1. Open Access and Trading

2. Trading “Trading" means purchase of electricity for resale thereof” Any person is allowed to undertake trading in electricity provided he has authorized licence issued under Section 14 or is exempted under Section 13 Appropriate Commission may specify trading margin, if needed. CERC has specified 4 paise/kwh as trading margin 27 Traders have been issued Trading Licenses by CERC for carrying out Inter State Trading.

3. Legal Framework For Trading Section 12 : No person shall undertake trading in electricity unless he is authorized to do so by license issued under Section 14, or is exempt under Section 13. Section 13 : The provisions of Section 12 shall not apply to any local authority, Panchayat Institution, users’ association, co-operative societies, non-governmental organizations, or Franchisees. Section 14 : The Appropriate Commission may, on application made to it, grant any person license to any person to undertake Trading in electricity as an electricity trader in any area which may be specified in the license.

4. Legal Framework For Trading Section 52 : 1. The Appropriate Commission may specify the technical requirement, capital adequacy requirement and credit worthiness for being an electricity trader. 2. Every electricity trader shall discharge such duties, in relation to supply and trading in electricity, as may be specified by the Appropriate Commission.

5. Highlights of Regulations for Inter State Trading Allows Bilateral Trading between the Generating Company including CPP, Distribution Licensee and Electricity Trader on the one hand and the electricity trader and the distribution licensee on the other The Inter-State Trading Licence shall be granted for 25 years The application fee is Rs. 1.00 lakh which is subject to adjustment after the same is prescribed by the Central Government Specifies the methodology for publication of the licence application

6. Contd … The technical; requirements for being an electricity trader stipulates having at least one full time professional each with experience in - Power System Operations and commercial aspects of power transfers - Finance, Commerce and Accounts Six Categories of Trading Licences

7. CAPITAL ADEQUACY REQUIREMENT Sl. No.Category of the Trading Licence Vol. of Electricity Proposed to be Traded Per Annum (in Units) Net Worth (Rs. in Crore) 1.AUp to 100 million1.5 2.B100-200 million3.0 3.C200-500 million7.5 4.D500-700 million10.0 5.E700-1000 million15.0 6.FAbove 1000 million20.0

8. Trading Relationship Generating Cos. Traders Distribution Cos.

9. DEFINITION OF “OPEN ACCESS” IN THE ELECTRICITY ACT, 2003 “ The non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission ”

10. INTRODUCTION Open Access is necessary for utilization of short time surpluses. Open Access will also create options for distribution companies to buy power. Open Access will provide means to the traders/buyers/sellers. Non- discriminatory / Transparent Process Freedom to buy/sell power Efficient Market Mechanism to address supply / demand mismatches Encourage investment in Transmission

11. Legal Framework SECTION 38: (CTU Function) CTU to provide open access to Licensee or Generating Company on payment of transmission charge Any consumer when open access is provided by State Commission on payment of surcharge in addition to transmission charges. Surcharge shall be for meeting cross subsidy, and to be progressively reduced and eliminated. Surcharge not payable in case of captive generation and Distribution Companies. CTU can not engage in generation and trading

12. Legal Framework Sections 39, 40 and 41 Similar provisions for STU and Transmission Licensee. STU can not engage in trading. Transmission Licensee can not engage in trading Section 42 State Commission to provide Open Access to all consumers who required supply more than 1 MW in 5 years.

14. Agencies involved in Short-Term Open Access Transaction RLDC (s) SLDC (s) CTU STU (s) Buyer Seller Trader

15. Open Access – CERC Regulations, 2008

16. Open Access Regulations, 2008 Regulation notified dated 25.01.2008, (scheduling w.e.f. 01.04.2008 as per New Regulation) Regulations, 2004 are now being repealed w.e.f 1 st April,2008 Procedure for Bilateral Transaction –POWERGRID/CTU -submitted on 28.01.2008 –CERC Approval on 31.01.2008 –Posting of Approved Procedure on RLDC websites – 31.01.2008 New regulation also cater for transaction through Power Exchange (Px) Procedure for Collective Transaction –POWERGRID/CTU -submitted on 12.02.2008 Regulations cover only Short-term Open Access Earlier Products of Short-Term retained under Bilateral Transactions

17. Transactions categorized as Bilateral and Collective (through Px) Nodal Agency –Bilateral : RLDCs –Collective : NLDC Transmission Charges moved from “Contract Path” to “Point of Connection” Both Buyers and Sellers of Collective transactions to bear transmission charges and absorb transmission losses Inter-Regional links -No Separate treatment. Emphasis on “Scheduling” rather than “Reservation” SLDC consent mandated along with application In case of Congestion – e-Bidding without Price Cap Exit Option provided with payment of up to 5 days open access charges. Moving towards empowerment of SLDCs

18. Comparison of CERC Regulations on Short-Term Open Access (Regulation 2004, Amendment 2005 and Regulations 2008)) S. No. Old Regulations (06.05.2004 to 31.03.2005) Amended Regulations (w.e.f. 01.04.2005) Regulations, 2008 (w.e.f. 01.04.2008) 1. Transmission Charges a. Intra Regional – 25% of Long Term Charges b. Inter Regional – 25% of Long Term Charges Transmission Charges a. Intra Regional – 25% of Long Term Charges b. Inter-Regional - 50% of Long Term Charges Transmission Charges: Bilateral: -Rs.30/MWh – intra- regional -Rs.60/MWh – Between adjacent regions -Rs90/MWh – Wheeling through one or more region Collective Transactions (Px): -Rs. 30/MWh for each point of injection and drawal 2. Retention by CTU a. Intra Regional – 25% of Charges collected b. Inter Regional – 25% of Charges collected c. Balance disbursed to States Retention by CTU a. Intra Regional - 25% of Charges Collected b. Inter Regional - 12.5% of Charges collected c. Balance disbursed to States Retention by CTU -25% to be retained by CTU -Balance disbursed to States

19. 3.RLDC Charges a. Application fee – Rs. 5000/- b. Scheduling Charges – Rs. 3000/day for each RLDC involved c. Handling &Service Charges - 2% of total charges RLDC Charges a. Application fee – Rs. 5000/- b. Scheduling Charges – Rs. 3000/day for each RLDC involved c. Handling & Service Charges – Nil RLDC Charges : Bilateral: a. Application fee – Rs. 5000/- b. Scheduling Charges – Rs. 2000/day for each RLDC involved c. Handling & Service Charges – Nil Collective Transactions: a. Application fee – Rs. 5000/- b. Scheduling Charges – Rs. 5000/day to NLDC for each State involved -NLDC to Share with RLDCs 4.Open Access Duration - Up to One year maximum - single application possible Open Access Duration - Up to Three Months max. - single application possible Open Access Duration Bilateral -Up to 3 months -separate application for each month -Collective: -Only Day ahead

20. 5.ST Rate - in Rs/MW/Day - Min. Charges for one day ST Rate - in Rs./MW/Day -Charges as per continuous block of upto 6 hours, 12 hours and more than 12 hours Rate -in Rs/MWh - Based on Scheduled Energy 6.Congestion Management - E-Bid without price cap Congestion Management - E-Bid with price cap Congestion Management Bilateral: - E-Bid without price cap Collective: - NLDC in coordination with Px

21. Intra-RegionExisting Rate (Paisa per unit) Proposed Rate (Paisa per unit) Northern2.53 Western1.53 Southern3.53 Eastern2.73 North-Eastern3.93 Inter-Regional ER-NR86 ER-WR5.76 WR-NR6.56 SR-WR10.56 ER-SR14.26 ER-NER9.16 Multi-Regions10.7 to 32.59

22. Short-Term Open Access transaction by Captive Power Plants A typical example: From : SAIL Durgapur Steel Plant (DVC), To: SAIL Bhilai Steel Plant (CSEB) Quantum: 20 MW Source : SAIL

23. Network Involved

24. Transmission Losses

25. Transmission and System Operation Charges

26. Procedure for Scheduling of Open Access ( Bilateral Transaction)

27. Outline CERC Regulations on Open Access in inter- State Transmission, 2008 – Provisions 4, Applicable for Scheduling of Open Access (Bilateral Transactions)– w.e.f. 01.04.2008

28. SUBMISSION OF APPLICATION Nodal Agency – RLDC where point of drawal is situated Application Contents –Details -Buyer /Seller /Point of injection/point of drawal/Contracted power at supplier interface/date/time period Application Fee (Rs. 5000/-) –Along with application –With in 3 working days ( for same day or next day transaction) Endorsement –Concerned RLDCs/SLDCs

29. CONCURRENCE OF GRID OPERATORS Available Transfer Capability SLDC – ( congestion in intra-State TS) – concurrence -along with Application RLDC - ( congestion in Regional TS) –To be obtained by Nodal RLDCs Refusals /Curtailed Concurrence – Reasons to be mentioned in writing

30. ADVANCE SCHEDULING Advance Scheduling – 3 months in advance Separate Application – –Month wise - each transaction Time Line for submission –Last date for submission ( -10 / -5 / 0 days prior to end of current month MO – for transaction in M1, M2, M3) –Cut-off time : 17:30 Hrs. of last day (Day 0) –Request for concurrence (RLDC) – by 12:00 Hr. next day (Day 1) –Concurrence - by 20:00 Hrs (Day 1) –Congestion Information to Applicant – next day 12:00 Hrs (Day 2) –Revised Request – next day 11:00 HRs. (Day3) –E-bidding – in case of Congestion (next day) (Day 4) –Acceptance/Refusal of Scheduling Request – (Day 5)

31. Time Line for Advance Scheduling M0 M1 M2M3 5105 Last Day for submission of Applications for transactions in M1, M2, M3 Processing time for RLDCs

32. e-Bidding Procedure Invitation of Bids – period of congestion –RTS/IR corridor – overstressed Only Registered Users –User ID & Password –Electronic submission – website of CTU –Bid Closing time as specified –Single Price Bid –No Modification/withdrawal once submitted Bid Price - in addition to Open Access Transmission Charges Multiples of Rs. 10/ MWh. ( Min. Rs. 10/MWh) Mandatory - Non-participation – Rejection of Application Acceptance - Decreasing order of Price Quoted Equal Price Bids – Pro-rata Part Acceptance – Price as quoted by the bidder Full Acceptance – Price quoted by last bidder getting full acceptance

33. “FIRST-COME-FIRST-SERVED” BASIS Scope –Current Month – Next Month ( during last 10 days of end of current month) Separate Application for each month To be submitted 4 days prior to date of Scheduling Processing time – 3 days Processed on FCFS basis Application Received in a day to be processed together – same priority Application Received after 17:30 Hrs. - next day Congestion Management – pro-rata

34. DAY-AHEAD BILATERAL TRANSACTION Applications received within 3 days prior to the day of Scheduling and up to 15:00 Hrs. of the day immediately preceding the day of scheduling shall be treated as having been received together for processing and shall have same priority. Processing only after processing of the Collective Transactions of the Power Exchange (s). Congestion Management – Pro-rata

35. SCHEDULING OF BILATERAL TRANSACTION IN A CONTINGENCY Only Buying Utility to make an Application to the Nodal RLDC. To be considered after 1500 hrs of the day immediately preceding the day of scheduling. In case of intra- day – scheduling from 6 th time block Congestion Management – Pro-rata

36. INCORPORATION IN DAILY SCHEDULES RLDCs to incorporate in Daily Schedules of the Regional Entities Average energy losses -estimated on weekly basis –RLDCs – ISTS –SLDC – intra-State TS resolution of 0.01 MW at each State/inter- Regional boundaries. ramp-up –at the time of commencement of the transaction ramp-down –at the time of termination of the transaction

37. REVISON OF SCHEDULE Only in case of “Advance Scheduling” or “First-Cum-First Served basis” minimum five (5) days notice Transmission Charges and Operating Charges for 5 days Margin Available – could be utilized for scheduling of other Open Access Transactions

38. Example: Say an Applicant has been scheduled for 10 days from 21st day of a month to 30th day of a month for 100 MW on round the clock basis (i.e. for 2400 MWh per day). If this Applicant, on or before 15th day of that month, submits request for revision of schedule to 50MW on round the clock basis (i.e. 1200 MWh per day), the revised schedule will get implemented from the beginning of the transactions (i.e. 21st day of the month). The Applicant shall pay the Transmission Charges for 2400 MWh per day for the period from 21st to 25th day of the month. Whereas for the period from 26th day to 30th day of the month, Transmission Charges shall be payable for 1200MWh per day. However, if the Applicant requests for such revision on 17th day of the month, his request will be implemented from 23rd day of the month. He shall pay Transmission charges for 2400 MWh per day for 5 days i.e. from 23rd to 27th day of the month and for the remaining period he shall pay the Transmission Charges based on 1200MWh per day.

39. CURTAILMENT IN CASE OF TRANSMISSION CONSTRAINTS Allocation/Reallocation of ISGS power Transmission constraint or to maintain grid security curtailed in the manner, which in the opinion of RLDC, would relieve transmission constraints/ enhance grid security Open Access Bilateral Transactions would generally be curtailed first followed by the Collective Transactions Rerouting allowed without curtailment Pro-rata refund of Transmission Charges

40. COMMERCIAL CONDITIONS All Payment related to Open Access Charges – by Applicant to the Nodal RLDC –within three working days from the date of acceptance Application Fees (as per Para 7 of Regulation) –non-refundable fee of Rupees five thousand (Rs.5000/-) only Transmission charges (Para 16 of Regulation) –Intra-region (Rs.30/MWh) –Adjacent Region (Rs. 60/MWh) –Wheeling (Rs.90/MWh) –STS charges – as specified by respective SERCs or Rs. 30/MWh Operating charges (as per Para 17 of Regulation) –Rs. 2000/- per day each RLDCs/SLDCs involved

41. DEFAULT IN PAYMENT OF OPEN ACCESS CHARGES nodal RLDC, at its discretion –may not schedule the transaction or –may cancel the scheduling of already scheduled transaction or –may not entertain any Application of such Applicant in future until such time the default is cured. simple interest at the rate of 0.04 % for each day of default from the Due Date of Payment Cheque has been dishonored –No cheque payment - next three (3) months

42. DISBURSAL OF PAYMENT Reconcile the Open Access Charges –10th day of the current month Transmission Charges and Operating Charges – for State System –Concerned STUs/SLDCs For ISTS –25% to be retained by CTU – 75% to be utilized for reduction of Transmission charges of Long Term customers Refund due to curtailment –15th day of the current month

43. GENERAL CONDITIONS “One- Time” information as per enclosed format Application - through Post/fax Any amendment/modification –fresh Application Applications not been accorded the Acceptance –stand disposed off with suitable intimation to the concerned Applicant(s) incomplete/vague Application –summarily rejected The Applicant shall abide by the provisions of The Electricity Act, 2003, Indian Electricity Grid Code and CERC Regulations, as amended from time to time Applicant shall keep each of the SLDCs/ RLDCs indemnified

44. Short-Term Open Access -Experience so far

45. OPEN ACCESS IN INTER-STATE TRANSMISSION Implemented w.e.f. 6-May-2004 Products – –Long term Access –Short term Access Monthly –Advance –First Come First Serve Day ahead Intra day transactions Permits usage of spare transmission capacity through a transparent process Offers choice and freedom to buy & sell power Provides signals for investment.

49. <--Introduction of Day-Ahead Product from May,2005

50. INTER REGIONAL Vs INTRA REGIONAL ENERGY APPROVED (ALL INDIA)

52. Trade under Short-Term Open Access Actual Upto Jan.,’08 Energy –26 BUs No. - 7289

53. Energy Traded in STOA per Transaction (2006-07)

56. Approved Active

57. Typical Approvals- Captive Power Plants Captive Power PlantQuantum( MW) Eastern Region NBVL(OPTCL)27 SAIL-DSP(DVC)20 TISCO(DVC)60 Bhushan Steel25 J.P Cement (Rewa)5 Western Region Indo Rama synthetics22 PSKL10-30 Southern Region Renuka Sugar25 Vishwanath Sugar7.5 Godavari Sugar25 Ugar Sugar25 Jindal Steel200 Nav Bharat50 NCS Sugar13

58. Typical Refusals- Captive Power Plants Captive PlantDrawee UtilityQuantum (MW) Refusal by SLDCs MMS Steel & Power [SR]BSES Rajdhani 7Tamilnadu Tata Sponge Iron Ltd. [ER]Noida Power Co. 12Orissa Renuka Sugars Ltd [SR]Punjab 5Karnataka DCM Shreeram [NR]Chandigarh 25Rajasthan Neelachal Ispat Nigam[ER]Haryana 10Orissa Vishwanath Sugar [SR]Gujarat 7.5Karnataka Ugar Sugar Works [SR]Gujarat 25Karnataka Real Ispat & Power Ltd.HPSEB 12CSEB Nav Bharat Ventures [ER]MP 27Orissa

59. Typical Reasons for Refusal Transmission Charges Cross-subsidy surcharge Stand by charge PPAs Telemetry Metering Scheduling Balancing Mechanism Consent by STU/DISCOM Functional Autonomy of SLDC

60. STOA – Success Story Developed in consultation with all stakeholders Applications Processed (Since Beginning) > 16,000 No. Volume (Energy) of Trade (Since Beginning) > 85BUs Applications Approved > 95 % –Refusal/Non-consent by SLDCs - 3 to 4 % –Refusal due to system constraints < 1 % Curtailment in real time < 1% Near Dispute free implementation Logistics/infrastructure -In-house Robust Financial Settlement System Confidence Building & Dissemination of knowledge

61. STOA – Encouraging facts Transactions between extreme corners of the country –Kerala to Punjab –Nagaland, Arunachal, Tripura to Maharashtra, UP Most of the States participated. Market Players – Simultaneous Buy & Sell on same day –Delhi – Buy in Peak, sell in off-peak Transactions from few MW to hundreds of MW – 2 MW (JP Cement Rewa,MP – JP Cement, Ayodhya,UP) – 800 MW (BSES Rajdhani to UP) Surplus during Weekend/Holidays utilised –Budge-Budge of CESC : National Award for PLF of 99.6% in 2005-06 Improved performance of Generating Plants –Kayamkulam GPS (PLF Improved, in 2006-07 – 57% and 2007-08- 82%) Diversity being gainfully utilized