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Recent Regulatory Reforms and its implications on Future Electricity Transactions

 

The Central Electricity Regulatory Commission (CERC) is in the process of framing many new regulations – such as Grid code, General Network Access (GNA) Regulations, Transmission Sharing Regulations, Renewable Energy Certificate (REC) Regulations, Ancillary Regulations, Deviation Settlement Mechanism (DSM) Regulations etc. which will have significant bearing on the functioning of the sector in the days to come, notes Jogendra Behera.

 

Particularly, Grid code, GNA Regulations and Transmission Sharing Regulations are the three regulations related to functioning of inter-state transmission system in the country. While the Grid Code lays down the framework for efficient and secure grid operations, the GNA regulations is related to obtaining open access in the inter-State transmission system. Similarly, the Transmission Sharing Regulations lay down the mechanism for recovery of Yearly Transmission Charges (YTC) from the designated users of the inter-State transmission system. These three regulations constitute the overall regulatory framework for the allocation and utilization of inter-State transmission system in the country.

As the transmission of electricity continues to be dependent upon the wired meshed network having natural monopoly characteristics, the important consideration other than having a secure and reliable grid, is to develop adequate transmission capacity and ensure efficient utilization of these highly capital intensive and scarce resources. The availability and efficient utilization of the transmission system will facilitate efficient transactions between the buyers and sellers of electricity which will lead to optimal utilization of generation resources and lowering of power procurement cost having far more significance for the sector. It is in this context that the proposed regulations are important for the market and the sector.

These regulations have covered different aspects of the inter-state transmission system proposing changes in some of the earlier mechanism and introducing newer concepts keeping in view the emerging needs of the sector. The Grid code has dealt with issues viz. resource adequacy, ancillary services and reserves, integration of renewables, unit commitment, cyber security etc. whereas the GNA Regulations has brought in a completely new approach for obtaining the access to the transmission system along with scheduling of transactions on a day ahead basis. Similarly, the Transmission Sharing Regulations has revised the methodology for recovery of transmission charges from its users. The key takeaways from these three regulations and their implications are as follows:

 

 

 

 

 

The above changes are expected to bring significant improvement in the allocation and utilization of inter-State transmission system in the country.  This will facilitate efficient transactions between buyers and sellers which take place on top of the meshed transmission network. The Discoms will have opportunities to reduce their overall power purchase cost including the transmission charges by considering various alternatives available in the market on a day ahead basis. They can schedule their power from the least cost sources including the DAM of the power exchanges. However, to benefit from these changes the Discoms are required to increase their market orientation and bolster their capabilities to take advantage of the situation.

 

About the author: Jogendra Behera is Vice President, Market Design & Economics, Indian Energy Exchange

 

 

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