DEREGULATED POWER SYSTEM

Presented by
R. RAVI TEJA
09271A0242
CONTENTS

INTRODUCTION
CONCEPTS OF REGULATION AND DEREGULATION
WHY WAS ELECTRIC UTILITY INDUSTRY REGULATED?
STRUCTURE OF REGULATED INDUSTRY
CONDITIONS THAT LED TO DEREGULATION
STRUCTURE OF DEREGULATED INDUSTRY
THE WHOLESALE POWER MARKET
MARKET MODELS
ISSUES INVOLVED IN DEREGULATION OF POWER INDUSTRY
CONCLUSION

BASIC CONCEPTS OF Regulation AND
Deregulation
Regulation:
Regulation means that the govt. has set down
laws and rules that put limits on and
describe how a particular industry or
company can operate.
Deregulation:
Deregulation in power industry is a
restructuring of the rules and economic
incentives that government set up to control
and drive the electric power industry.
30,500 MW
16,000
42,420 MW
39,175 MW
37,486 MW
19,41
6 MW
2,06 MW
PRESENT SCENARIO OF INDIAN
ELECTRIC POWER INDUSTRY


WHY WAS ELECTRIC UTILITY INDUSTRY
REGULATED???
Regulation offered a risk free way to finance the creation of
electric industry.
Establishment of Electric industry require large capital for
infrastructure building.
It was agreed that business man would risk their money not
the government towards capital investment.
Government also assured businessmen the local monopoly
and a stable market.
Characteristics of regulated electric
industry:

Monopoly Franchise
Obligation to serve
Regulatory oversight
Least cost operation
Regulated rates
Assumed rate of return

STRUCTURE OF A REGULATED INDUSTRY
CONDITIONS THAT LED TO
DEREGULATION
There are many reasons that led to deregulation of
power industry. One force that led to deregulation of
electric power was the change in Generation
economies of scale that occurred throughout the
1980s. Following are the main reasons:

The need for regulation changed
Privatization
Cost is expected to drop
Customer focus will improve
Encourages innovations



STRUCTURE OF DEREGULATED
INDUSTRY

DIFFERENT ENTITIES IN DEREGULATED
ENVIRONMENT
The introduction of deregulation has brought several entities in the
electricity market place, while on the other hand redefining the
scope of activities of many of the existing players. Variations exist
across market structures over how each entity is particularly
define and over what role it plays in the system.

Different entities:
Genco
Transco
Disco
Resco
Independent system operator(Iso)
coustomers

THE COMPETITION
A restructured, completely competitive electric
industry is a sandwich of competition. This
structure can be conveniently divided into
whole sale and retail levels.
The important thing to note is that the power
delivery transmission and distribution
remains the monopoly franchise.

THE WHOLESALE POWER MARKET
In order for a deregulated industry to work well,
two additional entities or functions must be
created:
Power market
System operation
Both the functions must be accomplished in
one form or another in every deregulated
electric power industry.
MARKETPLACE MECHANISM
Under deregulation, some system must be put in place where
competitive sellers of electricity can offer their product and
transact sales. This can be done in three ways:

Poolco:
There is only one buyer. It is a combined-buyer system operator.

Bilateral exchange:
In this individual buyers and sellers make a deal to exchange a
power at prices and under the conditions they agree to, privately.

Power Exchange(PX):
The buyer and sellers enter their needs into power exchange,
which operates much like a stock.
ENERGY AUCTION AND COMPETITIVE
BIDDING..
The bids are generally in the form price and quantity
quotations and specify how much the seller or buyer is
willing to buy or sell and at what price.
Non-discriminated or Second price auction
Discriminated or first price auction
MARKET MODEL
There are mainly two models of dereguulation presently
preferred in the various countries all over the world.

Pool model:
There is only single buyer for all the energy generated by
gencos. The buyers here is poolco, which also operate
the system. Auction is single sided auction.

Open access model:
The energy auctions and future markets are conducted by
an independent entity called power exchange(PX) and the
system is operated by independent body called ISO, who
assure equal opportunity for sellers and buyers through
open access to grid.
ISSUES INVOLVED IN DEREGULATION
OF POWER INDUSTRY
Network congestion
Effects of network congestion
CONCLUSION
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