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CERC Revisits The Methodologies Of Transmission Corridor Allocation For Power Exchanges

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Recently CERC revisited the methodologies of transmission corridor allocation for power exchanges after the giving registration to third power exchanges named “Hindustan Power Exchange Limited”. At present, two Power Exchanges are in operation in India, namely, the Indian Energy Exchange Limited (IEX) and the Power Exchange India Limited (PXIL).

Present transmission allocation method :

The Power Exchanges run an unconstrained process of trade matching where they consider all the buy-sell orders and assume infinite flows on their inter-regional transmission corridors. The orders derived in this process are used to derive net flows of each region and the flows required on each inter-regional transmission corridor. Thereafter, NLDC compares the power flow request sent by both the Power Exchanges with the actual flow feasible on the corridor and allocates the corridor to both Exchanges proportionate to the flows requested by the Exchanges. The above process called pro-rata allocation of transmission corridor.

In 2016, after analysing expert committe’s suggestion, the Commission directed that priority allocation of 10% in the constrained corridor shall be made in favor of PXIL. It was, however, clarified that beyond 10%, allocation of corridor will be on pro-rata basis as per the existing methodology.

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In 2020, the Commission approved another contract in collective transaction segment, in Real time Market (RTM) for trading of power on real time horizon on the Power Exchanges. The allocation of transmission corridor for RTM in case of congestion shall be based on the ratio of initial market clearing volume of RTM in the respective Power Exchange.

There exist different methodologies of transmission corridor allocation for collective transactions in case of congestion – in the Day Ahead Market (DAM), priority allocation of 10% in the constrained corridor in favor of PXIL and beyond 10%, allocation of corridor on pro- rata basis between the two Exchanges; and in the Real Time Market (RTM) in the ratio of the initial market clearing volume of RTM in the respective Power Exchange.

After giving registration to third power exchange, it has become necessary to revisit the methodology of allocation of transmission corridor to Power Exchanges for collective transactions in the Day Ahead Market and the Real Time Market.

Therefore, in view of the present scenario, the Commission has decided to revisit the methodologies of transmission corridor allocation for collective transactions in the Day Ahead Market. The Commission notes that PXIL has not been able to
effectively utilize the facility of priority allocation transmission corridor in the Day Ahead Market. Further, congestion situation has improved during the last few years. On introduction of the Real Time Market in June 2020, no priority allocation in the constrained corridor was assigned to the “smaller Power Exchange” for the transactions in the said Real Time Market and this Market has been running smoothly.

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The allocation of transmission corridor among the Power Exchanges shall be governed based on the following principles:

For the collective transactions in DAM:
(a) At the end of bidding session of DAM, all the operating Power Exchanges shall run the process of bid matching, considering all buy and sell bids on their platform.

(b) The initial unconstrained market clearing volume derived in this process shall be submitted to the NLDC. NLDC shall verify the combined volume cleared in all the Power Exchanges against the available transfer capability (ATC) for DAM. If the combined cleared volume of the Power Exchanges is within the ATC for Day Ahead transactions, the initial results shall be confirmed by NLDC to the Power Exchanges.

(c) In the event of the combined volume exceeding the ATC for DAM in any transmission corridor, the allocation of available corridor margin among the Power Exchanges shall be in the ratio of the initial unconstrained market clearing volume of DAM in the respective Power Exchanges, and accordingly, this shall be communicated to the Power Exchanges.

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(d) The Power Exchanges shall thereafter submit the final trades in conformity with the available corridor margin as provided by the NLDC.

For the collective transactions in RTM, the transmission corridor allocation shall continue to be as per the present methodology.

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