CENTRAL ELECTRICITY REGULATORY COMMISSION

EXPLANATOTY MEMORANDUM
TO
CENTRAL ELECTRICITY REGULATORY COMMISSION (IDIAN ELECTRICITY
GRID CODE) (FOURTH AMENDMENT) REGULATIONS 2015

Background

1. The Central Electricity Regulatory Commission (Terms and Conditions of

Tariff) Regulations, 2014 has specific provisions for declaration of COD of the
generating stations regulated by CERC under section 62 of the Electricity Act 2003.
The Central Electricity Regulatory Commission (Terms and Conditions of Tariff)
Regulations, 2009 also had specific provision for declaration of COD.

2. However, there is no specific provision for declaration of COD of generating

stations other than regulated by CERC under section 62 of the Electricity Act 2003 in
the IEGC or any other CERC Regulations.

3. This point came to the notice of the Commission in Petition No. 85/MP/2014
filed by WRLDC with regard to declaration of COD of Unit 3 of Sasan UMPP.
WRLDC has prayed for "issue of specific guidelines with respect to declaration of
COD of the generators who are not governed by the Central Electricity Regulatory
Commission (Terms and Conditions of Tariff) Regulations, 2009.

4. Commission in its order dated 8.8.2014 in Petition No 85/MP/2014 has

observed as follows:

"Guidelines with regard to the commercial operation

35. WRLDC has prayed for "issue of specific guidelines with respect to declaration of
COD of the generators who are not governed by the Central Electricity Regulatory
Commission (Terms and Conditions of Tariff) Regulations, 2009 to be in line with
CERC regulations so that the same can be implemented in a dispute free manner
and eliminate any possibility of gaming by generator". The Commission has taken
note of the prayer of WRLDC and is of the view that in case of UMPP, the PPA
contains the necessary provisions with regard to the performance testing and
commercial operation of the unit of the generating stations and the same should be
strictly complied with. In other cases, if adequate provisions are not made in the PPA,
the RLDC shall be guided by the provisions in the Central Electricity Regulatory
Commission (Terms and Conditions of Tariff) Regulations, 2014 in this regard. We
direct the NLDC and RLDCs to submit report in consultation with CEA which shall
include specific difficulties experienced by RLDCs in dealing with the performance
testing and commercial operation of the generating stations which are not governed
by the Tariff Regulations of the Commission. The report shall be submitted within two

-1-
 months. We direct the staff of the Commission to study the report of the
NLDC/RLDCs and place it before the Commission along with its suggestions for
consideration and necessary directions."

5. POSOCO vide their letter dated 17.9.2013 submitted a white paper on the
issue of COD. POSOCO subsequently vide letter dated 22.12.2014 has submitted
the Minutes of Meeting dated 22.11.2014 convened by CEA on the issue of COD.

Technical Analysis

6. The issue of declaration of COD of the generating stations has been

examined in the light of specific provisions relating to COD in the Central Electricity
Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014,
provision relating to COD in the PPAs of UMPP projects and Case-II competitive bid
projects, the guidelines issued by Central Electricity Authority/Ministry of Power,
COD declaration in case of Sasan UMPP, submissions of POSOCO and Minutes of
Meeting dated 22.11.2014 between POSOCO and CEA, procedure followed by
NTPC etc.

7. It is seen that there is no uniform criteria and methodology for declaring COD
of a unit of a generating station.

8. CERC Tariff Regulations provide for declaration of COD by the generating

company after demonstrating the maximum continuous rating (MCR) or the installed
capacity (IC) through a successful trial run after notice to the beneficiaries, if any,
and trial run means the successful running of the generating station or unit thereof at
maximum continuous rating or installed capacity for continuous period of 72 hours in
case of unit of a thermal generating station or unit thereof and 12 hours in case of a
unit of a hydro generating station.

9. As per PPA in respect of Sasan UMPP, COD means, in relation to a Unit, the
date one day after the date when each of the procurers received a Final Test
Certificate of the Independent Engineer after demonstration of unit tested capacity
not less than 95% of the contracted capacity for a continuous period of 72 hours and
establishing Super critical parameters of the unit.

10. As per the Model PPA for the Competitively Bid projects on DBFOT basis of
September 2013 , the commercial operation date of the Power Station or any Unit,
as the case may be, shall be the date on, which the Power Station or such Unit is
deemed fit for generating electricity and supplying it to the Grid upon issuance of
such Completion Certificate or the Provisional Certificate by the Independent
Engineer after demonstration of unit tested capacity not less than 95% of the
contracted capacity for a continuous period of 72 hours.

11. The Ministry of Power OM of 3rd September 2009 provided following definition of
commissioning of projects:

-2-
 (a) Thermal Units (coal, Gas, Lignite)
A thermal unit may be considered as commissioned when the construction and
commissioning of all plants and equipments required for operation of the unit at rated
capacity are complete and the unit achieves full rated load on the designated fuel.

(b) Hydro
(i) the trial run operation has started
(ii) the unit has achieved full rated capacity in case of purely runof river stations and
runofriver stations with pondage.
(iii) The unit has achieved full rated capacity or the design capacity corresponding
to prevailing reservoir level in case of storage power stations.

(c) Nuclear
Nuclear units could be declared to have been commissioned after these are declared
commercially operational by plant authority.

12. This was mainly for the purpose of considering capacity addition at the national
level and not for any commercial purpose. The above definition does not stipulate the
duration for which the full rated load has to be achieved. Some of the PPAs between a
generator and its customers possibly are silent on this issue and there have been
instances when some generators have declared COD after just touching the Maximum
Continuous Rating or MCR.

13. NTPC internal circular dated 01.12.2009 with regard to declaring commercial
operation of coal based units, also provides for continuous trial run of the unit at full
load for 72 hours after intimating the beneficiaries. The objective of this test is to
prove the capability of the boiler-turbine-generator unit along with the auxiliaries
(including common) to run at the installed capacity.

14. As per the minutes of meeting dated 12.11.2014 following methodology was
agreed between CEA and POSOCO for declaration of COD of a unit of a generating
station:

1. The generating company shall be required to demonstrate the maximum

continuous rating (MCR) or the Installed Capacity (IC) of the unit through a
successful Trial Run after notice to the beneficiaries, if any, as laid down in
the CERC Terms and Conditions of Tariff Regulations 2014. In any case,
Generators (under RLDCs jurisdiction) would give one week advance notice
to RLDCs before commencement of Trial Run. Those under SLDC's
jurisdiction would give similar notice to SLDC.

2. Trial Run would be for a 72 hour period for thermal machines wherein the
Minimum Net Generation capacity corresponding to MCR or IC shall be

-3-
 established for each of the 288 blocks of 15 minutes period. The Minimum
Nett Generation capacity to be established shall be determined after allowing
normative auxiliary power admissible as per CERC Terms and Conditions of
Tariff Regulations.

3. Trial run shall be for 12 hours for hydro unit wherein the Maximum Net
Generation capacity corresponding to Maximum Continuous Rating (MCR) or
Installed Capacity (IC) shall be established for each of the 48 blocks of 15
minutes period. In case of water shortage in hydro stations, the generator
could test at full load/ installed capacity for the period water is available and
declare provisional COD However the generator would test at the earliest for
12 hours. The Minimum Nett Generation capacity to be established shall be
determined after allowing normative auxiliary power admissible as per CERC
Terms and Conditions of Tariff Regulations 2014.

4. Before conducting the trial operation the Generating company, shall furnish
the details of installed capacity, applicable normative Auxiliary Power
Consumption as per CERC Tariff Regulations and Minimum Net Generation
capacity to be demonstrated; which shall be demonstrated for each of the 288
blocks of 15 minutes for successful completion of Trail Run. (48 blocks of 15
minutes for hydro units)

5. In case of plants governed by PPAs, having specific provisions in regard to

the COD, the Minimum Net Generation capacity to be demonstrated during
the Trial Run shall be as per the provisions of PPA subject to a minimum of 95
% Net Generation capacity corresponding to the MCR or installed capacity.

6. After the Trial Run, the generator would submit the 15 minutes time block
wise energy meter data to RLDC which shall examine the same before
certifying COD.

7. The procurers may separately take up with the generator for any additional
tests required contractually and satisfy themselves of the same.

Capacity to be Tested

15. It may be seen from the provisions with regard to COD of a unit of a
generating station in different Regulations, OMs, PPAs and procedure followed by
NTPC that emphasis is on demonstration of Maximum Continuous Rating of the unit
or Installed Capacity or the Nameplate Rating or the contracted capacity. But
declaration of COD in case of UMPP projects and Competitive bid projects in Case II
on DBFOT basis is based on demonstration of 95% of Installed capacity or more.

-4-
16. However, it is felt that from the point of view of the beneficiaries / procurers
and the grid operation point of view, the capacity demonstrated should be MCR
capacity or the Installed Capacity or the name plate rating and not less than this. In
such a situation it may not be desirable to provide for declaration of COD for the
demonstration of capacity less than the installed capacity or the contracted capacity.
However, it is up to the generating company to derate the unit which should not be
less than 95% of the name plate rating or the contracted capacity and with
corresponding derating of unit considering grid response to 105% of the capacity so
derated in terms of IEGC. In such case of derating RLDC should accept COD after
demonstration of capacity to such derated capacity. The UMPP PPAs will have to be
aligned to this particular provision.

Duration of Test and treatment of Interruptions during the trial operation

17. The other issue is the duration of capacity test before declaring COD. All
Regulations and PPA provisions etc provide for trial run of 72 hour continuous
operation except the MoP OM dated 9.9.2009 which provide for achieving full load of
unit or name plate rating without specifying the period of sustaining load
continuously. However aforementioned MoP OM is for the purpose of commissioning
of a unit/ station and not for its commercial operation. No specific genesis for 72 hour
continuous trial run has been found but perhaps this is from the point of view of
establishing sustained operation of the unit. However, it is found that industry is not
following the practice of 72 hour trial operation continuously at rated capacity or
name plate rating or 95% of the capacity and the name plate rating in letter and
spirit.

18. As per procedure followed by NTPC, during trial run, minor interruptions (less
than 4 hours at a time) do not affect the duration of trial run. If the interruption-outage
is long (more than 4 hours), the trial run is prolonged for the period of interruption.
Minor partial loading is allowed, but the average load during the running hours has to
be equal to the Installed Capacity.

19. From the practical point of view as well, sustaining unit load at the rated
capacity or the name plate rating may always not be possible throughout 72 hour
due to various reasons such as low system demand during off peak hours, system
constraints, unit partial loading due to operational reasons, etc. From the commercial
point of view, retesting would involve extra cost. It may therefore, be desirable that
short interruptions may be allowed with a cumulative of 4 hours during 72 hour
testing with corresponding increase in total duration of test. Cumulative interruptions
of more than 4 hours would call for retesting. Further partial loading may be allowed
with the condition that average load (based on 15 minute SEM readings) during the
duration of the trial run shall not be less than Maximum Continuous Rating, or the
Installed Capacity or the name plate rating.

-5-
Who should Declare COD

20. The generating company should be allowed to declare the COD only after
clearance from the respective RLDC on providing of generation data to the
concerned RLDC through SCADA or through e-mail. The respective RLDC should
notify the clearance within 7 days of receiving the generation data or else inform the
generating company of any deficiency in the trial run operation.

Compliance with various provisions of CEA Regulations and Grid Code

21. During the meeting of CEA and POSOCO, it was also decided that the
following technical requirements need to be fulfilled by the generators from the
power system security view points and as per the CEA Standards/Regulation:-

1. Primary response through governor action.

2. Availability of Automatic Voltage Regulator (AVR) and ability of the generator
to operate over the entire range of its capability curve from 0.85 power factor lag
to 0.95 power factor lead.
3. Power System Stabilizer (PSS) being in service and tuned.
4. Protective systems on generators and transmission lines provided as per the
Standards and tested.
5. Synchronous condenser capability of hydro units.
6. Black Start capability of gas turbines and hydro power stations.
7. Availability of real time data and communication facilities with RLDCs/ SLDCs/
NLDC through main and alternate paths.
8. Provision of Disturbance Recorder, Event Logger and other Data Acquisition
equipment which are time synchronized through
Global Positioning System (GPS) signal.
9. Completion of all the switchyard bays and equipment ensuring that the
switching scheme has at least two complete diameter in the breaker and half
switching scheme so that reliability is maintained.
10. Submission of model data for generator, exciter, PSS governor and other
equipment, if any to RLDCs for the purpose of simulation.
11. Any other statutory requirement.

22. In the meeting held in CEA, it was agreed that the above tests are necessary
for establishing the capability of the units for safe and reliable operation in the grid.
CEA has suggested that the above technical requirements could be tested by the
generator within the six month period from the date of synchronization and the COD
and certificate given to RLDCs.

23. In the meeting held in CEA, it was also agreed that CERC shall be requested
for provision to be made in the Indian Electricity Grid Code (IEGC) for completion of
these tests in a specified time frame after grant of connectivity along with suitable

-6-
penal provisions including disconnection of the generator by the SLDC or RLDC as
the case may be so that it is applicable for all generating units, be it in the State
sector, Central Sector or Private Sector. If required, suitable provisions could be
made by CEA in connectivity standards.

24. The para 5.2 (f) of IEGC deals with provisions relating to compliance of
generating stations of RGMO/FGMO. As such, no separate provision is required to
be made in respect of sub item 1 in para 21 above.

25. Central Electricity Authority (Technical Standards for Construction of Electrical

plants and electric lines) Regulations, 2010 provide for complying with sub items no
2 to 6 and 9 in para 21 herein.

26. CERC Tariff Regulations, 2014 provide that the generating company shall
certify to the effect that the generating station meets the key provisions of the
technical standards of Central Electricity Authority (Technical Standards for
Construction of Electrical plants and electric lines) Regulations, 2010 and Grid Code
and this certificate is required to be signed by CMD/CEO/MD of the company
subsequent to its approval by the Board of Directors in the specified format and to be
submitted to the Member Secretary of the concerned Regional Power Committee
and concerned RLDC before declaration of COD.

27. In order to see that all the requirement as specified from Item 2 to 6 and 9 are
complied by the generating company before declaration of the COD of the unit or the
station, it may be desirable that generating company may be asked to give
Certificate to the effect that generating station meets all relevant requirements and
provisions of the technical standards of Central Electricity Authority (Technical
Standards for Construction of Electrical plants and electric lines) Regulations, 2010
and Grid Code. The certificate should also contain that all main plant-equipments
and auxiliary systems including balance of plant such as fuel handling system, DM
plants, ash disposal systems and other site specific systems have been
commissioned and are capable for full load operation in sustained basis. It should
also certify that all electric supply system, instrumentation and control, auto-looms
etc. are in service for full load operation of unit(s). The certificate may be signed by
CMD/CEO/MD of the company. The approval of Board of Directors may be
submitted subsequently within 3 months period so as not to delay the declaration of
COD.

28. Item no 7, 8 and 10 mentioned in para 21 are already provided in the IEGC.

29. The RLDCs already has power in the IEGC not to schedule the unit station in
the event of non compliance of any of the provisions of Central Electricity Authority
(Technical Standards for Construction of Electrical plants and electric lines)
Regulations, 2010 and Grid Code.

-7-
30. Accordingly, it is proposed to insert provisions in regard to COD of a unit/block
or a generating station in the IEGC which would be applicable to all the generating
stations including generating stations regulated by CERC and certain other
provisions as discussed above.

Issue of Technical Minimum for the thermal generating stations

31. The issue of technical minimum has been under discussion for quite some time.

32. The State utilities/Discoms have raised the issue of technical minimum during
the hearing before the Commission on Draft Deviation Settlement Mechanism (DSM)
Regulations and in the hearing of Petition No 6/RP/2014. MPPMCL in Petition no
6/RP/2014 has submitted that in order to control drawal, SLDC submits request for
zero/less quantum of Central Sector generation well in advance. However, RLDC
allots quantity required for technical minimum capacity of Central Sector machines.
The same applies with intra-state scheduling. Thus, intra-state entities have to
accept this even though it is not required. MPPMCL has further submitted that there
are international allocation from the ISGS of NTPC situated in Western Region, like
allocation to Bangladesh and in order to ensure uninterrupted power supply to
international allottees, the particular generating stations has to be remain operative
even in extremely low demand situation. This results in to obligation of technical
minimum on other beneficiaries of that particular station and may result in under
drawal because of low system demand. Tripura State Electricity Co Ltd has made
submissions in Petition No 6/RP/2014, that in case of sudden reduction in demand,
the Utility immediately calls for revision of drawal schedule from various generating
stations but such requests for revision of drawal schedule are not accepted by the
RLDC/ISGS in totality on the plea of technical constraints (technical minimum). The
Restoration of system normalcy by the distribution utilities take 5 to 12 hours
depending upon severity of contingency and till such time continuous under drawal
takes place and Regulation forces the utility without any compensation though the
utility has no control over the above circumstances. Similar pleas have been made
by the State utilities during the hearings of Draft DSM Regulations.

33. NTPC in Petition No 142/MP/ 2012 with regard to regulation of power by

Power supply Grid has stressed the need of ensuring technical minimum schedule to
NTPC power stations. NTPC has requested POWERGRID and RLDCs to ensure
technical minimum for its stations & that merit order of all inter-state generating
stations may be considered while implementing Regulation drawing attention to
clause 6.5.14 of CERC IEGC Regulations, 2010. NTPC in Petition No 142/MP/2012
has also submitted that scheduling at less than 70% load levels would affect the
reliability of operation as well as the efficiency and economy of operation. In the long
run, due to cyclic load fluctuation which in turn would also cause the operational
parameters to vary, and would have an adverse impact on the machine health and
life. Almost 30 years old stations like Singrauli and Korba are still running at high

-8-
efficiency levels with minimum expenses and R&M mainly because of high loading
factors of the units over the years. Although in the technical specification for the BTG
supplier normally the power generators including NTPC put 30% of BMCR as the
limit for stable operations, this limit is generally used for a performance guarantee
test in a new boiler under controlled/ideal conditions with designed fuel and cannot
be ensured over the life of the plant as normal operating conditions will vary from
ideal/controlled operating environment.

34. To take a holistic view of the issue, the Commission in hearing dated
28.5.2013 in Petition No 142/MP/2012 directed CEA to submit their views on
technical minimum for thermal generating station. CEA in a communication dated
12.9.2013 to CERC in Petition No. 142/MP/2012 has given following views on the
issue of technical minimum:

"The control range for coal fired unties is generally taken as 50% to 100% MCR and
the rated steam temperature can be maintained in this range. However, the units can
operate at any lower load without any limits; and minimum load without oil support is
taken as about 30% MCR and operation below this limit needs oil support. The CEA
Technical Standards for Construction of Electric Plants and Electric Lines
Regulations 2010 prescribe a control load of 50% MCR. The operating capability
generally specified in the technical specifications also stipulate continuous operation
without oil support above 30% MCR load and control load range of 50% to 100%
TMCR

Thus unit operation may be envisaged as indicated above, barring any specific
operating constraints brought out or recommended by OEMs with proper technical
justification."

35. In the above back drop, the concern of generating companies such as NTPC
has merit but it needs to be appreciated that with the substantial capacity addition
during the 11th Plan and capacity addition of around 88,537 MW planned during
12th Plan as well as optimistic projection of incidence of renewable power capacity
in the country in the near future, it is likely that there may be surplus situation
during certain periods requiring generating units to shed load even below 65% to
70 % of Installed Capacity/ MCR. Therefore, the technical minimum generation to
be scheduled by a generating station needs to be reviewed.

36. It is proposed that the technical minimum may initially be kept as 55% of
Installed Capacity/ MCR of unit/units for old as well as new plants in due
consideration of CEA's recommendations and giving some margin over the
recommended technical minimum of 50% by CEA. However, the operation at 55%
loading has commercial implication for the generator in terms of increase in heat
rate, secondary fuel oil consumption and auxiliary energy consumption, thereby
increasing the actual energy charges. The generator will have to be compensated
for this increase in energy charges.

-9-
37. It is felt that any reduction in loading of units below 85% on account of low
despatch schedule given by beneficiaries/RLDCs may have to be compensated by
the beneficiaries. The Standard Bidding Documents (SBD) for case-II/UMPP
projects brought out by Ministry of Power provide for heat rate degradation for part
load operation corresponding to different unit loadings. In accordance with the
same, following heat rate degradation for part load operation corresponding to
different unit loadings may be provided:

S. No. Unit loading as a % Increase in SHR Increase in SHR

of Installed for supercritical (for sub-critical
Capacity of the Unit units units)
(%) (%)

1 85-100 Nil Nil

2 75-84.99 1.25 2.25
3 65-74.99 2 4
4 55-64.99 3 6

Below 55%, the station may go for reserve shut down.

38. The generating company may be allowed to seek relief at the end of the year
based on average unit loading due to low despatch schedule given by
beneficiaries/RLDC but not because of any other reason including short supply of
fuel/shortage of fuel; Commission may allow compensation for increase in station
heat rate, secondary fuel oil consumption and auxiliary energy consumption after
prudence check on a petition to be filed by the generating company giving requisite
details of unit loadings, forced outages, planned outages, PLF , generation at
generator terminal, energy sent out ex-bus, actual heat rate, number of start ups,
actual secondary fuel oil consumption, actual auxiliary energy consumption etc. In
case of gas based stations, compensation shall be decided based on the
characteristic curve provided by the manufacturer and after prudence check of the
actual operating parameters of station heat rate, auxiliary energy consumption. The
compensation worked out by the Commission shall be borne by the entity was
caused the plant to be operated at technical minimum. In case of generating
stations not regulated by the Commission, the generating company shall have to
factor these provisions in the PPA for sale of power in order to claim compensation
for operating at the technical minimum schedule.

39. This also requires all concerned including NLDC/RLDCs, RPCs generators,
beneficiaries and buyers of all regions to arrive at operating procedures to be
followed in certain specific grid conditions such as sudden load throw off or unit
tripping significantly endangering grid security. Such an operating procedure for
backing down of thermal generating stations based on merit order despatch/

- 10 -
staking may be developed in two months time and adopted at respective RPC
forum.

40. The generating companies are also required to keep a record of the emission
levels from the plant due to part load operation and submit a report to the
commission every year.

41. Accordingly, provisions relating to technical minimum are proposed to be

suitably incorporated in the IEGC.

- 11 -