Development of a transmission pricing methodology for Sri Lanka power system

The electricity sector in Sri Lanka is governed by the Sri Lanka Electricity Act, No. 20 of 2009 (as amended), and the Public Utilities Commission of Sri Lanka (PUCSL) is empowered by the Electricity Act to regulate the electricity industry. Ceylon Electricity Board has license of Generation, Transmission and Distribution, while the Transmission Licensee is the Transmission System Operator and the Single Buyer. Five Distribution Licensees (DLs) buy electricity from the Transmission Licensee (TL). Tariffs and charges levied from the Distribution Licensees for purchasing of electricity from the Transmission Licensee are determined in pursuant to the Tariff Methodology approved by PUCSL. In addition to the five DLs there are a few customers directly served by the TL at 220kV and 132kV voltage level, but charged under the tariff imposed by DLs, since the presently approved tariff methodology is not properly address tariff calculation for the bulk customers connected at 132kV/220kV. In this research, different power market models, transmission pricing principles and methodologies in different power markets were studied first, followed by transmission pricing methodologies in different countries. The study evaluated three main methodologies which can be implemented in Sri Lanka: (i) embedded cost based, (ii) marginal cost based and (iii) composite cost based methodologies. By analyzing data in each proposed model, the best suited methodology for Sri Lanka is recommended to be the embedded cost based method. The new tariff scheme which is to be implemented should recover the cost of utility, simple, stable and easy to implement in existing framework. With this background it was proposed the embedded cost based tariff calculation model, as the most appropriate option for calculation the transmission tariff in Sri Lanka