 of the Act.
23

Supply of Electricity From the(RTPP)-A Case Study

The contracted capacity of the project with a Unit configuration of 2x660 MW has subsequently been revised from 1234.2 MW to 1320 MW by way of a revised configuration of 2x700 MW under clause 3.1.1 A of the PPA.

24

Supply of Electricity From the(RTPP)-A Case Study

4. The Commission observes that in case of tariff discovery through a competitive bidding process undertaken under Section 63 of the Act, the Commission is essentially to adopt the tariff on being satisfied that a transparent process of bidding in accordance with the Guidelines has been followed in determination of such tariff. The Commission notes that the petitioner has in compliance of
25

Supply of Electricity From the(RTPP)-A Case Study

para 6.1 of the Guidelines signed the PPA with NPL on 18.1.2010 after acquisition of 100% shares of Powercom by the developer as per provisions of the RFP thereby transferring NPL on that date to the successful bidder.
26

Supply of Electricity From the(RTPP)-A Case Study

The petitioner has further confirmed compliance of para 6.2 of the Guidelines by the Evaluation Committee constituted by the petitioner and NPL for evaluation of bids which has provided appropriate certification that the evaluation is in accordance with the provisions of the bid documents.
27

Supply of Electricity From the(RTPP)-A Case Study

A certificate from the procurer that the bid process is in conformity with the Guidelines also stands submitted. As per requirements of para 6.3 of the Guidelines the evaluation of bid was also made public through an advertisement in The Tribune, The Economic Times, The Times of India, Ajit and Punjab Kesri on 4.2.2010
28

Supply of Electricity From the(RTPP)-A Case Study

Further, in pursuance of para 6.4 of the Guidelines, the signed PPA and certification from evaluation committee and procurer have been submitted to the Commission for adoption of tariff as per Section 63 of the Act. The Commission accordingly observes that the necessary documents supporting compliance of the provisions of paras 5.9, 6.1, 6.2, 6.3 and 6.4 of the Guidelines have been placed on record by the petitioner.
29

Supply of Electricity From the(RTPP)-A Case Study

5. Based on submissions in the petition, the documents placed on record and the factual position as brought out above, the Commission concludes that tariff discovery for the RTPP has been carried out through a transparent process of bidding in conformity with the Guidelines.

30

Supply of Electricity From the(RTPP)-A Case Study

Accordingly, in terms of Section 63 of the Act, the Commission adopts the evaluated levelized tariff of Rs.2.890 per kwh for supply of power to the procurer by NPL. The petition is disposed of accordingly.

31

Quality Power Supply

If you ask a commoner How is Power Supply? he answers OK [or otherwise] Just meaning availability.
If supply is available he says irrespective of voltage, frequency other quality parameters. OK and

Some power is better than No Power for most of the consumers.

There are voltage sensitive and frequency sensitive loads, which need quality power supply .
32

GRID SIDE Voltage Criteria CEA Standards:

System Voltage 400 kv 220 kv 132 kv As per IE Rules 1956 : Low & Medium High not > 6% not > +6% & not < -9% Max 420 kv 245 kv 145 kv Min 360 kv 200 kv 120 kv

EHV

not > +10% & not < -12.5%

33

(GRID) Voltage Unbalance

Voltages across each pair of phases shall be equal in magnitude and 1200 apart in phase angle. Deviations cause decrease in efficiency, negative torque, vibrations, overheating etc Voltage unbalance = Deviation between lowest & highest voltages between phases divided by average voltage across these phases. Limits: 220 kv & above - 2% Below 220 kv - 3%
34

Frequency
Statutory limits : rule1956) 48.5 to 51.5 HZ (IE

CERC standards:

49.5 to 50.5 HZ

A commercial mechanism (viz) ABT (Availability Based Tariff) is developed as per which UI (Unscheduled interchange) is priced on the following basis: Active power based on frequency

Reactive power based on voltage

This has resulted in Grid Discipline in Indian Power Utilities and CERC standards are being maintained. 35

Reliability
System Reliability includes three aspects

- System adequacy
- System security - Service reliability

Generation adequacy is measured in terms of LOLP (Loss of load probability) i.e. system capacity not being able to meet demand
- Preliminary (existing) 20% - Transition 8% - Final 1% (87.6 hrs in one year)
36

System Security
Ability of the power system to withstand sudden disturbances such as short circuits or sudden loss of elements (generator, transformer, line etc) System shall be designed for security level of n-1 or n-2 Loss of a critical generator (highest capacity) - ICT - Line (400 KVSC, 220 KVDC, 132 KVDC etc) - HVDC Pole
37

System Security (Contd.)

n-1 condition shall not result in

- Instability of system
- Overloading of lines / trfrs for more than 15 mts - Voltage drop of more than 10% - Load shedding - Rescheduling of generation Spinning Reserve 1% of system peak

IEGC specifies running of generators at 90% of MCR and all generators of 50 MW & above capacity shall be on free governor mode.
38

Service Reliability Customers perceptions of reliability are actually shaped by a combination of factors, including voltage characteristics. However, the most visible of these are the continuity of supply factors that manifest themselves in outages, be they momentary or extended.

39

Service Reliability
The type of interruption: planned or unplanned interruptions. Some customer satisfaction surveys have revealed that customers appreciate advance notice of planned interruptions. The duration of each interruption: short or long interruptions. For example, the European technical standard EN 50160 defines any interruption that lasts more than three minutes as a long interruption.
40

Service Reliability
Service Reliability is indicated by
SAIFI: System frequency index year energy is not supplied.

contd

Average Interruption indicates how many times in a

SAIDI: System Average interruption duration index indicates how long during the year energy is not supplied.

Duration of outage in Ti (minutes) sum of interrupted loads : Pi (KVA) SAIFI = Pi / P total SAIDI = [ Pi x Ti / P total] 60
41

Service Reliability
Allowable limits

(Contd.)

SAIFI SAIDI Existing Stage Final Stage No limit No limit

Transition Stage

24 / Yr.
18 / Yr.

10 hrs/ yr
8 hrs / yr.

Scheduled outages which are communicated to consumers before hand are not included
42

Harmonic Distortion
General Description

Many types of equipment and phenomena can produce voltages and currents at frequencies that are multiples of the power frequency. These high frequency components are called harmonics and their ratio to the fundamental frequency is the harmonic order. Harmonics have many negative effects on the system and connected loads, and they have to be limited to a manageable level.
43

Harmonics Control and Measurement

Control
Utility shall monitor the voltage harmonic levels at the supply points to the Users (DISCOMS, Genco, major users and other strategic locations on the transmission system.

Utility will compile a list of all metering points and take measurements at 5 sites per month. The list has to be submitted to ERC for approval.
Measurement

The measurements should conform to IEC Std 10004-7 or IEEE Std 519. The measurements should be taken at 10 minute intervals and should last for 1 week per site.
44

Voltage Flicker
General Description If the voltage fluctuates, the luminous intensity of the lamps and TVs will fluctuate correspondingly. If the fluctuation is of a magnitude and frequency perceptible to the eye, it becomes flicker. Flicker could range from annoying to complete interference of normal activity.
45

Voltage Flicker

(Contd.)

Flicker is not usually produced by the power system but by customer loads such as arc furnaces, arc welding, compressors, starting of large motors, etc. Since voltage fluctuation of the system affects other users on the same system, the transmission company needs to control the flicker on its lines and station buses.

46

Voltage Flicker

(Contd.)

At the same time, flicker-generating loads connected to the system have to be controlled. Indicator of Quality for System Flicker Flicker is expressed as: V = 100 x (Vmax Vmin) Vnom. 50% people perceived light flicker as annoyance under the following conditions: Voltage Change 1 Volt 2 Volts 4 Volts 2 1
47

an

Changes / Sec. 4

Voltage Flicker
Control and Measurement

(Contd.)

Substations which supply heavy industrial loads such as furnaces, steel mills, etc. are targets for flicker monitoring. Other substations and connection points will be selected for monitoring on a random basis. At least one site is monitored each month.

The list of monitoring points is submitted to APERC for approval at least 2 months before the monitoring.
48

Voltage Flicker

(Contd.)

The flicker measurement will be conducted at 10 minute intervals according to procedures outlined in IEC Std 61000-4-15. Each site is measured for 1 week. Enforcement of Limits (As per AP Grid Code)
Flicker limits and control and measurement procedure will be in effect only in the Final Stage
49

Power Factor
General Description It is desirable that loads on the system have power factors at or close to unity as that represents the most efficient use of the system capability and the least loss of energy. It also eliminates many transient stability problems.

Any load with a power factor lower than 90% is imposing burden on the transmission system and other Users. Power Companies restrictions on the customer loads. therefore impose power factors of 50

Power Factor (Contd.)

Power factor surcharges are levied on customers where, Trivector metering is done and where p.. is below allowed limits. Limit The minimum power factor allowed is 90%.

Control and Measurement

Power factor measurements are made continuously in conjunction with the voltage measurements. Loads with inherent low power factors should automatically include capacitors to correct the p.. 51

Power Factor (Contd.)

Penalty A user with power factor worse than 90% may be refused connection to the transmission grid until the problem is rectified. Alternatively, a penalty may be assessed. Enforcement of Limits

Imposition of limits of power factor shall be with immediate effect (A.P. Grid Code)
52

. Reliability

- Breakdown Maintenance
Efficient and pleasant relations of the discoms with the consumers. Communication with the customer through IVC (interactive voice calls) by dial-up connections. Introducing customer PIN (Personal Identification Number) for registration of no current complaints and following up till supply is restored.
53

Reliability - Breakdown Maintenance

Use of GIS and digital maps for pin pointing location of fault and nature of fault. Deployment of strength and specialty maintenance crew corresponding to the nature of the fault. The strength of the crew would be based on collapse of supply in the entire area or restricted to a particular segment

54

Reliability Contd-Preventive Maintenance of Distribution Equipment

.

Creating asset database of all sub-station equipment and on-the-ground equipment, which would include key information relating to the history beginning from its installation, defining the time of periodic maintenance requirements (viz.., checking of tightness of bolted connection, visual inspection, oil filtration of transformers etc.) of all equipment in the network.
55

Reliability Contd-Safety and Reliability Enhancement

Generate Maintenance schedules from above. Bring out dos and dont (checklist points) in simple language handbook for operating and maintenance staff. Plan tree pruning along the line routes. Review the existing substation Earthing..

56

Reliability Contd-- Maintenance Planning and Scheduling

Draw inventory needs of Spare Parts for Switchgear, lines (overhead, underground), Protections, batteries, transformers and other capital equipment. Frame inventory requirements of consumables, hardware and petty unforeseeable needs. Ensure maintaining minimum inventory levels of hardware, consumables and spare parts. Computerization of all such inventory for resource management and optimal use. Manpower planning and optimization.
57

Reliability Contd-Condition Monitoring and Predictive Maintenance

System studies based on the real time data and planning augmentation/strengthening of the distribution equipment. Use of Infra red cameras to monitor hot spots and loose connections. Study of long LT feeders. Study of overloaded transformers. Study of under loaded transformers.. Study and identify poor workmanship, electrical looseness, non-compatible hardware, weak Earthing, pin and post insulators,cross arms
58

. Reliability Contd--

Condition Monitoring and Predictive Maintenance

Location of new DTRs and substations in the load centers. Optimization of each DTR and substation equipment. Overloading and under loading both to be analyzed Remedies in loss reduction and failures. Predict future load growth at the time of clearing FRS (Feasibility Reports) for new connections. Logging all these data for MIS.
59

Reliability Contd-Safety and Reliability Enhancement

Improve housekeeping at the substation premises (All enclosures shall be boxed up, trench covers shall be in place, safety kit in place, first aid box in place etc). Provide aerial bunched cables in areas where bare conductors can not be laid due to congestion of space viz.., narrow lanes (Also provide dry type distribution transformers and LT distribution boxes for providing consumer connections). Ensure a proper Permit to work system incorporating safety checks, safety Earthing at all locations and equipment. Introduce Hot line maintenance equipment and 60 procedures for overhead lines.

Reliability Contd-Safety and Reliability Enhancement

As distribution systems age, planners increasingly face repair, upgrade, and replacement decisions. The problem of aging assets has become more important because of the increasing emphasis on reliability, customer service, and cost reduction . However, reliability is greatly influenced by maintenance and environmental factors that are unique to individual utilities.
61

Reliability Contd-Safety and Reliability Enhancement

It is extremely important that individual utilities track their individual component reliability so that over time they can understand the unique reliabilities of their installed components. There is no single, generally available dataset that distribution planners can use to answer all questions associated with reliability-based planning.
62

Continuity of Supply Standards

KPI Example Standard Comments

Duration of interruption per customer per single outage

Responding to failure of suppliers fuse: within 4 hours in urban areas and 8 hours in rural areas. Restoring electricity supply after faults (ex. force majeure events): 80% within 8 hours.

There is not yet a well-developed history with these standards, so adaptation may be required after an initial period of experimentation with measurement and reporting.

Number of interruptions per customer per year

Maximum no. of interruptions per LV customer per year: - Urban = 12 - Suburban = 15 - Rural Concentrated = 18 - Rural Sparse = 24 Maximum no. of interruptions per MV customer per year: - Urban = 8 - Suburban = 12 - Rural Concentrated = 16 - Rural Sparse = 20

These standards are very new to the regulation of electric companies and should be used cautiously until sufficient experience has been gained to instill confidence in companies and regulator alike.

63

Continuity of Supply Standards contd

Yearly duration of interruption (ex. Force majeure and third party action) Max hours of interruption per customer per year: - Urban LV = 8 hrs - Urban MV = 4 hrs - Suburban LV = 10 hrs - Suburban MV = 8 hrs - Rural concentrated LV = 15 hrs. - Rural concentrated MV = 12 hrs. - Rural sparse LV = 20 - Rural sparse MV = 16

These standards are very new to the regulation of electric companies and should be used cautiously until sufficie experience has been gained to instill confidence in companies and regulator alike.

Improvement Standard

Provisional target a minimum rate of improvement in total customer minutes lost and customer interruptions of 3%. This must be refined on the basis of an analysis of demographic and other data.

Refinement of an appropriate rate of improvement will require analysis of the demographics of the territory served (customer density, etc.)

64

Commercial Quality Standards (Proposed KPIs)

KPI
Outage response time Example Standard Comments

Within 4 hours; or 6 hours in rural areas

An alternative KPI might require responding to, say, 80% of outages within 4 hrs

New connection time (supply and meter)

LV within 5 days following contract signing MV within 7 days

An alternative could require connecting 90% within 4 days and 100% within 30

Estimating Charges

90% within 20 working days for simple requests

These standards vary from 5 to 20-30 days

Meter problem response time

Visit within 10 working days

These standards vary from 5 to 20 days

Queries on charges and payments

Reply and settle within 10 working days

These standards vary from 5 to 20 days

Appointment scheduling

Either a.m. or p.m.

Standards range up to 5 working days

Execution of simple work

Within 15 days

Standards vary from 3 to 30 days

65

Reconnection after disconnection for nonpayment Execution of complex works

By 5 p.m. the day following payment

Some KPIs set same day reconnection or in 24 hrs, including Saturdays

Start within 30 days

Time to complete will depend on the complexity of work Standard relates to the start of service not resolution.

Maximum waiting time in a customer service centre

90% of customers served within 30 minutes

Time to answer customer service telephone

75% within 60 seconds

Measuring this will require specialized equipment.

Notice of supply interruption

Minimum 24 hours before planned interruption

Maximum notice: 5 days for LV customers, 10 for MV

Voltage complaints

Respond in 10 work days

Range of stds = 5 to 20 days

Number or actual meter readings within a year

99% of meters will be read at least once each year

Standards range from 95% to 100% and one calls for at least 6 actual reads per year

Response to customer letters

100% within 10 days

An alternative requires 90% response within 20 work days

Cut-off at customers request

Within 10 working days

Longest time: one month

66

Conclusion
Quality Power Supply is to be maintained as consumers, especially of process industries have voltage sensitive and frequency sensitive loads. Automation, Modern maintenance techniques and Expert Systems for corrections have to be

implemented although , the gap between demand and availability is the impediment for moving towards quality power supply. Maintaining Quality Power Supply for total customer satisfaction & hence improving Financial status of the supply utility is to be taken as a Challenge.
67