A Rational Approach regarding the Tariff Principles that should govern Inter-State Exchange of Power with Integrated Operation

With the development of Inter-State transmission lines linking the State-wide grids, integrated operation of the power systems should be a natural development. Such integrated operation ensures optimum utilisation of generation facilities already built up in each State, as one State could draw power from the other during the off-peak hours of the other grid. To enoourage such integrated oporation, evoluation of sound and equitable principles for the tariff to be charged for the power inter-changes to cover both fixed and variable charges is an essential prerequisite. While variable charges may not bo difficult to determine as these are based on mere energy consumption, fixed charges which represent costs incurred in maintaining the fixed assets created to meet the peak demand pose a problem. This article outlines a method providing a rational basis for costing the fixed charges offering incentive to both the seller and the buyer. This approach based on the “Method of intercepts”, which takes into account not only the quantum of maximum demand of the receiving party but also the time of its occurrence, is illustrated in the paper.