REGULATORY AND COMMERCIAL

ASPECTS OF POWER
GENERATION

Presented by Dks rautela

 Click toOUTLINE
edit Master title style

Tariff 2019-24

CERC DSM Regulation

Tariff based bidding

RRAS (Reserve Regulation Ancilliary Services)

Recent Amentments in IEGC (Indian Electricity
Grid Code) regarding Tech. Minimum

Copyright © 2016 Your Company All Rights Reserved. 2

TARIFF 2019-24
CAPCITY CHARGE
Generation Tariff… Capital Cost

Capital Cost forms the basis for determination of tariff and includes….
New Projects –
 Expenditure incurred upto CoD
 Interest during Construction (IDC) and Fin Charges upto CoD
 Increase in cost of Contract pkgs as approved by the Commission
 Capitalized initial spares – subject to ceiling
 Minus : revenue earned from sale of infirm power, in excess of the fuel cost
Generation Tariff… Capital Cost

Existing Projects –
 Capital Cost admitted by the Commission for prior control period, duly trued up by
excluding un-discharged liability if any, as on 1st April of first FY of control period under
reference

The Assets forming part of the project but not in use, shall be taken out of the Capital Cost.

Capital Cost Structure

 Equity as actually deployed – restricted to 30%

 Balance taken as Debt
Generation Tariff… Capital Cost

Add-Cap for New/Existing Projects –

 Projected to be incurred after CoD upto cut-off date –
 Undischarged Liabilities
 Works deferred for execution
 Initial Spares
 Liabilities to meet
 Award of Arbitration
 Compliance of order or decree of court
 Change in Law
Generation Tariff… Capital Cost
 Add-Cap for New Projects beyond cut-off date –
 Liabilities to meet
 Award of Arbitration
 Compliance of order or decree of court
 Change in Law
 Deferred works related to Ash Pond or Ash handling system
 Any Liability for works executed prior to cut-off date.

 Add-Cap for Existing Projects beyond cut-off date –

 Liabilities to meet
 Award of Arbitration
 Compliance of order or decree of court
 Change in Law
 Deferred works related to Ash Pond or Ash handling system
 Any Liability for works executed prior to cut-off date.
 Any Expense incurred on account of higher safety and security of the plant
Generation Tariff… Fixed Cost Norms

Return on Equity
15.5% per annum post- tax

Base Rate grossed up by effective tax rate

Rate of Pre-tax RoE = Base Rate / (1-t )

For project commissioned on or after 01.04.2014, an additional 0.5% RoE allowed provided
projects are completed within the stipulated timeline
Generation Tariff… Fixed Cost Norms

Interest on loan
Interest calculated on Normative Average loan.
Outstanding Loan worked out by deducting cum. repayment.
Repayment deemed to be equal to Depreciation.

Rate of Interest
Wt. Av. Rate of Interest of Actual Loan Portfolio
Generation Tariff… Fixed Cost Norms

Depreciation
 Depreciation allowed up to a maximum of 90% of the capital cost (excluding the
cost of land other than land under lease)
 Based on straight line method at asset-wise specified rates

For Plant & Machinery of Generating Station –

 5.28% for first 12 years
 Balance spread over the balance useful life of the assets.
Generation Tariff… Fixed Cost Norms

Working Capital
Primary Fuel Coal Station 40 days for pit head and 50 days for non-pit head
Gas Station Cost of fuel for 1 month
Secondary Fuel Coal Station Cost of secondary fuel oil for 2 months
Gas Station Cost of Liquid fuel for ½ month
Mtc. Spares Coal Station 20% of O&M Expenses
Gas Station 30% of O&M Expenses
O&M Expenses Coal Station For 1 month
Gas Station
Receivables Coal Station
For 45 days
Gas Station

• Rate of Interest on working capital – Bank rate as on 01.04.2019 or 1st April of the year of COD of
generating station, whichever is later.
Generation Tariff… Fixed Cost Norms

Renovation and modernization

 R&M provision can be availed by a station/ unit on after completion of useful life.
 CERC would do the prudence check based on the estimated cost, extension of life,
detailed justification etc.
 New capital cost will be based of expenditure incurred after deducting the accumulated
depreciation from original capital cost.
Generation Tariff… Fixed Cost Norms
Special Allowance
 Alternatively, the generating company may opt to avail Special Allowance (SA). In such a case:
– There will be no revision of capital cost
– No relaxation in operating norms
 Will be allowed for units completing 25 years from COD
 Will not be allowed to stations for which expenditure on R&M has been allowed earlier
 Amount of Special Allowance – Rs 9.5 Lakh/ MW/ year
Generation Tariff… Energy Charge

ECR = GSHR x LPF / GCV x ( 100 – AUX )

Where –
ECR = Energy Charge Rate
GSHR = Gross Station Heat Rate ( Normative)
LPF = Landed price of Fuel
GCV = Gross Calorific value of Fuel
AUX = Auxiliary Energy Consumption ( Normative)
 NORMS OF OPERATION
PARAMETER TARIFF (2014- PRSENT TARIFF REMARKS
19) ( (2019-24)

DC 85.00% 85.00% Concept of Peak/Off peak

hour and Normal/peak
season brought in 19-24
INCENTIVE PLF(SG/EX 85.00% 85.00% Concept of Peak/Off peak
BUS CAP) hour brought in 19-24

GHR - 210 MW 2450 2430 -20 kcal

500 MW 2375 2390 +15 kcal

APC - 210 MW 8.50% 8.50% No Change

500 MW 5.25% 5.75% +0.75%

O&M Expenses….

Provisions
 Security expenses have been excluded from O&M expenses and shall be allowed
separately as water charges and spares are being allowed presently
 O&M Expenses norms based on last five year actuals
 O&M Expenses Norm for 2019-20
Norms ( lakhs / MW) 2018-19 2019-20

200 /210/250 30.51 32.96

500 20.43 22.51
600 & Above 18.38 20.26
800 & Above - 18.23
Gas Stations
 Annual escalation 18.72
of 3.5 % ( presently 6.2%) 17.58
Transit & Handling Loss….

Provisions

 Transit & Handling Loss : No change except additional loss of 0.4% provided
for transportation greater than 1000 KM
• Pit head - 0.2%,
• Non-pithead – 0.8%

 GCV margin of 85 kcal/kwh is for as received GCV (No margin was allowed in
tariff 14-19)
 Click to edit Master
NEW ENVIRONMENT title style
NORMS

Assets installed for implementation of the revised emission standards shall form
part of the existing generation project and tariff thereof shall be determined
separately on submission of the completion certificate by the Board of the
generating company.

Copyright © 2016 Your Company All Rights Reserved. 21

FINAL TARIFF DEFINIATION
 ClickAFTER
TARIFF to edit Master title
COMPLETION style
OF LIFE

1. In respect of a thermal generating station that has completed 25 years of

operation from the date of commercial operation, the generating company
and the beneficiary may agree on an arrangement, including provisions for
target availability and incentive, where in addition to the energy charge,
capacity charges determined under these regulations shall also be
recovered based on scheduled generation.

2. The beneficiary shall have the first right of refusal and upon its refusal to
enter into an arrangement as above, the generating company shall be free
to sell the electricity generated from such station in a manner as it deems
fit.

Copyright © 2016 Your Company All Rights Reserved. 23

 INCENTIVE AND DISINCENTIVE FOR RAMP RATE Click to edit Master title style

In case of a thermal generating station, with effect from 1.4.2020:

a) rate of return on equity shall be reduced by 0.25% in case of failure to
achieve the ramp rate of 1% per minute;
b) an additional rate of return on equity of 0.25% shall be allowed for
every incremental ramp rate of 1% per minute achieved over and
above the ramp rate of 1% per minute, subject to ceiling of additional
rate of return on equity of 1.00%:
Provided that the detailed guidelines in this regard shall be issued
by National Load Dispatch Centre by 30.6.2019.

Copyright © 2016 Your Company All Rights Reserved. 24

 Click toCHARGES
NEW APPROACH FOR CAPACITY edit Master title
RECOCERY stylefrom
(applicable
01.04.2020)

Copyright © 2016 Your Company All Rights Reserved. 25

 NEW APPROACH FOR CAPACITY CHARGES RECOCERY (applicable from
01.04.2020)
Click to edit Master title style

Copyright © 2016 Your Company All Rights Reserved. 26

 ClickAFC
to edit Master title style
RECOVERY

Copyright © 2016 Your Company All Rights Reserved. 27

 NEW APPROACH Click to edit Master title style
FOR INCENTIVE

Copyright © 2016 Your Company All Rights Reserved. 28

 CERC
DSM Regulations
Average Clearing Price
RRAS(Reserved Regulation Ancillary Services
 Why?
• Power systems require ancillary services to maintain reliability and
support.
• Ancillary services are services the system operator uses over
various time frames to maintain the required instantaneous and
continuous balance between aggregate generations and load.
Ancillary Services consist of services required for:
• a) Maintaining load – generation balance (frequency control)
• b) Maintaining voltage and reactive power support
• c) Maintaining generation and transmission reserves
• The RRAS Provider shall increase or decrease the generation
as per the instruction of the Nodal Agency given through the
respective RLDC for Regulation Up and Regulation Down
respectively
 Format AS1
• The RRAS Provider shall provide (in the prescribed Format AS1) the following details by 8th day of the
current month (if 8th day is holiday, then next working day) along with any other information pertaining to
the generating station for the next month to respective RPC.
• a) RRAS Provider Station Name
• b) Owner Name
• c) Unit wise and Total Installed/Effective Capacity (MW)
• d) Type of fuel used
• e) Maximum possible ex-bus injection (including overload if any)
• f) Region and Bid Area
• g) Ramp Up Rate (MW/Min.)
• h) Ramp Down Rate (MW/Min.)
• i) Station Technical Minimum (MW and in %) as per CERC ….. Regulations.
• j) Fixed cost or Capacity Charges (paise/kWh up to one decimal place)
• k) Variable cost or Energy Charges (paise/kWh up to one decimal place)
• l) Start-up time for cold start and warm start
• Payment to the generators under RRAS would be on the basis of the
scheduled quantum.
• Any deviation would be handled through DSM Regulations.
• Sustained failure to provide the Regulation Reserves by any generator
(barring unit tripping) would lead to
stringent penalties on account of gaming.
 How RRAS provider paid
• Fixed cost :corresponding to normative availability
• Variable Charges: shall be the variable charges for the previous
month or in case that is not available then last available month bill.
• The information will be used for despatch of RRAS from the
16thday of the current month till the 15th day of the next month.
• The RPCs shall use the above mentioned details of fixed charge,
variable charge and any other statutory charges applicable on
the RRAS Providers for preparation of Energy/Deviation
Accounts of the RRAS providers. Any post-facto revision in
rates/charges by RRAS providers shall not be permitted
• “Up Regulation” RRAS: The merit order stack from lowest to highest variable cost
prepared by the Nodal Agency shall be used for “Up Regulation” RRAS.
 
• Case – I (Despatch from already running units): In this scenario, URS power available
through the RRAS providers, as per merit order.
•  
• Case – II (Despatch from units under reserve shutdown.
• COAL:A minimum dispatch duration of ninety six (96) time blocks i.e., twenty four (24)
hours
• GAS :A minimum dispatch duration of twelve (12) time blocks i.e., three (3) hours shall be
given by the Nodal Agency to the gas/RLNG/liquid based
Withdrawal of Reserves Regulation Ancillary Services (RRAS)

• a) If the frequency remains above 49.90 Hz continuously for a

period of 5 minutes (for low frequency criteria) in a time block
• b) If the frequency remains below 50.05 Hz continuously for a
period of 5 minutes (for high frequency criteria) in a time block
• c) No violation of n-1 criteria for the transmission corridor or no
violation of ATC for 15 minutes.
• d) Depending on real time power system conditions
• a) Fixed and variable charges payable to RRAS providers from the pool
in case of UP Regulation
• b) Variable charges payable by RRAS providers to the pool in case of
DOWN regulation
• c) Mark up as specified by CERC through a separate order
• d) Fixed charges to be reimbursed by RRAS providers to the original
beneficiaries
• In case of “DOWN Regulation”, the refund of 75% of the variable
charges by the RRAS Providers to the respective Deviation Settlement
Pool Account.
Recent Amentments in IEGC (Indian Electricity Grid Code)
regarding Tech. Minimum
 Thank You

Copyright © 2016 Your Company All Rights Reserved. 56