Power System Basics

Gerard Francesco DG. Apolinario

ELECTRICAL ENGINEERING
Electrical engineering is a field of engineering
that generally deals with the study and
application of electricity, electronics, and
electromagnetism. (General definition)

Is an art of science of the generation,

transmission, distribution and utilization of
electrical energy. (Philippine setting)
Power
• Power:
– Instantaneous rate of consumption of
energy,
– How hard you work!
• Power = voltage x current for dc
• Power Units:
Watts = amps times volts (W)
kW – 1 x 103 Watt
MW – 1 x 106 Watt
GW – 1 x 109 Watt
 Energy
• Energy:
– Integration of power over time,
– Energy is what people really want from a power system,
– How much work you accomplish over time.
• Energy Units:
Joule = 1 watt-second (J)
kWh – kilowatthour (3.6 x 106 J)
Btu – 1055 J; 1 MBtu=0.292 MWh
What is an Electric Power System?
Is one of the tools of converting and transporting
electrical energy. It can be classified as:
• AC or DC system
• Overhead or Underground system
It has the following divisions:
• Generating Power Stations (GENERATION)
• Transmission Lines (TRANSMISSION)
• Distribution Systems (DISTRIBUTION)
 Power System Examples
• Electric utility: can range from quite small, such as
an island, to one covering half the continent:
– there are four major interconnected ac power systems in
North America (five, if you count Alaska), each operating
at 60 Hz ac; 50 Hz is used in some other countries.
• Airplanes and Spaceships: reduction in weight is
primary consideration; frequency is 400 Hz.
• Ships and submarines.
• Automobiles: dc with 12 volts standard and higher
voltages used in electric vehicles.
• Battery operated portable systems.
Power System Analysis & Design
• Fundamentals of Power Systems
– basic models of power apparatus,
• transformers, synchronous machines,
transmission lines
– simple systems
• one feeder radial to single load
• What more is there?
– large interconnected systems
• multiple loads; multiple generators
– why have large interconnected systems?
• Reliability and Economics (reserve capacity,
spinning reserve, maintenance purposes)
– analysis of the large system
• flow of power and currents; control and stability
of the system
• proper handling of fault conditions; economic
operation
Modern Power Systems
• Power Producer
– generation station
• prime mover & generator
• step – up transformer
• Transmission Company
– HV transmission lines
– switching stations
• circuit breakers
• transformers
• Distribution Utility
– distribution substations
• step - down transformers
– MV distribution feeders
• distribution transformers
Complications
• No ideal voltage sources exist.
• Loads are seldom constant and are typically
not entirely resistive.
• Transmission system has resistance,
inductance, capacitance and flow limitations.
• Simple system has no redundancy so power
system will not work if any component fails.
INFINITE BUS
• A power system that is so large that its voltage
and frequency do not vary regardless of how
much real and reactive power is drawn or
supply to it.
Power Plant
A station or establishment that
houses the prime mover, electric
generator and auxiliaries for
conversion of mechanical energy,
chemical energy and/or nuclear
energy into electrical energy.
Types of Power Plants
HEPP (Hydro Electric Power Plant) – uses flowing water as source of
energy.
Thermal Power Plant – uses heat from fossil fuels.
Coal Fired Plant – uses pulverized coal as fuel.
Nuclear Power Plant – uses fissionable material as fuel
Gas Turbine Power Plant – uses natural gas and light distillates
Diesel Engine Plant – uses diesel oil as fuel
Oil Fired Thermal Plant – uses bunker fuel, heavy fuel and industrial fuel
Dendro Thermal Plant – uses wood (ipil – ipil) as fuel
Tidal Power Plant – uses natural rising of tides to simulate the flow of
water
Wind Power Plant – uses wind as a source of energy
Magnetohyrodynamic Power Plant – directly converts heat energy to
electrical energy.
Transmission and Distribution
HV (standard high voltage) – 115, 138 and 230 kV
EHV (extra high voltage) – 345, 500 and 765 kV
UHV (ultra high voltage) – 1000 to 1500 kV

• Large generators is in range of 13.8 kV to 24 kV

• Uses SCADA for monitoring purposes
Purposes of Transmission
1. To transmit power from a water power site to
a market.
2. For bulk supply of power load center from
outlying steam stations. These are likely to be
relatively short.
3. For interconnection purposes, that is, for
transfer of energy from one system to
another in case of emergency or in response
to diversity in the system peaks.
 DC Transmission Parts

AC GENERATOR DC LINES UTILIZATION

TRANSFORMER AND INVERTER AND

RECTIFIER TRANSFORMER

CONVERTERS
DC – DC CONVERTER
DC – AC CONVERTER (inverters)
AC – DC CONVERTER (rectifiers)
AC – AC CONVERTER (transformers)
Parts of Distribution System
1. Distribution Substation – steps – down the voltage to
primary distribution.
2. Primary distribution feeder – 1 to 5 km line in rural areas
and 10 to 12 km long in urban areas.
3. Distribution Transformer – 3 to 500 kVA transformer w/c
steps – down the voltage at utilization voltage. These are
located at convenient places in the area in which power
is to be supplied such as pole mounted transformers
located on the road side.
4. Secondary distribution feeder – line carrying at
utilization voltage and delivers energy at customers
premises through a service wire called service drop.
Network Layout
• HV Networks
– Large quantities of power shipped over great distances
• Sharing of resources
– Improved reliability
– Economics of large scale
• MV Networks
– Local distribution of power
– Numerous systems
• Economics of simplicity
• Autonomous operation
• Loads
– Agriculture
– Industrial & Commercial
– Residential
Advantages of interconnecting power
systems
a. Diversity Factor improves and the installed
generating capacity (number of generators)
required to supply the combined system load
is less
b. It is highly stable with better frequency and
voltage regulation
c. The spinning reserve requirement gets
reduced
d. Bigger unit size can be planned resulting in the
economy of scale
Advantages of interconnecting power
systems
e. Better generation mix improves the
economics in operation
f. Emergency assistance from neighboring
system(s) can be availed
g. Optimum Location of new plants is possible
Disadvantages of interconnecting power
systems
a. Increase in short circuit level causes increased
breaker capacity and duty
b. Any disturbance in one system may spread to
other systems
c. The tie – line interconnection needs to be
provided with proper protection arrangements
d. Maintaining synchronism among all generators is
difficult
e. Proper coordination among power systems is
important
System Control
• Network Protection
– Switchgear
• instrumentation transformers
• circuit breakers
• disconnect switches
• fuses
• lightning arrestors
• protective relays
• Energy Management Systems
– Energy Control Center
• computer control
• SCADA - Supervisory Control And Data Acquisition
Computer Analysis
• Practical power systems
– must be safe
– reliable
– economical
• System Analysis
– for system planning
– for system operations
– requires component modeling
– types of analysis
• transmission line performance
• power flow analysis
• economic generation
• scheduling
• fault and stability studies
Areas of Power System Analysis and Design

Load Flow Studies – is the determination of the

voltage, current, power and pf or reactive power
at various points in an electrical network under
existing or contemplated conditions of normal
operation.
Economic Load Dispatch – the process of
apportioning the total load on a system between
the various generating plants to achieve the
greatest economy of operation.
Areas of Power System Analysis and Design

Fault Calculation – any failure which interferes

with the nominal flow of current. This lead to
the designing of proper system protection (surge
arresters, relays and circuit breakers).
Factors in selecting breakers:
1. Current flowing after the fault occurs (base
on PEC, NEC).
2. Current which the circuit breaker must
interrupt (kAIC rating).
Areas of Power System Analysis and Design

Stability – a condition in which the various synchronous

machine of the system remain in synchronism
Types:
1. Steady State Stability Limit – is the maximum flow of
power through a particular point of the power system
without loss of stability when the power is increased
gradually.
2. Transient Stability Limit – is the maximum flow of
power through a particular point of the power system
without loss of stability when a sudden disturbance
occurs such as sudden change of load, short circuit or
fault on the system.
Electric Systems in Energy Context
• Course focuses on electric power systems, but
we first need to put the electric system in
context of the total energy delivery system.
• Electricity is used primarily as a means for
energy transportation:
– Use other sources of energy to create electricity,
and electricity is usually converted into another
form of energy when used
– Electricity is used by transforming into another
form of energy.
Energy Economics
• Electric generating technologies involve a tradeoff
between fixed costs (primarily capital costs to build
them) and operating costs:
– Nuclear, wind, and solar high fixed costs, but low operating
costs,
– Natural gas has low fixed costs but relatively high operating
costs (dependent upon fuel prices)
– Coal in between.
• Total average costs depend on fixed costs, operating
costs, and capacity factor (ratio of average power
production to capacity).
Goals of Power System Operation
• Supply load (users) with electricity at
– specified voltage (220 ac volts common for
residential),
– specified frequency,
– at minimum cost consistent with operating
constraints, safety, etc.
Major Impediments
• Load is constantly changing:

• Power system is subject to disturbances, such as

lightning strikes.
• Engineering tradeoffs between reliability and
cost.
 MW Load

0
5000
10000
15000
20000
25000
1
518
1035
1552
2069
2586
3103
3620
4137
4654
Hour of Year
5171
5688
6205
Example Yearly Electric Load

6722
7239
7756
8273
Brief History of Electric Power
• Early 1880’s – Edison introduced
Pearl Street dc system in
Manhattan supplying 59
customers. (2400 V, 59 km)
• 1884 – Frank J. Sprague produces
practical dc motor.
• 1885 – invention of transformer.
• Mid 1880’s – Westinghouse/Tesla
introduce rival ac system.
• Late 1880’s – Tesla invents ac
induction motor.
• 1893 – First 3 phase transmission
line operating at 2.3 kV.
History, cont’d
• 1896 – ac lines deliver electricity from hydro
generation at Niagara Falls to Buffalo, 20 miles
away.
• Early 1900’s – Private utilities supply all
customers in area (city); recognized as a
natural monopoly; states step in to begin
regulation.
• By 1920’s – Large interstate holding companies
control most electricity systems.
History, cont’d
• 1935 – Congress passes Public Utility Holding
Company Act to establish national regulation,
breaking up large interstate utilities (repealed
2005).
• 1935/6 – Rural Electrification Act brought
electricity to rural areas.
• 1930’s – Electric utilities established as vertical
monopolies.
Vertical Monopolies
• Within a particular geographic market, the
electric utility had an exclusive franchise
In return for this exclusive
Generation franchise, the utility had the
obligation to serve all
existing and future customers
Transmission
at rates determined jointly
by utility and regulators
Distribution
It was a “cost plus” business

Customer Service
Vertical Monopolies
• Within its service territory each utility was the only game in
town.
• Neighboring utilities functioned more as colleagues than
competitors.
• Utilities gradually interconnected their systems so by 1970
transmission lines crisscrossed North America, with voltages
up to 765 kV.
• Economies of scale (bigger is cheaper per unit capacity)
coupled with growth in demand resulted in decreasing
average costs.
• Decreasing average costs resulted in decreasing prices, so
most every one was happy.
Vertical Monopolies
• Vertically integrated electric utility
– Perform all functions involved to produce and sell electric power
– Government-granted monopoly franchise
– Had to agree to serve all customers in the region not just those it
saw advantageous to its business
– Electricity prices limited to a level deemed reasonable by the
government, based on a review of its costs and spending
• Four key functions
– Generate
– Transmit
– Distribute
– Sell
Major types of electric utilities prior to de –
regulation
• Vertically Integrated Utilities
• Generation and Transmission Utilities (G&T)
• Local Distribution Companies
• Independent Power Producers
• Non – utility generators
Business Frameworks
• Investor – Owned Utilities
• Municipal Utilities
• Public Utility Districts
• Electric Membership Cooperatives
• National Utilities
• State – Owned Utilities
• Administrations, Authorities, Agencies, and
Government Utilities
History, cont’d -- 1970’s
• 1970’s brought inflation, stagnation of growth,
increased fossil – fuel prices, calls for conservation
and growing environmental concerns.
• Increasing prices replaced decreasing ones.
• In that context, U.S. Congress passed Public Utilities
Regulatory Policies Act (PURPA) in 1978, which
mandated utilities must purchase power from
independent generators located in their service
territory (modified 2005).
• PURPA introduced some competition.
Electrical Utility Restructuring
History, cont’d – 1990’s & 2000’s
• Major opening of industry to competition occurred as a
result of National Energy Policy Act of 1992.
• This act mandated that utilities provide “nondiscriminatory”
access to the high voltage transmission.
• Goal was to set up true competition in generation.
• Texas followed suit in 1996 and 1999.
• Result over the last few years has been a dramatic
restructuring of electric utility industry (for better or worse!)
• Energy Bill 2005 repealed PUHCA; modified PURPA.
Electrical Utility Restructuring
Utility Restructuring
• Driven by significant regional variations in
electric rates.
• Goal of competition is to reduce prices
through the introduction of competition and
its incentives for technological innovation.
• Allow consumers to choose their electricity
supplier.
State Variation in Retail Electricity Prices
Customer Choice
The Result for California in 2000/1

OFF

OFF
 The California-Enron Effect
WA
MT ND VT ME
OR MN
NH
ID SD WI NY MA
WY MI RI

IA PA CT
NV NE NJ
IN OH DE
UT IL W MD
DC
CO VA VA
CA KS MO KY
AZ TN NC
OK
NM AR SC
MS AL GA
TX
LA
AK
FL
HI

electricity delayed suspended

no activity
restructuring restructuring restructuring
47
Source : http://www.eia.doe.gov/cneaf/electricity/chg_str/regmap.html
August 14 , 2003 Blackout
th

48
Philippine Electricity Regulation
• Generation
– National Power Corporation (NPC)
– NPC – IPPs
– Other IPPs
• Transmission
– NPC
• Distribution and Sales
– 119 Electric Cooperatives
– 17 Private Distribution Utilities
– 10 Local Government Units
Regulators
• Franchise – granting authority
– Provincial government
– Congress
• Energy Department
– Department of Energy
• Utility commission
– Energy Regulatory Board (now Energy Regulatory
Commission)
• Others
– National Electrification Administration
Regulation
• Government has set down laws
• Put limits and defines how a particular
industry can operate
Key Characteristics of Regulated Electric
Industry
• Monopoly franchise
– Usually cover a certain period of time
– Grants one company the sole right to sell electricity
to consumers
– Guarantees that it will have customers
• Obligation to serve
– Provide for the needs of all electric consumers
• Regulated Rates
• Guaranteed rate of return
– Reasonable profit margin above its costs
Key Characteristics of Regulated Electric
Industry
• Regulatory Oversight
– Prescribed operating and business practices
• Least – Cost Operation
– Defines how the utility computes costs and prices
• Only qualified expenses go in the rate base (Certification of Need)
• Comprehensive costing
• Long – term view
• Revenue requirements minimization
– Requires to operate in a “lowest cost” manner
• Least – cost evaluation of expenses
– Defines specific ways it should and should not finance its
operations
The Good and Bad of Regulation
• It legitimized the electric utility business
– Government franchises and regulation implied
that electricity is a good thing
• It gave utilities recognition and limited support
from local government
• It assured a return on investment
• It established a local monopoly
Driving Forces in Favor of De – Regulation
• Regulation not necessary
– The objective which is to foster development had been achieved
• Electricity prices may drop
– Innovation and competition
• Customer focus will improve
– Competition is expected to give much wider choice and more
attention to improve service
• Will encourage innovation
– Rewards risk takers
– New technologies and business approaches
• Augments privatization
– Enhances value of assets as perceived by potential buyers
De – regulation
De – Regulation

• Re – regulation
– Changing the rules to permit competition in some areas
• De – regulation
– A political process driven from top down, often
intertwined with privatizations efforts
– Did not occur everywhere at the same time
– Neither did it occur instantly where it was implemented
– Several forces pushed governments to de – regulate
• To garner foreign investment and cash flow through
privatization
• To create competition at the top, and at the bottom
The Reform Goal

• To create governance arrangements that

provide long – term benefits to consumers
– Competitive wholesale and retail markets
• Improve efficiency
• Improve responsiveness to customer
preferences
– Incentive regulation
• Improve efficiency
• Facilitate competition
Four Approaches to Regulation and De –
Regulation
• Franchised monopolies
• Purchasing agencies that buys from
competitive generators
• Wholesale competition through open
transmission systems
• Wholesale and retail competition
Shortcomings of Regulated Monopoly
• Over – investment in rate base
• Security of supply
• Risks borne by the ratepayers
• No customer choice
• Price disparities
• Price subsidies
Other Attributes of Regulation
• Supply adequacy
• Manipulation by politicians
• Nuclear energy
• Public disclosure and coordination
Drivers of Change in the Regulatory Paradigm

• Advent of highly efficient Gas Turbines

• Sympathetic regulators
• Ideology and politics
• Public debt
• Regulatory complexity
• Inadequate investment in infrastructure
• Poor accountability
• Decentralized decision making
Two Basic Views on Competition and the Role of
Regulation
• Create level playing field where the regulator plays the
role of the referee
– Remove barriers to entry in generation
– Privatize or corporatize all players
– Unbundle vertically integrated enterprises
– Ensure that the transmission network is open and accessible
to all under transparent/non – discriminatory prices
– Create wholesale markets that are open and transparent
– Ensure that the grid is managed by an independent operator
– Foster competition in the supply business
• Write a script and makes the puppet dance
Textbook Model for Restructuring and
Competition
• Privatization
• Vertical separation
• Horizontal restructuring
• Independent System Operator
• Markets and trading arrangements
• Regulatory rules to promote access to the transmission
and distribution networks
• Unbundling of tariffs
• Arrangements for supplying customers
• Independent regulatory agencies
• Transition mechanisms
Concept and Evolution
The Original Double – Ended Competitive
Concept
• Demand and supply (market forces) would
determine price
• Studies predicted reductions of up to 25% at the
generation level
• De – regulation at retail level pushed as a
potentially good thing
• Competition at the generation and retail level
– Would reward innovation
– Better customer service
– Cost reduction with larger market share and higher
profit
Basic Structure of De – Regulation as
Implemented
Representative Structure of De – Regulation
as Implemented
Competition: Generation and Retail Level

• Competition at generation level is almost universal

– Intense competition, run under tight rules
• How power is bought and sold
• How buyers and sellers do business
• Competition at retail level is rather rare
– Political jurisdictions
– Problems in creating the needed infrastructure
– Systems, processes, training and equipment have long lead
time
• Tracking, pricing, metering and billing
– Vast majority of the consumers did not care one way or
another
• Reliability and price of electric service
Market Mechanisms at the Wholesale
Generation Level
• The Power Exchange (PX)
– Buyers and sellers post their offers and “make”
deals
• Bi – Lateral Trades
– Buyer and seller meet to negotiate and execute
one – on – one contract
• Middlemen
– Power brokers who buy power and re – sell at
wholesale levels
Independent System Operator
• The role of the independent system operator (ISO)
– Operates the regional transmission grid
– Make certain the electric grid stays up and running
– Make certain that the transmission grid is operated
“fairly”
• Universal transmission access makes the
wholesale generation market competitive
• Independence in policy and approach
– Transmission access limitation usually favors somebody
Independently Operated Regional
Transmission Grids
Congestion Pricing
• How congestion is best handled?
– Congestion fees
– Anticipation and planning
– Integration of congestion fees with pricing
• Fixing the congestion – transmission expansion
– Who should build the upgrade and own the facilities?
• Regional transmission grid owner
• Local distribution companies (LDCs)
• Generation companies
• ISO
• Merchant transmission
The Electric Utility Industry Under
Regulation
Dis – aggregation: The Mechanism
• Separate organization
• Separate locations
• Separate identity
• Separate charter
• Separate ownership
• Separate leadership
• Separate business dealings
De – regulation does work
• Not perfectly
• Service quality and reliability are not worse than
before
• Needs adjustment and fine tuning
– Industry structure
– Regulatory policy
• Issues interact with one another and with
numerous differences
• Sensitivities to and preference to one solution
varies
 Restructuring Experience
Restructuring and De – Regulation in
the Philippines
The Philippine Power Industry: History
• Creation of the National Power Corporation
– Commonwealth Act No. 120 (November 3, 1936)
• Nationalized the hydroelectric industry
– Republic Act No. 2641
• Conversion of NPC into a stock corporation (100M
capitalization)
– Republic Act No. 3034 (June 17, 1961)
• Capitalization increased to 250 Million
– Republic Act No. 4897 (June 17, 1967)
• Capitalization increased to 300 Million
– Republic Act No. 6395 (September 9, 1971)
• Decentralized activities and functions of NPC
The Philippine Power Industry: History
• Creation of the National Power Corporation
– Presidential Decree No. 40 (November 7, 1972)
• Promote welfare through electrification
– Setting – up of island grids
– Linked – up generation facilities and cooperatives for distribution of power
– Setting – up of transmission line grids and associated generation facilities
– Own and operate, as an integrated system, all generating facilities
supplying power to the grid
– Presidential Decree No. 380 (January 1974)
• Placed NPC under the Office of the President
• Capitalization of 2 Billion, indebtedness of 3 Billion
– Presidential Decree No. 830 (November 27, 1975)
• NPC was attached to the Department of Public Works,
Transportation and Communication
The Philippine Power Industry: History
• Creation of the National Power Corporation
– Presidential Decree No. 938 (May 27, 1976)
• Increased capitalization to 8 Billion, indebtedness of up to 12
Billion
• Authorization to contract foreign loans of up to USD 4 Billion
• NPC entry to Nuclear Power Development
– Presidential Decree No. 1206 (October 6, 1977)
• Creation of the Department of Energy
• Policy coordination and integration of sectorial reforms
– Presidential Decree No. 1360 (April 24, 1978)
• Increased capitalization to 50 Billion
• Corporate reorganization
The Philippine Power Industry: History
• June 11, 1978
– NPC purchased Meralco’s generating assets at a total cost
of 1.1 Billion
– Assets covered: Malaya I, Gardners 1 & 2, Synders 1 & 2,
fuel storage facilities
• 1988
– Pegged electricity rates to not more than 2.50 P/kWh
– Memorandum of agreement signed with NEA
– Takeover by NPC of generating facilities in remote islands
• April 1991
– Taken over facilities and operation of various electric
cooperatives in 26 remote islands
The Philippine Power Industry: History
• Executive Order No. 215
– Encourages active private sector involvement in major
economic activities of the country
– Finalized IRR in 1989
• Cogeneration, Build – Operate – Transfer (BOT), Build – Own – Operate
(BOO)
• First BOT agreement signed in 1988
– Hopewell Energy Management Limited
– 2 x 110 MW gas turbine plants in Luzon
• 1991 – power crisis
– Power supply deficiency caused by extended dry spell
– 11 gas turbines installed throughout the country
– 768 diesel generator sets installed in remote islands
The Philippine Power Industry: History
• By 2001, NPC IPPs accounted for 31% of the
installed capacity
• Industry Reform Law (EPIRA) passed in 2001
• October 16, 2001 – inauguration of the
Malampaya Project
– Sta. Rita Natural Gas (October 2001)
– Ilijan Natural Gas (June 2002)
– San Lorenzo natural Gas (September 2002)
• June 26, 2006 – commercial operation of WESM
in Luzon
Electric Power Industry Reform Act (RA
9136) or EPIRA: Purpose
• To ensure and accelerate the total electrification
of the country
• To ensure the quality, reliability, security and
affordability of electric power
• To ensure transparent and reasonable prices of
electricity
• To enhance the inflow of private capital
• To ensure fair and non – discriminatory treatment
of public and private sector entities in the process
of restructuring the power industry
Electric Power Industry Reform Act (RA
9136) or EPIRA: Purpose
• To protect the public interest
• To assure socially and environmentally compatible
energy sources and infrastructure
• To promote the utilization on indigenous and new and
renewable energy resources
• To provide for an orderly and transparent privatization
of the assets of the NPC
• To establish a strong and purely independent
regulatory body and system
• To encourage the efficient use of energy and other
modalities of demand side management
Philippine Electric Power Industry:
Organization
• Generation Sector – shall be competitive and open
– Secure certificate of compliance from ERC
– Does not require a national franchise
– Prices charged by a generation company for the supply of
electricity shall not be subject to regulation (upon
implementation of retail competition and open access)
– Sales shall be value added tax zero – rated
– Be required to submit financial statements
• Transmission Sector – a regulated common electricity
carrier business
– Distinction between the transmission and sub –
transmission assets
Philippine Electric Power Industry:
Organization
• Creation of the National Transmission Corporation
– assume the electrical transmission function of NPC
– responsible for the planning, construction and centralized
operation and maintenance of the high voltage facilities
(including interconnections) and ancillary services
– Functions and responsibilities
• System operator
• Provide open and non – discriminatory access
• Ensure and maintain the reliability, adequacy, security, stability
and integrity of the grid
• Improve and expand the transmission facilities
• Provide central dispatch
• Prepare the Transmission Development Plan
Philippine Electric Power Industry:
Organization
• Distribution Sector – a regulated common carrier
business
– Provide distribution services and connections to its
system
– Provide open and non – discriminatory access
– Obligation to supply electricity in the least cost
manner
– Prepare and submit annual distribution development
plan
• Supply Sector – open and competitive
– Suppliers shall be required a license from ERC
Philippine Electric Power Industry:
Wholesale Electricity Spot Market (WESM)
• Establishment of a Wholesale Electricity Spot Market
• Retail Competition and Open Access
– Establishment of the WESM
– Approval of the unbundled transmission and distribution
wheeling charges
– Initial implementation of the cross subsidy removal scheme
– Privatization of at least 70% of the generating capacity of
NPC in Luzon and Visayas
– Transfer of the management and control of at least 70% of
the total energy output of NPC – IPPs to an IPP
administrator
Other Features of EPIRA

• Government assumes a portion of the financial

obligations of NPC not exceeding 200 Billion
• Full recovery of stranded debt and stranded
contract costs (15 to 25 years)
• Universal Charge – fixed and approved by ERC
– Payment of stranded debts
– Missionary electrification
– Equalization of taxes and royalties
– Watershed rehabilitation and management
Other Features of EPIRA

• Creation of the Energy Regulatory Commission

– Promote competition
– Encourage market development
– Ensure customer choice
– Penalize abuse of market power
• Privatization of NPC Assets
– Except for the assets of SPUG
• Creation of Power Sector Assets and Liabilities
Management Corporation (PSALM)
• Conversion of Electric Cooperatives
– Stock cooperative or stock corporation
Other Features of EPIRA

• Debt Condonation of Electric Cooperatives

• Review of IPP Contracts
• Renegotiation of Power Purchase and Energy
Conversion Agreements between Government
Entities
• Mandated Rate Reduction (P 0.30/kWh) in
NPC rates Removal of Cross Subsidies
EPIRA Milestones
• Creation of the Energy Regulatory Commission
– Grid Code and Distribution Code
• Creation of TRANSCO and PSALM
• Unbundling of Rates
– NPC, 20 Private Utilities, 120 Electric Cooperatives
– Price reductions ranging from 0.3512 P/kWh to 0.0069 P/kWh
– Rate increases ranging from 0.0048 P/kWh to 1.7855 P/kWh
• Administration of the Universal Charge
– Missionary electrification: 0.0373 P/kWh
– Environmental charge: 0.0025 P/kW
– 8.21 Billion collected as of February 2008
EPIRA Milestones
• Intra – Regional Grid Cross Subsidy Removal
• Inter – Class Cross Subsidy (Partially complied)
– Schemes (complete, 2/3, 1/2, 1/3 and 1/4)
– 19 PUs and 55 ECs fully implemented the schemes
• Open Access Transmission System (OATS) Rules
• Privatization of sub – transmission assets
– P 2.515 B assets sold
– P 3.876 B assets under negotiation
• Establishment of the WESM
EPIRA Milestones
• Privatization of NPC Generation Assets
– 1850.40 MW (48.9%) of NPC generation assets has
been privatized as of 2007
– Tiwi – Makban (289 MW, 457.73 MW) privatized but
yet to be turned – over
– Panay/Bohol Diesel (146.5 MW, 22 MW) latest plant
to be privatized but yet to be turned-over
• Debt Condonation of Electric Cooperatives
– 7.37 B assumed by PSALM (as of February 2008)
– Rate reduction of 0.4988 P/kWh (as of December
2007)
 Wholesale Competition
The Philippine Wholesale Electricity
Spot Market (WESM)
The Role of NPC in the Power Industry (Pre
– EPIRA)
• System planning and forecasting
• Power sourcing and contracting
• Government guarantees
• Billing and collection
• Power generation
• Transmission construction and maintenance
• Operation and maintenance
• Rural electrification
The New Structure of the Industry
RA No. 9136 – Electric Power Industry
Reform Act of 2001
Section 30
Within one (1) year from the effectivity of the
Act, the DOE shall establish a wholesale
electricity spot market composed of wholesale
electricity spot market participants. The market
shall provide the mechanism for identifying and
setting the price of actual variations of
quantities transacted under contracts between
sellers and buyers of electricity.
The Role of Wholesale Electricity Spot
Market
• Centralized venue for
electricity trading
– Alternative venue for the
purchase of uncontracted
power
• True economic – cost pricing
• Ensure transparency in
generation prices and
dispatching
• Clarity in system planning
• Consistency in demand
forecasting
• Billing and settlement facility
• Economic analysis
Pricing: Comparison Between the Old and
the New Regime
WESM Objectives
To establish a competitive, efficient, transparent and
reliable market for electricity where:
• A level playing field exists among WESM participants
• Trading of electricity is facilitated among WESM
participants within the spot market
• Third parties are granted access to the power
system
• Prices are governed as far as practicable by
commercial and market forces
• Efficiency is encouraged
Benefits of WESM
• Efficient price signaling
• Results to efficient production and
consumption
– Competitive offer prices forces plant to be
efficient
• Inefficiency results to higher costs and uncompetitive
offer prices
– Consumers adjust demand given price signals in
the market
• Proper scheduling of consumption
• Prudent and economic use of resource
WESM Governance
Electricity Market Development
Market Design
• Bid – Based
• Gross Pool
– All energy transactions are scheduled through the market
• Net Settlement
– Bilateral Contract quantities transacted in the pool can be
settled outside of the market
• Locational Marginal Price
– Marginal price computed at each node or location to reflect
transmission loss and / or congestion
• Reserve Co – optimization
– Reserve and energy offers are scheduled at the same time
• Mandatory Market
What is traded in the WESM?
Market Dispatch Optimization Model
Market Dispatch Optimization Model:
Constraints
Market Dispatch Optimization Model:
Constraints
The MDOM Basic Process
Perform the market clearing computations using:
• Information from the System Operator TRANSCO
(i.e. power system condition and requirements)
• Information from Market Participants (i.e
Generator Offers and Customer Bids)
• Then determines optimum scheduling of energy
and reserves (i.e. dispatch targets, reserves
allocations, energy and reserve prices)
The MDOM Basic Process
The MDOM Basic Process
The MDOM Basic Process
The MDOM Basic Process
The MDOM Basic Process
The MDOM Basic Process
The MDOM Basic Process
Scheduling and Pricing
Generator Merit Order
Dispatch Scheduling
Locational Marginal Price
Price Drivers
Price Drivers
Scheduling and Pricing Example 1
Scheduling and Pricing Example 2
Timeline of Dispatch Process
Timeline of Dispatch Process
Timeline of Dispatch Process
WESM At A Glance
Market Participants
Highlights of 1st Year Operation (June 2006
– June 2007)
• Low prices was experienced in the first two months but
increased in the next four months due to tight supply
condition brought about by the Malampaya shutdown
• First market suspension was declared by the ERC due to
extensive transmission system damages, particularly in
Southern Tagalog and Bicol regions, caused by Typhoon
“Milenyo” (Sept. 28 – Oct. 2, 2006)
• Tight supply condition resulting to significant number of
undergeneration and load shedding was experienced in
2nd quarter of 2007 due to coal supply limitations
• Demand recorded a new high of 6590 MW on May18,
2007 representing a 3% increase from 2006 peak
Highlights of 2nd Year Operation (June 2007
– June 2008)
• Tight supply condition due to continued coal supply limitation resulted to an 8 –
hour rolling brownout on July 25, 2007
• Extended summer condition until July 2007 also limited the ability of hydro
plants to be dispatched in the market
• Monsoon rains started from August up to December 2007 which improved hydro
contribution.
• Line congestions due to the upgrading of San Manuel - Concepcion 230 kV line
and compliance to N – 1 grid code requirements also resulted to price
separations between North Luzon, Central Luzon, Metro Manila and Southern
Tagalog regions
• In May 2008, early monsoon rains and typhoons depressed the demand for
electricity. Resulting Effective Settlement Price (ESP) is P1,805/MWh, the lowest
since market launch.
• Demand recorded a new high of 6681 MW on June 4, 2008 (1.4% increase from
May 2007 peak)
• Second market suspension was declared by ERC from June 22-25, 2008 as a
result of transmission damage, particularly in North Luzon, by Typhoon “Frank”
Market Outcomes
Market Outcomes
Market Outcomes
Market Outcomes
Market Outcomes
Market Outcomes
Market Outcomes
Market Operator Performance
Market Operator Performance
Market Operator Performance
Market Benefits
Market Benefits
Market Benefits
Summary
• Two years of WESM operation have shown
promising economic benefits to the industry
• WESM expansion in the Visayas Region and
the Reserve Market could provide solutions
• Implementation of major EPIRA provisions is
key to WESM success
• Continuous improvement in market design
and operation to combat obsolescence
Challenges
• Tight supply condition
– Malampaya shutdown
– Fuel (coal) limitations
– Forced and scheduled shutdown
• Transmission Congestion
– Forced outages
– Prolonged shutdown of lines
• Natural Calamities, e.g. Typhoons
• Regulatory / Political
 De – regulation
Decentralized Control of
Power Systems
Impact on System Operation
• Keeping the lights on – prime objective of
system operation
• The power system
– Behavior is governed by the law of physics
– Certain functions has to be performed irrespective
of the market structure
• Balance supply and demand at all times
• Generation and absorption of reactive power must be
kept in balance
Impact on System Operation
• What changes?
– The mechanics by which the fundamental
requirements are met
– The apportionment of responsibilities
– Additional requirement to facilitate market
operation
• Market processes designed to ensure that the physical
requirements of the system can be met
• Providing the Grid Operator with control over the
physical input to the system in sufficient time before
the event to plan and exercise control
Impact on System Operation: Operational
Planning
• Prior to privatization
– The program of generation and transmission outages for
maintenance was firmed up well in advance of the event
• Post privatization
– Difficult to optimally plan outages of generation and
transmission and to effectively plan generation
• No fixed merit order against which to plan future generation
operation
• No requirement to coordinate generation and transmission outages
• New generation has been less than ideally sited (has exacerbated
transmission constraints)
• Notice to close generation may be very short and at best six months
• Increased power transfers have led to the need for more system
reactive and active power compensation
Impact on System Operation: Operational
Planning
• The key is
– To maintain an effective operational planning
process
• That enables most of the problem to be anticipated in a
defined time frame, and
• That permits ameliorating action
Impact on System Operation: Demand
Projection
• Accurate predictions of demand are the
starting point for secure operation
– Peak Demand – key determinant in scheduling
generation
• Impact of privatization
– Consumer response to very high peak demand
prices
– Demand side bidding where the consumers
choose to reduce load in response to high prices
Impact on System Operation: Unit
Commitment
• Organizing the commitment of generation has to take
place irrespective of the market arrangements
• What will be different is who is responsible
– Generators may self – commit and dispatch
– Generators may only self – commit
– The total process may be managed by the grid operator
• Prior to privatization
– Generation pattern was relatively stable
• Only changed as fuel price differentials change
– Actual capability of generating units were made available
to the System Operator
Impact on System Operation: Unit
Commitment
• Post privatization
– Generators choose their price for commercial
reasons
• Alters the pattern of generation from day to day
• Analysis of the network, upon receipt of bids, to establish
a viable system and derive any transmission constraints
necessary for inclusion in the scheduling study
– Generators may choose to profile their availability to
achieve a particular running regime for commercial
reasons
– Scheduling algorithms do not distinguish different
types of generation and treat them differently
Impact on System Operation: Unit
Commitment
Impact on System Operation: Unit Dispatch

• Post privatization
– Generator re – declarations
• Short time scales
• Need for accuracy
• Electronic transmission is necessary
– Generator bids are not firm and may be re – declared
as unavailable during the dispatch phase
• Complicates maintenance of adequate reserve margins
– Set contingent reserve levels in the scheduling
• Accommodate potential shortfall, forecast error and forced
outages
• Additional cost to consumers (uplift cost)
Impact on System Operation: Unit Dispatch
Impact on System Operation: Ancillary
Services
• To provide ancillary services
– The provision of reserve response requires units to
operate part loaded
– There is a trade – off between the replacement
cost of the reduced output and the reserve
holding costs
• The solution – reserve co – optimization
• Consumers may also participate in the reserve
market
– Ability to reduce load at short notice
Impact on System Operation: Transmission
Services
• The grid owner and operator are responsible
for managing the uplift costs incurred in day to
day operations
– Incentive scheme has been put in place where the
transmitter benefits financially if these costs are
contained below a predefined level
– Costs are monitored and actions are taken to
minimize these costs
• Real – time displays have been developed to support
the process and contain the workload
Impact on System Operation: The Role of the
Independent System Operator
• Providing fair governance
• Having no vested financial interests
• Providing open access
• Ensuring short – term reliability complies with set standards
• Controlling transmission facilities
• Managing transmission congestion according to set rules
• Promoting efficiency in operation
• Accommodating a pricing regime that promotes efficiency of
use and investment
• Making transmission information available
• Managing transfers
• Supporting a dispute process
Impact on System Development
• Objectives of system development
– Meeting the overall reliability requirements expressed
in terms of the probable incidence of loss of supply
– Minimizing the ongoing capital and operating costs
– Maintaining diversity against fuel price changes or
shortages
– Establishing a stable planning environment for
consumers and plant suppliers
• Prior to privatization, system development was
traditionally planned as an entity by vertically
integrated utilities
Impact on System Development:
Generation Planning
• Prior to privatization
– Planned operating regime based on global operational
studies using fuel costs and unit heat rates
• Post privatization
– Generator has to assess when it might be running and
its profit and hedge against the risk of it not
materializing
– New focus of development
• maximum efficiency and minimum capital and running
costs
• Short construction period to give improved cash flow
Impact on System Development:
Transmission Planning
• Post privatization
– the assessment of future transmission needs
became difficult, if not impossible.
• Uncertainty in the future generation that will be built and
closed
• Unpredictable prices and merit order
– Emphasis in planning has to be given to identifying
the solution that gives maximum flexibility to
accommodate change
• Some compensation equipment has to be made
relocatable
– Planning code was introduced
The IT/Communications Infrastructure
• Prior to deregulation
– requirements were principally to service the needs of SCADA
– Facilities for remote control were limited
– Instructions for switching and dispatch transmitted verbally
• Post deregulation
– Requirements for communications between power stations,
substation and grid control centers has been radically altered
• The need for accurate metering data to support retrospective
settlement
• The requirements to monitor performance against contracts for
ancillary services and instructions
• The need to be able to demonstrate to auditors that the correct data
has been used in scheduling and setting prices
• The desire to automate the process to reduce manpower and costs
The IT/Communications Infrastructure
• New requirements
– Offer data
– Re – declarations
– Dispatch instructions
– Metering and monitoring
– Remote control
• Design considerations
– System integrity
– Confidentiality
AC POWER
Single Phase Power Consumption
Average Active (Real) Power
Apparent Power
 Reactive Power

• for a pure resistor

– the impedance angle is zero, power factor is unity
– apparent power and real power are equal
• for a purely inductive circuit
– the current lags the voltage by 90°, average power is zero
– no transformation of energy
• for a purely capacitive circuit
– the current leads the voltage by 90°, average power is zero
AC Power
Example
– The supply voltage is given by v(t) = 480 cos ωt
– the load is inductive with impedance
– determine the expression for the instantaneous
current i(t) and instantaneous power p(t)
– plot v(t), i(t), p(t), pR(t), pX(t) over an interval of 0
to 2π
Complex Power
• Real Power, P
– RMS based - thermally equivalent to DC power
• Reactive Power, Q
– Oscillating power into and out of the load because
of its reactive element (L or C).
– Positive value for inductive load (lagging pf)
• Complex Power, S
Complex Power
The Complex Power Balance
• From the conservation of energy
– Real power supplied by the source is equal to the
sum of the real powers absorbed by the load and
the real losses in the system
– Reactive power must also be balanced
• The balance is between the sum of leading and the
sum of lagging reactive power producing elements
– The total complex power delivered to the loads
in parallel is the sum of the complex powers
delivered to each
Complex Power
Example
– In the circuit below, find the power absorbed by
each load and the total complex power
– find the capacitance of the capacitor to be
connected across the loads to improve the overall
power factor to 0.9 lagging
Complex Power Flow
Consider the following circuit
– For the assumed direction of current

– The complex power

Complex Power Flow
• For a typical power system with small R / X ratio, the follow
observations are made
– Small changes in d1 or d2 will have significant effect on the real
power flow
– Small changes in voltage magnitude will not have appreciable
effect on the real power flow
– Assuming no resistance, the theoretical maximum power (static
transmission capacity) occurs when the angular difference, d, is
90° and is given by:

– For maintaining stability, the power system operates with small

load angle d
– The reactive power flow is determined by the magnitude
difference of the terminal voltages
Three-Phase Power
• Balanced three phase power
– Assumes balanced loads
– Assumes voltage and currents with phases that
have 120°separation