the presentation deals with the Tariff determination for hydro power plants with an example.

1. Tariff
Determination
for Hydro Power
Plant
Krishnakumar R V
M.E Power Engineering & Management
Anna University, Chennai

2. General Concepts
(i) Additional capitalization
Additional capitalisation means the capital expenditure
incurred or projected to be incurred, after the date of
commercial operation of the project and admitted by the
Commission.
(ii) Auxiliary energy consumption
The quantum of energy consumed by auxiliary equipment
of the generating station, and transformer losses within
the generating station, expressed as a percentage of the
sum of gross energy generated at the generator terminals
of all the units of the generating station.
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3. General Concepts
Contd.,
(iii) Capital cost
Capital Cost for a Project includes the expenditure
incurred or projected to be incurred, including interest
during construction and financing charges, any gain or
loss on account of foreign exchange risk variation during
construction on the loan.
(iv) Date of Commercial Operation’ or ‘COD’
The date declared by the Generating company after
demonstrating peaking capability corresponding to
Installed capacity of the Generating station through a
successful trial run, after notice to the beneficiaries.
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4. General Concepts
Contd.,
(v) Debt-Equity Ratio
Debt–Equity ratio as on the date of commercial operation
shall be considered as 70:30 for determination of tariff.
However, if the Equity employed is more than 30%, the
amount of Equity for determination of tariff would be
limited to 30%. Also, if the actual equity employed by the
developer is less than 30%, the actual Debt and Equity
would considered for determination of tariff.
(vi) Declared capacity
The capability to deliver ex-bus electricity in MW declared
by such generating station in relation to any time-block of
the day or whole of the day, duly taking into account the
availability of fuel or water, and subject to further
qualification in the relevant regulation.
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5. General Concepts
Contd.,
(vii) Design energy
Design energy means the quantum of energy which can be
generated in a 90% dependable year with 95% installed
capacity of the Hydro generating station.
(viii) Operation and Maintenance expenses
The expenditure incurred on operation and maintenance of
the project, or part thereof, and includes the expenditure on
manpower, repairs, spares, consumables, insurance and
overheads.
(xii) Plant availability factor (PAF)
The average of the daily declared capacities (DCs) for all the
days during that period expressed as a percentage of the
installed capacity in MW reduced by the normative auxiliary
energy consumption.
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6. General Concepts
Contd.,
(viii) Normative Annual Plant Availability Factor (NAPAF)
Normative annual plant availability factor (NAPAF) for Hydro
generating stations is determined by the Commission as per the
following criteria:
(a) Storage and Pondage type plants with head variation between
Full Reservoir Level (FRL) and Minimum Draw Down Level
(MDDL) of up to 8%, and where plant availability is not affected
by silt : 90%
(b) Storage and Pondage type plants with head variation between
FRL and MDDL of more than 8%, where plant availability is not
affected by silt : (Average head / Rated head) + 0.02
(c) Pondage type plants where plant availability is significantly
affected by silt: 85%.
(d) Run-of-river type plants: NAPAF to be determined plant-wise,
based on 10-day design energy data, moderated by past experience
where available/relevant.
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7. General Concepts
Contd.,
(xiii) Capacity Index (CI)
Capacity Index (CI) = {Declared Capacity (MW) /
Maximum Available Capacity (MW)} x 100
Where, Declared Capacity (DC) is the power that is
expected to be generated next day based on availability of
water & machine; and Maximum Available Capacity
(MAC) is the maximum power that a station can generate
with all units running, under the prevailing water levels
and flows over the peaking hours next day.
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8. Components of Fixed Charge
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9. Interest on Working Capital
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10. Capacity Charge
Capacity Charge (Rs) = AFC x 0.5 x NDM / NDY x (PAFM / NAPAF)
• AFC (Rs) = Annual fixed cost as specified by the Commission for the year
• NAPAF = Normative Plant availability factor, in percentage
• NDM = Number of days in the month
• NDY = Number of days in the year
• PAFM = Plant availability factor achieved during the month, in
Percentage
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11. Capacity Charge
Contd.,
PAFM = 10000 X ∑ DCi / {N x IC x (100 – Aux)}%
• AUX = Normative auxiliary energy consumption in
percentage
• DCi = Declared capacity (in ex-bus MW) for the ith day of the
month which the station can deliver for at least three (3)
hours
• IC = Installed capacity (in MW) of the complete generating
station
• N = Number of days in the month
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12. Energy charges
• The Energy charge are payable by each beneficiary for the total energy
scheduled to be supplied to the beneficiary
Total Energy charge payable to the generating company for a month:
(Energy charge rate in Rs./kWh) x {Scheduled energy for the month in
kWh} x (100 – FEHS) / 100
Energy charge rate = AFC x 0.5 x 10 / {DE x (100 – AUX) x (100 –
FEHS)}
Where,
• DE (MWh) = Annual design energy specified for the Hydro generating
station
• FEHS (%) = Free energy for the home State
• CERC has capped the Energy charge rate at Rs 0.80/Unit
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13. Tariff determination for a 500
MW Hydro Power Plant
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14. Calculations
Return on equity
1. Capital cost/MW= Rs. 6 Cr
2. Capital cost for 500 MW = 500 x 6= Rs. 3,000 Cr.
3. Normative Debt/Equity Ratio= 70:30
4. Equity = 30/100 X 3000 = Rs. 900 Cr.
5. Debt =70/100 X 3000 = Rs. 2, 100 Cr.
RoE = 15.5% of Equity
= 15.5/100 x 900 = Rs. 139.50 Cr.
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15. Calculations
(2) Interest on Loan
10% of Debt=10 /100 x 2100 =Rs. 210 Cr.
(3) Interest on Working capital
10% of Working capital (Rs. 300 Cr.)
10/100 x 300 = Rs. 30 Cr.
(4) Depreciation
5.28% of Capital cost= 5.28/100 x 3000= Rs. 158.40 Cr.
• (5) O & M Cost
• Normative O&M Cost: 2% of Project Cost
• 2% x 3000 = Rs. 60 Cr
• Hence, Total Fixed cost = (1) + (2) + (3) + (4) + (5)
• = Rs. (139.50+210+30+158.40+60) = Rs. 597.90 Cr. = Rs. 597.90 x 107
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16. Calculations
Contd.,
Annual Energy generation
Gross Energy generated in the Year
500 MW = 500 x 365 x 24 x 90 x 1000/ 106
= 3942 Million Units (MUs)
= 3942 x 106 Units
Auxiliary consumption: 1%
Net Annual Energy generation:
=Gross energy x (1 – Aux consumption)
= 3942 x 106 x (1 - 1%)
= 3902.58 x 106 Units
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17. Calculations
Contd.,
Fixed cost per unit
Fixed Cost/Unit = (Total Fixed Cost) / (Net Annual
Energy generation)
= (597.90 x 107) / (3902.58 x 106)
= Rs 1.53 / kWh
Nominal Tariff:
Nominal Tariff = (Fixed Cost / Unit) + (Variable cost
/Unit)
= Rs (1.53 + 0)/Unit
= Rs. 1.53/Unit
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18. THANK YOU
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