Implementation of Point of Connection Tariff in India

Efficient transmission pricing mechanism plays an important role in nurturing the growth of electricity market and promoting competition. In India, the transmission pricing mechanism has evolved over the years. The implicit transmission pricing model was followed in the initial years until the year 1992, when it was replaced by usage based transmission pricing model. Further, in 2002, the usage based transmission pricing model was replaced by access based transmission pricing scheme. The National Electricity Policy (NEP) issued by the Government of India in the year 2005 mandates transmission prices to be distance and direction sensitive and based on the usage of the network. In line with this mandate, Central Electricity Regulatory Commission (Sharing of Inter State Transmission Charges and Losses) Regulations were notified on 15th June 2010 for implementation of a new transmission pricing mechanism called Point of Connection (PoC) transmission pricing mechanism. National Load Despatch Centre (NLDC) was designated as the Implementing Agency for this mechanism. During the implementation phase, a number of issues were encountered. To address the same, certain modifications in the form of orders on removal of difficulties were also passed by the regulator for facilitating the implementation of PoC Mechanism. Thus, finally, the PoC mechanism was implemented w.e.f. 1st July 2011 for all types of transactions i.e. Long Term, Medium Term and Short Term Open Access. In this paper, the authors have enumerated their experiences in implementing this mechanism, which has been one of the biggest power sector reforms in India.