Philosophy of POC Transmission charge Amitava Nag

How transmission charge depends on measure of utilization? Pricing basically depends on the method of measuring the utilization as under: 1.Average utilization of the transmission assets 2.Marginal utilization of the transmission assets

What is efficient pricing? Pricing of a commodity or service is considered as efficient when marginal cost of utilization of the underlying resources that are used is reflected.

How efficient pricing works for Transmission of Electricity? It tries to identify how much power that flows through each of the lines in the system is due to the existence of a certain network user and charge it according to the measure of utilization.

What are MP & AP methods? Utilization of the Transmission Network is generally determined in terms of either average or marginal utilization of the Transmission Assets. Depending upon the method of capturing the utilization, it is called MP (marginal participation) or AP (average participation) method.

What is the basic theory behind MP method? Kirchhoff’s current law is the basic theory behind Marginal Participation method

What is the basic behind AP method? “proportionate tracing method” proposed by Kirschen in 1996 is the basic behind Average Participation method.

What is done in MP method? It analyzes how the flows in the grid are modified when minor changes are introduced in the production or consumption of any agent. Total participation for each agent are calculated as a product of its net injection by its marginal participation. Cost of each line is allocated pro-rata to the agents according to total participation in the line.

Which are the countries follow MP method? UK, Norway, Brazil, Columbia use MP method with modification to their need.

What is Hybrid method? 1 MW injection or withdrawal in a bus is compensated by other buses called slack buses. These slack buses are selected by AP method by constructing physical paths for generator or demand node. Then burden of transmission charges or losses on each node is computed.

What is PoC? Recovery of the cost of line from an entity in proportion to the extend of usage. Aggregation of entity’s usage cost and division by MWs injected or consumed and time duration leads to Point of Connection tariff (PoC).

Why Hybrid method is accepted as suitable for India? The criticism of the MP method that the results are dependent on the choice of the slack bus is removed in hybrid method by selecting slack buses by AP method.

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