Point of Connection–the new way for power transmission in India

Author:  Mr Rohan S. Modi (Student NPTI, Power Management)

Point of Connection Charges


It is the latest transmission charge pricing methodology introduced for sharing of Inter State Transmission Systems (ISTS) charges and Losses among the Designated ISTS Customers (DICs) depending on their location and sensitive to their distances from load centers (generators) and generation (customers) and the direction of the node in the grid.

Triggers of POC:

The need for this method was triggered due to the problems confronted in the application of the present Regional Postage Stamp Method which implied that all the users of a system in a region pay same price/MW of allotted transmission capacity. However due to increasing short term transactions over the grid, allotment of power plant capacities of one region to the beneficiaries in the other regions, etc the grid and it’s usage is getting more and more complex everyday.

Some of the main triggers are summarized below:

  1. Change in the configuration of ISTS: The transmission system features a combination of a decreasing regional flows and an increasing share of unidirectional inter-regional flows mainly from central, eastern, north-eastern generating zones to power hungry western and northern zones.
  2. Changing nature of use of transmission system by various other users:  The Electricity Act 2003 has given an impetus to the market in the efficient use of system resources, which led to the increase in the trading of the power and also in establishment of Merchant Power Plants (MPP) in the country. Earlier the trend was that only consumers pay for the transmission charges and not the generators but due to emergence of MPP’s whose beneficiaries aren’t identifiable they are asked as to which regions their power will be sold and are asked to pay for it. Attribution of lines to individual users is also no longer possible in a deeply meshed transmission system like India.
  3. The Problem of Pancaking: In the present methodology no distinction is being made between the transactions with regard to the power flow path for supply or delivery points neither for the time it takes place which ultimately ended with same charges for transactions taking on two adjacent buses and for those between far off located buses. The postage stamp transimission tariff is determined at aregional level and the inter regional flows attacted the transmission tariff and also the normative losses of all the intervening regions.
    1. Evolution of Open Access and Competitive Markets: Presently Open Access is organized around two paradigms (i) Beneficiary based system for long term use; (ii) Short Term Open Access (STOA). According to the regulations of the CERC the STOA in particular is considered as “incidental” to long term system use, utilizing the redundancies and margins available on the system and hence the pricing of the STOA has been limited to a fraction of the average cost of transmission services. This will ultimately lead the generators to forego the long term commitments and start dealing only on short term transactions as the price of the short term electricity is higher as compared to long term electricity and resulting in the congestion, higher losses in the exisisting transmission network and considerable uncertainty in transmission grid capacity expansion planning.



  1. Changes caused by laws and Policies:

National Electricity Policy: Network expansion should be planned and implemented considering the anticipated transmission needs to cater both the margins and redundancy levels in consultation with stakeholders and taking up the execution after due regulatory approvals. To facilitate a cost effective transmission of power a national transmission tariff framework sensitive to direction, distance and related quantum of flow should be implemented by CERC.


Tariff Policy: Transactions should be charged on the basis of the average losses arrived at after appropriately considering the distance and directional sensitivity as per the methodology laid down by the CERC and FOR for inter-state and intra-state transmission.

  1. Other Issues:
  • Sometimes state lines are an integral part of the meshed grids and needs to be compensated.
  • Effective congestion management will require changes in pricing.
  • In a large region is not uniform.


Objective of POC:

To recover the total annual fix costs of the network and to provide signals reflecting the ‘utilization’ of the network assets. Accordingly all the network users will have to pay:

  • Connection Charges: Relates to costs of assets installed solely for an individual user.
  • Charges for joint Assets and operations: For real time dispatch, energy accounting and for subsidizing the connection charges for small environmental friendly generators benefits of which will be shared by all the network users.
  • Network Usage Charges: Charges which are to be paid by the DICs based on the network used by them.


The Connection and Joint Assets and Operations charges are directly identifiable while the Network usage charge needs to be calculated using the load flow analysis. The two methods recommended for the same are:

(i)                 Average Participation Method

(ii)               Marginal Participation Method


Average Participation Method: In this method for every individual generator and customer a number of physical paths are constructed tracing the actual flow of power towards load for every injection and tracing upstream for the energy consumed by a certain user from the demand bus until some generators are reached. A simple allocation rule with some theoretical backing base allocates the responsibility for the costs of actual flows on various lines from sources to sinks in which inflows are distributed proportionally between the outflows. The drawbacks of tracing is that it leads to counterintuitive results if generation and load or different nodes are aggregated.



Marginal Participation Method: Marginal participation sensitivities are obtained that represents how much the flow through each network branch j increases when the injection/ withdrawal in a bus is increased by 1 MW. Flow variation in each network branch j incurred by 1 MW injection / withdrawal at each bus is computed for each scenario, e. Here six scenarios (e) are considered: Winter peak & off peak, Summer peak &off peak and Monsoon peak & off peak. According to Kirchoff’s law for every 1 MW increase in injection of power is to be compensated with 1 MW increase in demand at another node in the grid network. The bus which responds to this extra injection of power in the network is known as slack bus.

Once this flow variation in each line of the network by every agent i, is obtained under every scenario is obtained the seasonal usage index for every network user is computed using following equations:


U eil = (|File|- |Fle|)*Pie


Ueil is the seasonal usage index in line l due injection/withdrawl at node i.

File is the flow in line l under scenario e due injection/withdrawl of 1 MW at node i.

Fle is the flow in line l under scenario e under base case.

Pie is power demand at bus i under scenario e under base case.


Once this is done the revenue requirement of each line is allocated pro-rata to the different agents according to their total participation in the corresponding line by the following equation:


cost allocated eil = (U eil / i U eil ) * Cl * (Flowl / capl)


U eil / i U eil is the marginal participation factor.

Cis the seasonal aggregate revenue requirement of line l.

Flowl is the flow on the line l.

capl is the capacity of the line l.




Distinguishing features of POC Mechanism:


  • Proposed Mechanism is based on locational point charge (Rs/MW/month).
  • Transmission Charges and Losses to be shared by:

-Power Stations / Generating ?Stations ( that are regional entities as per IEGC)

?SEBs/STUs (On behalf on intra?State entities)

? Bulk consumer directly connected with the ISTS

  • No transmission charges and losses during useful life for solar projects commissioned in next 3 years.
  • No differentiation between LT, MTOA and STOA customers.
  • Advance declaration of rates subject to periodic true?ups.
  • Zoning of the country in 30 generation zones and 27 demand zones.
  • Zonal charges(Generation access charge and demand access charge).
  • It will manage the congested lines by charging heavy rates on the congested lines.
  • It will encourage the transmission from less loaded area to heavy loaded areas by charging less on respective transmission corridors.
  • It’s prices will be lesser as compared to the postage stamp method model.


Need of Zoning: The transmission access charges are determined for each generation/demand access at each bus. However, for the ease of implementation and management, buses have been aggregated into zones based on principles:

I.            Zones should contain relevant nodes whose marginal costs (as determined from the output from the computation model) are within a logical range.

II.            The nodes within zones should be geographically and electrically proximate.

III.            Generation and demand are separately zoned. Even as it is preferable to have similar zones for generation and demand, this should be pursued only when practical, and other conditions for zoning are met.


Roles and Responsibilities:

Implementation Agency (NLDC): Collect the basic network data, do load flow of basic network and estimate the charges and losses of different zones and demarcating them into slabs.


Validation Committee: To validate the basic network, nodal generation, nodal demand and load flow results.


CTU: Billing, collection and disbursement of transmission charges to ISTS Transmission Licensee.


DICs: To submit network related, demand/injection forecast and commercial information to IA.


RPCs: To certify non – ISTS lines being used for inter-State transmission, prepare transmission charge accounts and certify rescheduling of planned maintenance for reasons beyond control of generator.





Proposed Computation of POC charges:
The POC being still in the implementation phase and to avoid the sudden problems eruption due to its implementation, it is proposed to calculate POC by the following method for first two years in the implementation phase.


POC = 50% charge by uniform method + 50% charge by hybrid method


Uniform method = Total transmission charges / (total approved injection + total approved drawl).


Approved Injection means the injection in MW vetted by Implementing Agency (IA) for the Designated ISTS Customer for each representative block of months, peak and other than peak scenarios at the ex-bus of the generator or any other injection point of the Designated ISTS Customer into the ISTS, and determined based on the generation data submitted by the Designated ISTS Customers incorporating total injection into the grid, considering the long term and medium term contract.


Approved Withdrawal  means the simultaneous withdrawal in MW vetted by Implementing  Agency for any Designated ISTS Customer in a control area aggregated from all nodes of ISTS to which Designated ISTS Customer is connected for each representative block of months, peak and other than peak scenarios at the interface point with ISTS, and where the Approved Withdrawal shall be determined based on the demand data submitted by the Designated ISTS Customers incorporating long term and medium term transactions.



The transmission losses to be shared among all DICs will also be calculated in a similar fashion as POC rates/charges as explained above.

In order to smoothen the transition process the IA will be using 3 slab rates for charges and losses in order to minimize the diversity of the POC rates among the different zones.





Mechanical engineer with experience in Power Plant maintenance , operation and auditing for ISI marked products. MBA in Power Management from National Power Training Institute, Faridabad. Working as Consultant for Bridge to India Pvt. Ltd. Expertise in: 1) Power sector regulations 2) Financial Modelling 3) Project Development solar PV plants 4) Strategic consulting 5) Report writing

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1 Response

  1. pl keep me abreast of the latest in transmission tarriffs in india

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