Study on Transmission Pricing Mechanisms for Nepal Power Transmission Network

Abstract

In this study on transmission pricing mechanism of Nepal Power Transmission Network (NPTN), the postage stamp method was used for calculating the wheeling charge (X1) for the consumers which were connected in loop network. The wheeling charge (X1+X2) was paid by the consumers in radial network, where (X2) is the charge calculated using the flow-based MW-mile method, using the Bialek’s algorithm. The aforementioned algorithm was implemented on Bialek’s four bus and IEEE 14 bus system. The annual revenue required for IEEE 14 bus system was estimated to be NPR 52.51 million. The total cost allocated to the generators and loads were NPR 59.04 million and NPR 85.83 million respectively which showed that the cost recovery is possible using the power tracing method. In case of NPTN, the wheeling charges (X1) calculated using postage stamp method for the loop network was NPR 0.80/kWh. The wheeling charges (X2) for the Chameliya HPP (CHPP) was NPR 8.72/ kWh. As the CHPP was using the loop network also, so additional cost of NPR 0.80/kWh had been charged to CHPP and the total wheeling charge (X1+X2) was calculated to be NPR 9.52 /kWh. The cost of the CHPP was the highest among all the hydropower, this was because the CHPP had been using five transmission lines to transfer its power to the national grid. In this study, the profit margin was estimated to be 32% which was calculated assuming the payback period of 5 years. Based on the current calculated wheeling charge for the CHPP, the cash flow for using the transmission line was generated and IRR for the same was obtained as 19% with cost and benefit ratio of using the alignment was found to be 20.23. The same methodology was applied for calculating the wheeling charge for the radial network Dhalkebar Muzzafarpur transmission line. The cost of the aforementioned transmission line was calculated as NPR 1.06/kWh which was found to be 80.22% higher than the original price of NPR 0.21 that was paid by the NEA to the PTCN in FY2018/19 for the usage of the transmission line. The difference between the values could be due to the different profit margin and payback period of the transmission company. The current study suggests that the transmission line wheeling charge will not only depend on the usage of the network but also will depend on the profit margin and estimated payback period which will be guided by the guidelines of the particular utility.