ABT gives stability charge to tripping power grids

While the impact of The Electricity Act ’03 is still being debated, Availability Based Tariff (ABT), also introduced in ’02-03, has had far reaching impact on grid operations. The frequency of grid used to hover below the acceptable mark of 49 Hz (below which the grid runs the risk of a total collapse) for significant part of time earlier.

But, it is now being maintained in the range for more than 97% of the time, for all the regions except North. Most remarkable is the performance of southern region where the percentage of time when frequency remained below 49 Hz has come down from 88% in FY01 to less than 1% now. Further, with its mechanism for penalty and incentive, companies with efficient operations are generating additional revenues through unscheduled interchange (UI) charges.

ABT refers to the tariff structure which separates the fixed and variable cost of power generation. A generation company would receive the fixed component depending upon the declared availability of its plant and irrespective of actual generation.

The variable cost called ‘energy charge’ depends upon the scheduled load requirement. The third component of ABT is UI charge, the most critical element, which varies depending upon the existing frequency of the grid on real time basis. The objective is to provide incentive/penalty such as to bring the frequency of the gird to normal level. Segregation of fixed and variable charges enables generation based on incremental cost of generation, bringing down the overall generation cost.

The UI charges vary based on the actual frequency of the grid at a point of time. At 49 Hz, the charge is Rs 5.70 per unit. This means that a generation company would get Rs 5.70, if it produces one unit over and above its schedule at this frequency. Similarly, if a consumer reduces drawl of power at 49 Hz, it would receive Rs 5.70 per unit.

Thus, it pays the maximum for a generation company to pump more or consumer to consume less, if the frequency of the grid is 49 Hz. At 50.5 Hz, UI charge is zero meaning consumer would have to pay nothing if it draws more power at this frequency. Similarly, if a power plant reduces its generation at this frequency, it saves on the fuel cost, without having to pay anything.

While the system is sufficiently robust, there is still some scope of grid indiscipline. Says SK Dubey, director (operations), PTC India, “ABT mechanism, no doubt, has improved the grid operation substantially. However, the UI element, which has been conceived as a commercial deterrent, is now being used as a trading route by some parties, which may again breed grid indiscipline.”

Northern region is the only region, which has seen grid instability despite ABT, because of acute demand-supply gap. However, with inter-linking of North with Eastern region last month, the disturbance should be lower now. The inter-linkage leads to more power flow from surplus eastern region to northern region.

Further, the regional variation in UI charges gets removed so that north gets power at cheaper rate whereas generation unit in east get revenue from their surplus capacity. The arrangement has also helped reduce the Eastern region’s problem of plenty. The region, operated at high frequency of 51 Hz for more than 15% of time in ‘02 and ‘03 because of low demand.