TRANSMISSION PRICING UNDER OPEN ACCESS

Abstract

Historically, the electricity industry was a monopoly industry with a vertical structure. In a vertical structure, with integrated environment generation, transmission and distribution of electrical power were organized by a single or more government owned or private companies. Since 1990s, the electricity supply service has been undergoing a drastic reform all over the world. The old monopolist power markets are being replaced by multiple and independent ownership utility with deregulated electricity markets open to the competition. Different market forces specially performance and availability have driven the power market towards the deregulation. Deregulation has led to the unbundled of the generation, transmission and distribution of electrical power. Policy makers world wide understood the benefits of deregulation, changes and impacts on the overall electricity availability. Nations all over the world have committed to and currently are in the process of introducing more competition into their power industries. Indian Electricity Act 2003 enacted in June 2003 has brought electricity generation, transmission and distribution into deregulated and competitive environment to get quality& reliable electricity supply to the consumers. The concept of Open Access Transmission was introduced into the electric power supply industry to alter monopolized industry to one with greater level of competition. Under Transmission Open Access (TOA), transmission companies will provide power market participants with non-discriminatory access to its transmission services. As a result, the power market has seen a major trend towards power trading and retailing. Such issue shall meet Power Wheeling charges which can be defined as the transmission of Active power and reactive power from a seller to a buyer through a transmission network owned by a Transmission line ownering company (wheeling utility). In this dissertation work Investigation of the various methods used in the market specially in India for the pricing of wheeling transactions has been carried out. Some of the common methodologies such as Embedded cost-based, Incremental cost-based and Marginal cost-based have been examined closely to review their pros and cons. A case study has been carried out for Uttarakhand state to find out the transmission pricing for the wheeling transaction by using postage stamp method and MW-mile method. A comparative analysis between postage stamp method and MW-mile method has been carried and presented with recommendations.