1. OPEN ACCESS IN INTER-STATE TRANSMISSION

2. 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”

3. CERC Order/Regulations on Open Access Final Order issued : 30.01.2004 Final Regulations issued : 30.01.2004 Gazette Notification : 06.02.2004 CERC’s Order effective from 06.02.2004.

4. Salient Features of CERC Order / Regulations Open Access customers categorised : Short-Term - Upto One year. Long-Term - Twenty Five years or more All Open Access customers to abide by Indian Electricity Grid Code.

5. Further Classification of Open Access Customers Direct Customer – Persons directly connected to system owned and operated by CTU Embedded Customer – Other than direct customer

6. NODAL AGENCY For Short-Term Customers – RLDC of the Region in which the drawal point is located. For Long-Term Customers – Central Transmission Utility (CTU) – STU of the region in which the drawal point is located when CTU system is not involved.

7. Responsibilities of CTU/RLDCs Procedure for reservation of transmission capacity for short term customers including the detailed procedure for bidding within 45 days by RLDC. Procedure and application forms for long- term customers within 30 days by CTU. Notice of 60 days to the existing customers for applying afresh.

8. Standardization within 60 days, the other commercial conditions for transmission charges and scheduling and system operation charges. RLDCs to post “Open Access information” on their website within 30 days:

9. Information System RLDC to post the following on their websites within 30 days: Floor rate in Rs./MW/Day for Short-Term customer – Regional System – Inter-Regional link – System of STU/SEB/Transmission Licensee Status Report on current short-term customer Month-wise and year-wise report on past short-term customer Information regarding usage of – Inter-Regional links – Links between CTU and States systems – To be updated on hourly basis and wherever feasible on 15minute basis Average energy losses for previous 52 weeks.

10. Processing of Application For Long-Term Customers Long term access to be granted based on planning criteria. Application for long term access should be submitted to CTU along with a Processing fees of Rs. 1.0 Lakh. The application shall contain the details, such as capacity needed, point(s) of injection, point(s) of drawal, duration of availing open access, peak load, average load, etc. Based on the system studies, CTU will intimate within 30 days whether or not the long term access can be allowed without further system strengthening.

11. If no system strengthening is required, open access to be allowed immediately after entering into commercial agreements. In case system strengthening is required required, applicant may request CTU to carry out further system studies, preliminary investigation for the purpose of cost estimate & completion schedule. Actual extra-expenditure incurred by CTU to be reimbursed by applicant. CTU to intimate result of studies within 90 days on receipt of such request.

12. BPTA mandatory for long –term customers. Long-term customer cannot transfer or relinquish his rights obligation under BPTA, without prior approval of Commission. It may be allowed, subject to payment of compensation as determined by the Commission.

13. Processing of Application For Short-Term Customers Nodal RLDC to interact with concerned RLDCs/SLDCs to process the same in specified time period. Processing time as per CERC Order – Upto One Day : 12 Hours – Upto One Week: 2 days – Upto One month: 7 days – Upto One year: 30 days Applicant to furnish details of transactions like point of injection/drawal, quantum (MW), duration, alongwith necessary payments.

14. Approval Process Short-term open access to be allowed by utilising : (a) Inherent design margins, (b) Margins available due to variation in power flows, and (c) Margins available due to in-built spare transmission capacity created to cater to future load growth.” In case of congestion snap bids are to be invited by RLDC. In case of transmission constraints, the short-term customers shall be curtailed prior to the long term customers. Provided within a category, the open access customers shall have equal priority and will be curtailed on pro-rata basis.

15. Short- Term Open Access Charges A. Transmission Charges: (Rs./MW/Day) ST_RATE = 0.25 x [TSC/ Av_CAP]/365 To be applied on postage stamp basis for each – Regional System – Inter-Regional link – STU/SEB or Transmission Licensee System 25% of this charges to be retained and balance 75 % to be adjusted in the transmission charges payable by long term customer. The transmission charges payable shall be for one day and in multiples of whole no. of days. Every transmission licensee to declare rate in Rs. Per MW per day which shall remain fixed for one year.

16. Where TSC for any transmission licensee is not available the per MW per day charge applicable for the system owned by CTU of the region will be applicable. Transfer capacity reservation by short-term customers is non- transferable. In case of under utilisation, customers to bear the full transmission and Scheduling and system operation charges as per original reservation. B.Scheduling and System operation Charges The Short-Term customer has to pay Scheduling and System Operation Charges @ Rs. 3000/- per day per customer to each RLDCs and SLDCs involved. C. Handling and processing charges to nodal RLDC – 2% of the total billed amount(A+B). D. Non-refundable Processing fee – Rs. 5000/- per application

17. Unscheduled inter-change charges UI charges to be applicable to all open access customers. For Direct Customer – separate bill for UI charges. For Embedded Customer – A composite bill for the State as a whole – Segregation to be done at State Level

18. Reactive Energy charges All customers directly connected to CTU network shall have to reactive energy charges as per IEGC. The reactive energy charges to be paid to or received from Pool A/c shall not be apportioned to the embedded customers. For Embedded Customer reactive energy charges shall be governed by the regulations of the respective State.

19. Energy Losses The transmission customers shall bear average energy losses in the transmission system as estimated by CTU and SLDC concerned. The energy losses shall be compensated by additional injection at the injection point(s). Special Energy Meters The Special Energy Meters shall be installed by the direct customers and if required by the embedded customers.

20. Redressal Mechanism All grievance related to open access is to be made to Member Secretary, REB or RPC of the region against whom the complaint is made, is located. Member Secretary, REB or RPC shall investigate and endeavour to resolve the grievance. In case, Member Secretary, REB or RPC is unable to resolve the grievance, it should be reported to the Commission for decision.

21. Procedure for reservation of transmission capacity by Long-Term Open Access Customer

22. Long Term Open Access - Procedure Receipt of Application for long term Open access by CTU in the prescribed format CTU to carry out system studies within 30 days of receipt of application to determine whether Scenario - I open access can be allowed without any system strengthening Scenario-II Additional system strengthening would be required for desired open access

23. Procedure – Scenario - I Applicant to confirm with in 30 days to sign BPTA – Otherwise application shall be canceled Long term Open access – effective only after signing of BPTA

24. Procedure – Scenario - II ResponsibilityTime frameActivities Receipt of application POWERGRID30 Days Communicate necessity of system strengthening Cost for carrying out studies Consent for Studies Applicant30 Days Communicate to POWERGRID the consent for carrying out studies Receipt of costPOWERGRID90 Days Communicate study results, preliminary cost estimate & completion schedule Receipt of study result Applicant30 Days Confirm acceptance of results 90 Days Execute BPTA with POWERGRID and other transmission licensee 15 Days Forward agreement signed with other transmission licensee

25. Application for Long Term Open Access – As per CERC Notification POWERGRID developed following format/documents long term open access – Application Form with its covering letter – Guidelines – Terms and Conditions – Format for intimation of open access Applicants shall deposit application fees of Rs. 1 Lakh through DD. Note : POWERGRID proposes that applicant should confirm the acceptance of terms and conditions.

26. Application for Long Term Open Access – As per CERC Notification POWERGRID developed following format/documents long term open access – Application Form with its covering letter – Guidelines – Terms and Conditions – Format for intimation of open access Applicants shall deposit application fees of Rs. 1 Lakh through DD. Note : POWERGRID proposes that applicant should confirm the acceptance of terms and conditions.

27. Application and Guidelines Guidelines for application – Applicant shall complete the Application form for seeking Long Term Open Access and provide following in a prescribe format: Details of the applicant Power transfer requirement (peak load, average load) Details of points of injection and drawl Date of commencement and duration Generating station details including various clearances in case of new Gen. Station Name of trader if any Confirm acceptance of Terms & Conditions

28. Additional Terms & conditions for Applicants Comply with IEGC in force from time to time POWERGRID shall only carry out the study and shall not be bound to construct the identified system strengthening Indemnify POWERGRID for any loss or damage arising as a consequence of study carried out by us. Open Access shall be effective from the date of permission or date on which identified system strengthening is in place, whichever is later Share the RLDCs fees & charges and any other charges as per directions of CERC. Shall not transfer rights and obligations specified in BPTA without approval of CERC and shall be subjected to payment of compensation as determined by CERC.

29. Procedure for reservation of transmission capacity by Short-Term Open Access Customer

30. Notice issued to existing customers -5 th Mar, 2004. Long Term Open Access - Guidelines, Procedure and Application forms issued -29 th Mar, 2004. Short Term Open Access – Procedures for reservation of transmission capacity issued -31 st Mar, 2004. ST_Rate for CTU system posted on websites of RLDCs -31 st Mar, 2004.

31. OUTLINE – Procedures in compliance of the provisions of the CERC Regulations dated 30.01.2004. – All short term Open Access Customers to comply with these procedures. – Review if necessary, after three months. – RLDCs reserve the right to review/revise/ modify/ amend the procedures as and when considered necessary.

32. APPLICATION AND ITS ENCLOSURES – Separate application for each transaction. – Applications received between 1000 hrs. of a day and 1000 hrs. of the following day to be treated as to have been received together. – An incomplete / vague application or an application not found to be in conformity with these procedures/ Regulations shall be rejected.

33. Enclosures along with the application: – Copies of the agreements/MOUs entered by the buyer / seller /trader. – Advance payment through a bank draft or electronic transfer covering the following: Transmission charges of STU/SEB/transmission licensee system payable to the respective STU/SEB/Licensee. Transmission charges of CTU system payable to POWERGRID. Scheduling and system operation charges payable to the SLDCs.

34. Scheduling and system operation charges payable to the RLDCs Handling and service charges payable to the Nodal RLDC. Non-refundable fee payable to the Nodal RLDC. Advance payment for 31 days when Application for more than one month. Otherwise, full payment in advance.

35. PROCESSING/APPROVAL OF APPLICATIONS – Each day to be reckoned as a working day (excluding holidays) of 24 hours. – Nodal RLDC to seek consent of other SLDCs/ RLDCs involved. – A non-receipt of timely consent from the SLDCs/ RLDCs to be considered as acceptance by the concerned SLDC/RLDC. – Approval to be issued transaction wise by Nodal RLDC – Applicant to confirm his acceptance/ refusal of the approval. – Non receipt of acceptance from the applicant to be considered as refusal.

36. – Grid security / stability / reliability shall not be compromised while granting approval. – RLDC to issue transaction-wise approvals from The point of injection of a seller to the injecting State ’ s periphery From the periphery of injecting State up to the periphery of the drawee State. From the periphery (control area boundary) of the drawee State to the point of drawal of buyer as confirmed by the concerned SLDC.

37. SCHEDULING – Customer ’ s coordinator to coordinate with the Utilities. – Transaction details to be furnished to each of the SLDCs involved, on a daily basis. – SLDCs to advise RLDCs by 15.00 hours each day regarding Open Access transactions. – Ramp-up/ramp-down, if required, to commence at the time of commencement of the transaction and to end at the time of termination of the transaction. – No request to be entertained for revisions.

38. Advance payments by Short -Term Open Access Applicants – Transmission charges Each STU/SEB/transmission licensee involved. Each Regional / inter-regional system involved. – Scheduling and system operation charges. Each SLDC involved @ Rs3000/- per day Each RLDC involved @ Rs3000/- per day – Handling & Service Charges Full amount computed @ 2% of above charges. - Non refundable Application fee : Rs. 5,000/-

39. – If the applied period is 31 days or less, the advance comprises of the actual period. – If the applied period is more than 31 days, the advance to be payable for one month (31 days). – Payment to be made fortnightly through Bank Draft/ electronic transfer, in case of transaction for a period exceeding 31 days,. – No separate bills to be issued for the fortnightly payment. – Short-term Open Access charges shall not be adjusted against any other payment/charges.

40. - The decision of the RLDCs regarding the existence of a force majeure condition shall be final and binding. - Customers to bear average energy losses estimated by RLDC/SLDC. - Energy losses to be compensated by additional injection at the injection points.

43. Commercial Conditions for the Short-term Open Access Customers – Payment to be made transaction-wise. – Payment to be made as per schedule of fortnightly payment issued by the Nodal RLDC. – Payment to be remitted only by Bank draft/ electronic transfer. – The Nodal RLDC to suspend the transaction in case of a payment default. – In case of persistent payment default, new applications from such a customer may not be entertained for a period upto twelve months.

44. – The advance payment to be forfeited by the Nodal RLDC in case of relinquishment /abandonment by an applicant, – In case of approval with curtailment followed by relinquishment /abandonment by the applicant, only the non-refundable application fee to be retained and the balance advance payment to be refunded.

45. Payment Security Mechanism – Intended to ensure recovery of the payment through LC in case of payment default. – Not a mechanism for regular payment. – Letter of Credit (LC) - security against payment default for fortnightly payment. – The Bank Guarantee (BG) - security against payment default in case of relinquishment / abandonment by a customer.

46. Letter of Credit – The customer to open a fortnightly irrevocable revolving Letter of Credit (LC) on acceptance of an approval (transaction period > 31 days), – LC to be opened in a bank as mutually agreed between a customer and the Nodal RLDC. – LC to be opened within 10 days. – LC to be operated by the Nodal RLDC as and when customer fails to remit the fortnightly payment. – Terms and conditions as prescribed by the RLDCs.

47. Bank Guarantee – Irrevocable Bank Guarantee (BG) in favor of the Nodal RLDC. – BG to be equal to the amount payable by the customer for the balance period of the approved transaction. – BG to be provided from a bank as mutually agreed between a customer and the Nodal RLDC. – BG to be submitted in original to the Nodal RLDC within five (5) days of the date of acceptance by the customer.

48. – The BG to be encashed by the Nodal RLDC After five days from the previous date of operation of the LC, if the same is not recouped. The customer fails to pay the full charges in terms of the provisions under para 14 (iii) of the Regulations on Open Access, 2004.

49. Bidding Procedure – Nodal RLDC to invite snap bids when the capacity sought to be reserved is more than the transfer capacity expected to be available (Para 6 of Regulation). – Bids to be invited only for such period during which congestion occures. – The decision of the RLDC/SLDC to be final and binding regarding congestion. – The bidding procedure is not an “ Auction Process ”.

50. – Bids to be submitted on-line. – No bids through fax/post. – Only Applicants entitled to submit a bid. – Bid price in terms of percentage price above the floor price. – RLDCs reserve the right to reject an incomplete or vague bid.

51. GENERAL – RLDC to process application through e-mail if advance payment is received. – Re-routing to be considered on its merit. – Amendment/ modification to be treated as fresh application. – Expenses related to Bank draft/ LC/ BG to be borne by the customer. – Applicant to indemnify RLDCs/ SLDCs from any damage, losses, claims etc.

52. Standard Formats – Application for grant of short term open access. – Consent for short term open access. – Approval for short term open access. – Acceptance of short term open access. – Refusal of short term open access. – Format for invitation of bids.

53. WBSEB WBPDC L CESC DTL 100 MW, 00 to 06 hrs 150 MW, 06 to 12 hrs 125 MW, 22 to 24 hrs Treated as 3 separate transactions and needs 3 separate applications ISSUES REGARDING CHARGES Case-I (Customer is PTC for all three)

54. WBSEB DTL 100 MW, 06 to 12 hrs 150 MW, 15 to 18 hrs 250 MW, 22 to 24 hrs Case : I)– If covered in 1 application – will be considered as one transaction and transmission charges shall be paid for 250 MW. II)If 3 separate applications then will be treated as 3 transactions. CASE- II(Customer is PTC for all three)

55. Eastern Region Northern Region West Bengal WBPDCL Delhi BSES HVDC Pusauli Short-Term Open Access - A Case Study : SELLER:WBPDCL BUYER:BSES (Delhi Discom) TRADER:PTC QUANTUM: 100 MW DURATION:1 YEAR ( 01.04.2004 to 31.03.2005) NODAL AGENCY: NRLDC Ø PTC shall submit application to NRLDC. Ø NRLDC shall co-ordinate with the concerned agencies for processing and approval of the Short-Term Open Access. Ø NRLDC shall collect and disburse all the Short-Term Open Access Charges.

56. ESTIMATED CHARGES PAYABLE Non refundable processing feeRs.5000/- Transmission charges (POWERGRID)-Rs. 7.04 crores – (for ERTS, NRTS, ER-NR link) Transmission charges(STU)-Rs.3.54 crores – ( for West Bengal and DTL) Scheduling & system operation charges – RLDCs(ERLDC & NRLDC)-Rs. 0.22 crores – SLDCs(WB SLDC & Delhi SLDC)-Rs. 0.22 crores Handling & Processing charges-Rs.0.22 crores Total (payable by short term customer)-Rs.11.24 crores POWERGRID share-Rs.2.20 crores Other Constituent’s share-Rs.9.04 crores Total Charges Payable : Approx. 13 paisa per unit

57. Number of Short term Open Access Transactions (All Regions) 61 69 50 60 62 59 76 58 0 10 20 30 40 50 60 70 80 May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04 Number of STOA Transactions 6th May 2004 to 31st Dec 2004 Average Numbers = 62

58. The STOA was 3.5% of the total energy generated in the country. The no. of players out to share this 3.5% cake is going up.

59. e-bidding for transactions in (All regions May-Dec 2004) e-bid conducted (no. of times)9 Price quote above floor rate (no. of times, details below) 3 Congested Link Bid for no. of days Max bid Price (time floor rate) Effective ST Tr. Charges WR-NR 75.0101.33 WR Tr. System 39.9991.96 ER-WR 73.0001.59

60. Summary of STOA Transactions (All Regions) May-04 to Dec-04Total No of transactions495 Total Energy Generated MU 347783 Approved MU for STOA12178 STOA As % of Total Energy Generated 3.5

62. Open Access-the NR experience Yr 2004 (May to Dec) NR Energy Consumption (MU) STOA requested (MU) STOA approved (MU) STOA Scheduled (MU) Total 1091741089466914984 Average (per month) 136471362836623 Scheduled STOA was 4.5% of total regional energy. Further only 75% was scheduled vis-à-vis approved.

72. Eastern Region Orissa Northern Region Inter Region Link Change in point of injection WBSEB CESC CTU Punjab GRIDCO

73. WBSEB Eastern Region Inter Regional link Northern Region CTU Jaipur Ajmer Rajasthan

74. Example In a 100 MW transaction from GRIDCO to Punjab, if point of injection is changed from GRIDCO to CESC in Eastern Region, the network changes involve, – GRIDCO to Orissa network changed to CESC to WBSEB network. – Orissa to CTU network changed to WBSEB to CTU network. In both the cases, the network is to be rechecked for availability of capacity in the new paths.

75. In a 50 MW transaction from WBSEB to Jaipur, if point of drawal is changed from Jaipur to Ajmer in Northern Region, the network changes involve, – CTU to Rajasthan(GSS-1) network changed to CTU to Rajasthan(GSS-2) network. – Rajasthan to Jaipur network changed to Rajasthan to Ajmer network. In both the cases, the network is to be rechecked for availability of capacity in the new paths.

76. Concluding remark Entry barriers are essential to screen genuine players and to prevent those who are only testing waters. It is required to prevent bystanders to stray into the arena. Therefore the Open access charges must not be so low as to cause a stampede. It is a service that is being offered and the compensation has to be fair and reasonable. With the opening of the flow gate there is mad scramble to get a pie of a cake which is really small which is giving rise to conflict of interests. Therefore each one must be given a fair and equitable chance to play his cards. Freedom and flexibility are required there is no doubt about it but it must be ensured that it does not become a spoke to jam the entire machinery.

77. Summary of Short Term Open Access Transactions May'04June'04July'04 Aug'0 4 Sept'04Oct'04Nov'04Dec'04Jan'05Total No of Transactions 616959507660586277572 Energy (MU) 14051060156919431968110914511673138513563 Applications fees (Rs in Cr) 0.03 0.310.040.03 0.0290.0330.555 Transmission Charges (Rs in Cr) 8.519.029.2114.9717.3712.4716.4617.8814.73120.6 Scheduling Charges (Rs in Cr) 0.380.310.370.550.630.691.061.1641.066.21 Handling Charges (Rs in Cr) 0.180.19 0.310.360.260.350.3810.322.537 Total (Rs in Cr) 9.109.559.7915.8618.4013.4517.9119.4516.14129.6 Short Term Rate (Paise/unit) 6.479.006.248.179.3512.0212.3411.6311.669.65