CAPTIVE POWER POLICY

Presented BY:-

NAVAJYOTI MARTHA

HISTORY• Captive generation “concept”& “activity” was

recognized under the repealed law prior to Electricity Act-2003.

• In section 44 of Electricity (Supply) Act,1948 there was the provision for captive generation.

• The provision enabled that any licensee/person (other than central govt. body) can set up captive generation by taking the permission of SEB.

• Also the SEB need to consult with CEA before giving any consent if the capacity of generation exceeds 25 MW.

• The restrictions & controls on captive generation have been scrapped under the EA-2003.

• The new act allows any person to set up captive generating plant.

PROVISION FOR CAPTIVE GENERATION UNDER ELECTRICITY ACT-2003

• Under section 2(8), the expression “captive generating plant” has been defined as a generating plant set up by any person/society/association to generate electricity primarily for his/their own use .

• Section 9(1) stipulates that the person need to construct, maintain “DEDICATED” transmission lines primarily for his own use & that can sell the “surplus power” available to the grid.

• They can avail “open access” to the existing transmission lines subjected to availability of adequate transmission capacity determined by STU/CTU.

• Also the person shall not required to obtain license for setup,operating,maintaining a “dedicated T/L” if the person complies with the followings

(1)Grid code,

(2)Technical standards,

(3)system of operation as per the norms of the concerned SLDC/RLDC

• Also “CESS” & “EXCISE DUTY” levied at different stages of Production or at the stage of Retail Sale.

• Also both the taxes are leviable for different purposes. “CESS” charged on consumption of electricity & “EXCISE DUTY” charged on the consumption of electricity on the installed capacity within the premises.

• To the extent of sale the captive plants treated at par with the regulations applicable to the generating companies.

• Under section 9,the person owning captive generating plant has also been allowed “OPEN ACCESS” for conveyance of energy to a destination for his own use without paying any “SURCHARGE”.

• The objective of the act to create “Competitive Pressure” on the utilities to prevent charging industrial consumers with high Cross subsidy.

REALITY ISSUES• Most of the available capacity may not available to

Grid because of 2 reasons

(1) Open Access

(2)Transmission Tariff

Because the open access linked to the attitude of the state & RLDC/SLDC.

In case of postage transmission tariff captive capacity has to pay the “entire transmission cost”

THE ELECTRICITY RULE-2005

• According to the rule in case of a power plant-

(1) Captive users shall not hold less than 26% of the ownership of the plant.

(2) Such Captive users shall not consume less than 51% of the electricity generated.

• NEP spells the use of the “SPARE CAPACITY” of the Captive Generators for contributing to the GRID.

• So that the “Quality of power supply” & “Competitive” environment will be enhanced.

ACCORDING TO NTP• A two-part tariff structure should be adopted for all

long term contracts to facilitate “Merit Order dispatch”.

• “Availability Based Tariff (ABT)” framework would be extended to generating stations (including grid connected captive plants of capacities as determined by the SERC).

• Appropriate Commission may also introduce differential rates of fixed charges for peak and off peak hours for better management of load.

• The basic focus is to Harnessing captive generation .

CAPTIVE POLICY OF ORISSA• The Commission through a consultative process

followed by Public Hearing on 03.01.2008 had issued a “Policy on harnessing of Surplus Power”from Captive Generating Plants.

(1)Firm Power:

Those captive generators who give a commitment for supply of power for a period of more than 3 months & up to 1 year shall be considered as supplier of firm power of electricity form their Captive Generating Plants.

• The procurement of power through the Competitive Bidding route as per provision under Section-63 of Electricity Act, 2003.

• To avoid cartelization of a few large CGPs artificially boosting the pricing of surplus power from CGPs Commission has capped .

• The “Acceptable Cost” determined through the competitive bidding route should be within 10% of the Maximum of cost of generation which can be certified by reputed firm of CAs.

• State Utilities are free to purchase Power at a higher rate than 110 % of the cost of generation through the competitive route for purpose of “TRADING”.

• CGPs selling power to GRIDCO will have the indirect advantage of saving in “Transmission charge and Transmission loss” which at 2007-08 level will be around 34 to 35 paisa/ unit.

(2) Non-firm Power:

• Those of the captive generators who are capable of giving day ahead schedule but are not in a position to give supply continuously for a period up to three months.

• If a CGP is in a position to give its day ahead schedule for 21 days, 35 days, 40 days etc. during a period of three months shall be considered as non-firm supplier of electricity in a block period of 3 months.

• It has to declare at the beginning of the period of three months about the volume of energy that they would be supplying to the state grid.

• In case of failure to supply the declared volume, they may have to pay penalty at double the rate.

(3) Inadvertent Power:

• Power injected by the Captive Generators without giving day ahead schedule.

• It would be priced equal to the pooled cost of

hydro power of the State.

• However, there shall be no payment for any kind of injection firm, non-firm or inadvertent at frequency of 50.4 HZ or more as a matter of grid discipline.

• CGPs are given the facilities like land at concessional rate, water supply and other benefits by the state for setting up the industries If they enter into an agreement for sale of their surplus power to the state.

• The Captive Generating Plants are free to sell their power through Open Access if they do not want to participate in a bidding process for determination of tariff for sale of power inside Orissa to GRIDCO.

THANK U