POWER GRID CORPORATION OF INDIA LIMITEDSRLDC,BANGALORE

LONG TERM TRADING POLICY FOR GOA

3D FREQUENCY OF SRAUG 20043D LOAD CURVE OF GOASCATTER PLOT OFSR FREQUENCYCOMPARISION OF CG AND SR FREQHISTOGRAM OFSR FREQ WITH PRICEVARIABLE COSTALL REGIONSDEMAND OF GOAAN ANALYSIS3D LOAD CURVE OF GOADEMAND OF GOAAN ANALYSIS3D LOAD CURVE OF GOA

TERMS OF REFERENCETo undertake a review, in commercial term, of the total power situation comprising the availability of power, cost of power, utilization within the State of Goa, forecasting and scheduling activities, availability based tariff for unscheduled interchanges, availability of surplus power etc.To examine the legal framework and make an assessment of business potential taking into account the prevailing environment.To make recommendation regarding a long term policy for power trading and to suggest a trading mechanism including delegation of suitable trading powers to appropriate levels within the electricity department.

16th Economic Power Survey (EPS) 9.14 The CERC has implemented the Availability Based Tariff in all the five electrical regions of the country at Inter-State level. The ABT facilitates merit order dispatch of various generating stations having different variable costs The UI mechanism facilitates the spot sale and purchase of electricity into or out of the electricity grid and does not require the services of a trader. As UI mechanism is an alternative to formal trading it provides a sort of benchmark price for the trading of electricity..

PRESENT ALLOCATION TO GOA FROM CENTRAL SECTOR PLANTS

REGIONPLANTALLOCATION(MW)INDICATIVE VARIABLE COST(Ps/Unit)W.RKORBA21070W.RVSTPS-135111W.RVSTPS-212109SUB TOTAL257S.RRSTPS7586TOTAL332

GOA MAX ELECTRICITY TARIFF

GOA: MAXIMUM ELECTRICITY TARIFFSTypeClassificationRate (Max.) (Ps./unit)LTDomestic250LTDomestic/Mixed300LTCommercial380LTMotive Power295LTHotel350LTAgriculture100LTPublic Lighting200LTPublic Water Works300HTMixed325HTIndustrial300HTFerro-Metallurgy250HTAgriculture125HTDefence300HTSteel Rolling300HTIT Hightech225

TYPICAL DEMAND CURVE OF GOAUNDERDRAWAL(UI TRADE) OR BILATERAL TRADE IN THIS ZONE16TH EPS EXTRACT

YEAR2004-052006-072011-122016-17LOAD MW322355448563

ADDITIONS TO CAPACITY

PLANTPROPOSEDALLOCATION/REQUESTProbable year of CommissioningINDICATIVE COSTVINDHYACHALSTAGE 312 MW/15 MW2005 end186 Ps/UnitSIPAT-124 MW/ 50 MW2005-06186 Ps/UnitSIPAT 212 MW/ 30 MW2005-06179 Ps/UnitHYDEL60 MW2005-06VIDEOCON30 MW2005-06

SOME QUESTIONSHow much is the surplus power?What is the time and season when surplus power is available?What is value of the surplus power?What is the cost of the surplus power?What are the options available for commercial treatment of this surplus power?

STRATEGIES FOR TRADEAVOID EXTENDED 24 HOUR BILATERALSHARNESS DIVERSITY TO CONTRACT FOR PEAKBACK TO BACK CONTRACTUI WOULD BE COSTLYINNOVATIVE, FLEXIBLE PRODUCT MIXCONTRACT FOR DIFFERENCE (CFD)BILATERAL ON UI+ RATE WITH TRADERTRADE WITH POOL (UI)PARTLY TRADE WITH THE POOL AND PARTLY WITH TRADERRETURN FROM UI CAN BE A BENCHMARK FOR BILATERALS

TRADING WITH THE POOLTHE POOL IS THE 30,000 MW CENTRAL GRIDUNSCHEDULED INTERCHANGE ( UI) IS AN ESTABLESHED PRACTICEPRICE IS KNOWN TRANSPARENT MECHANISMNO FEAR OF RIGGINGNO NEED FOR NEGOTIATIONS / FORMAL CONTRACTFLEXIBILITY REGARDING QUANTUM AND DURATIONARBITRAGE POSSIBILITIESCOMES AT A COST SUPPLY DISRUPTIONIN-BUILT PAYMENT SECURITY MECHANISMMORE ON THE UI MECHANISM..

TRADING WITH THE POOLISSUESUI PRE-SUPPOSES A ROBUST TRANSMISSION SYSTEMACCURATE LOAD FORECAST GOA LACKS HYDRO FLEXIBILITYMEETING THE PEAK -ERRORS COULD BE COSTLYPREDICTABILITY OF POOL COSTREDUCE REQUIREMENT ONLY WHEN GRID FREQUENCY IS ABOVE VARIABLE COST

TRADING WITH THE POOL

GOA NEEDS A MECHANISM TO DEAL WITH SURPLUS AT NON-PEAK HOURSLESS REQUISITION FROM CHEAP PIT-HEADS DOES NOT MAKE ECONOMIC SENSEBILATERAL TRADING HAS ITS ISSUESUI MECHANISM PRICE PREDICTABILTYCOMBINATION - CONJUNCTION

LEGAL ISSUES: EXTRACTS FROM ACTAs per Electricity Act 2003 Para 2(71) trading means purchase of electricity for resale thereof and the expression trade shall be construed accordingly.As per Electricity Act 2003, Trading is a licenced activity. However, as per Para (4) Section 14 in case appropriate Government transmits electricity or distributes electricity or undertakes trading in Electricity whether before or after commencement of this Act, such Government shall be deemed to be a Licencee under this Act but not required to obtain Licence under this Act.

LEGAL ISSUES: EXTRACTS FROM ACTPara 32(2)(a) of the Act also stipulated that SLDC will be responsible for optimum scheduling and dispatch of electricity.As per Section 31(2) no SLDC shall engage in the business of Trading in Electricity.Section 39 of the Act has specified that State Government may notify the Board or the company as a State Transmission Utility provided that the State Transmission Utility shall not engage in the business of Trading in Electricity.Trading is a Licenced activity as per the Act 2003.There is provision for State Electricity Regulatory Commission in each of the State as stipulated vide para 85. The Function of the State Commission as enumerated in section 86(b) is to regulate electricity purchase besides fixing trade margin in trading of electricity and many other associated issues. So far though SERC has been constituted/established by the Govt. of Goa, the same is not functioning in the absence of

INSTITUTIONAL CHANGESTRADING IS A FULL TIME JOBENGINEERING/ECONOMICS/STATISTICS SKILL SETSEMPOWERMENTCONCEPT OF PROFIT CENTREBENCHMARKING WITH WHAT-IF UI RETURNSLEEK SETUP, PREFERABLY AUTONOMOUS RESPONSIVE TO THE MARKETTHOROUGH UNDERSTANDING OF GOAS LOAD LOAD GROWTH ETC.

RECOMMENDATIONSLONG TERM AND SHORT TERM LOAD FORECAST.JUDICIOUS CAPACITY BOOKING MEET RISING PEAKMAKE FULL USE OF ALLOCATIONS FROM PIT HEAD STATIONSATTEMPT TO RESTORE ANY SURRENDERED/UN-UTILISED CAPACITY ALLOCATION DAY-TO-DAY OR SEASONAL SURPLUS TO BE CONTINUOUSLY MONITORED.BENCH MARK PRICE FOR EXPLICIT SELLING: MONITOR ALL FACTORSFREQUENCY UI RATEOA CHARGESUI MECHANISM AS FALLBACK.TO REVAMP THE INSTITUTIONAL ARRANGEMENT NEED FOR ROBUST TRANSMISSION SYSTEM WHICH IS THE KEY FOR OPTIMUM UTILIZATION.INNOVATIVE PRODUCT MIXTRAINING AND EXPERTISE BUILDING.