Transmission line congestion in Luzon costs consumers P2B
Wednesday, January 18, 2006
The financial impact of congestion in the transmission lines for the Luzon grid alone has been saddling consumers with a monstrous sum of roughly P2 billion annually.
Such infirmities in the market were among those being revealed for electricity consumers and stakeholders to be aware and conscious of, as transparency in the system are gradually being introduced.
This was the initial cost assessment culled from the Trial Operations Program for the Wholesale Electricity Spot Market (WESM), indicating that this is among the hurdles that needed to be addressed if the electricity service providers are bent on doing something to bring down electricity costs in the country.
As an initial account submitted to the Energy Regulatory Commission, it was noted that the cost of line congestion in the Luzon grid amounts to roughly P160.8 million monthly or a total of P1.929 billion yearly; and such costs are currently embedded in the rates being paid for by consumers.
With the commercial operation of the WESM, it is being prescribed that line rental revenues shall be prescribed to account for these congestion costs. Via financial modeling, schemes are being sorted out on how congestion revenues can be returned to the trading participants, either directly through an allocation formula or funding for a Financial Transmission Right (FTR) contract or indirectly through the reduction of other Market Participant fees or charges.
The simulation employed by the WESM’s market operator to assess the cost of congestion partly rests on dividing dispatch schedule based on the months when weather is considered either dry or wet.
It was further noted that market simulation considered two scenarios – the normal scenario or the time when there are no line outages; and the worst scenario, where single and double line outage contingencies are experienced.
"The results indicate that with or without physical line outages, congestion can still be present due to line limitation, demand level and generator offer optimization," it was stressed.
Those considered to be typically constrained transmission lines include the Dasmariñas-Biñan, Duhat-Balintawak and Concepcion-Mexico.
On the other hand, those eyed to become typical marginal plants or those assets likely to plug the gap in generation during the spot market’s trading would include the Ilijan natural gas-fired plant; Malaya thermal, Duracom, Sta. Rita natural gas and Limay facilities.
Findings from market trial operations further indicate that around 3.0 to 4.0 percent of the total monthly customer payments can be allocated to line rentals due to losses; while around 10 to 11-percent are line rentals due to line congestion, for a total surplus percentage of 14 percent.
It was further observed that during worst case condition, congestion is present 65-percent of the time while for normal condition, congestion is present about 38 percent of the time.
"Estimating the range of surplus considering the worst and normal condition indicates that the surplus can range from 5.8 to 14 percent with respect to total customer collection," the report has indicated.
posted by philpower @ 10:10 PM,
