Question 1

Q.1. What do you mean by Nodal Pricing?

Accepted Answer

Nodal pricing is an electricity pricing method where the price at each network node (bus) reflects the actual marginal cost of supplying power at that specific location, accounting for generation cost, losses, and transmission congestion.

Question 2

Q.2. What is Consumer Surplus?

Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay for a good (as represented by the demand curve) and what they actually pay (the market price), representing the net economic benefit gained by the buyer.

Question 3

Q.3. Explain Re-dispatching.

Accepted Answer

Re-dispatching is the process of adjusting the output of generating units after the initial market-clearing dispatch, in order to relieve transmission congestion or maintain system security, without changing the total generation-demand balance.

Question 4

Q.4. What is Supplier Surplus?

Accepted Answer

Supplier (producer) surplus is the difference between the price a supplier actually receives for a good and the minimum price at which they would have been willing to sell it (as represented by the supply/marginal cost curve), representing the net economic benefit gained by the seller.

Question 5

Q.5. What do you understand by Deadweight loss?

Accepted Answer

Deadweight loss is the loss of total economic surplus (consumer plus producer surplus) that occurs when a market operates at an inefficient quantity, typically due to market power, price controls, or transmission congestion, rather than at the efficient perfectly-competitive equilibrium.

Question 6

Q.6. What is Market Equilibrium Conditions?

Accepted Answer

Market equilibrium conditions occur when the quantity of electricity demanded exactly equals the quantity supplied at the prevailing market-clearing price, determined graphically by the intersection of the aggregate demand and supply curves.

Question 7

Q.7. What do you mean by start capability service?

Accepted Answer

Start-up capability service is an ancillary service in which a generator (typically one capable of black-start) provides the capability to start up without relying on an external power supply, essential for restoring the grid after a total or partial blackout.

Question 8

Q.8. What is Loss of opportunity cost?

Accepted Answer

Loss of opportunity cost (LOC) compensation is a payment made to a generator that is instructed by the system operator to reduce or curtail its scheduled output for system security reasons, compensating it for the profit it would have earned had it been allowed to generate as originally scheduled.

Question 9

Q.9. What is HHI Index?

Accepted Answer

The HHI (Herfindahl-Hirschman Index) is a measure of market concentration calculated as the sum of the squares of the market shares of all firms in a market, used to assess the degree of competitiveness or market power in a restructured electricity market.

Question 10

Q.10. What is Entropy Coefficient?

Accepted Answer

The Entropy Coefficient is a market concentration/competitiveness measure derived from information theory, calculated from the market shares of participating firms, where higher entropy indicates a more even distribution of market share (greater competition) and lower entropy indicates concentration in fewer firms.

Question 11

Q.1. Outline the rolled-in transmission pricing paradigm.

Accepted Answer

The rolled-in transmission pricing paradigm allocates the entire embedded (historical) cost of the transmission network across all users through a common, averaged tariff (often based on a postage-stamp or similar rate structure), regardless of each individual user's actual usage pattern, distance, or contribution to system peak.

Question 12

Q.2. Explain the elasticity of demand and supply curve.

Accepted Answer

Elasticity of demand/supply measures the percentage change in quantity demanded/supplied resulting from a percentage change in price; electricity demand is typically highly inelastic (steep curve) in the short term due to limited real-time consumer responsiveness, while supply elasticity varies with generation mix and capacity margin.

Question 13

Q.3. Write a short note on Counter-trade and Curtailment.

Accepted Answer

Counter-trade is a congestion management mechanism where the system operator buys back power from generators on the constrained side of a congested link and sells/dispatches additional power from generators on the other side, at the operator's cost, while curtailment involves directly reducing scheduled generation or load to relieve congestion or maintain system balance.

Question 14

Q.4. Discuss the ATC, TTC, TRM, CBM.

Accepted Answer

ATC (Available Transfer Capability) is the remaining transmission capacity available for additional commercial transactions beyond already-committed uses; TTC (Total Transfer Capability) is the maximum power that can be transferred reliably; TRM (Transmission Reliability Margin) reserves capacity for uncertainty; and CBM (Capacity Benefit Margin) reserves capacity for generation reliability sharing between areas.

Question 15

Q.5. What are the different provisions of ancillary services?

Accepted Answer

Ancillary services support secure, reliable grid operation beyond simple energy supply, including frequency regulation, spinning/non-spinning reserves, reactive power/voltage support, black-start capability, and load-following, each procured by the system operator (often through dedicated ancillary service markets) to maintain system balance and security.

Question 16

Q.6. Discuss the different attributes of a perfectly competitive market.

Accepted Answer

A perfectly competitive market is characterized by many buyers and sellers (none able to influence price individually), a homogeneous product, free entry and exit, perfect information, and price-taking behavior by all participants — conditions rarely fully met in real electricity markets, requiring careful market design and monitoring.

Question 17

Q.7. Explain the entities involved in restructuring process.

Accepted Answer

The restructuring process involves separating the traditionally vertically-integrated utility into distinct entities: Independent System Operator (ISO)/Regional Transmission Organization (RTO), Generation Companies (GENCOs), Transmission Companies (TRANSCOs), Distribution Companies (DISCOMs), Power Exchanges, and Regulatory Commissions, each with clearly defined, separated roles.

Question 18

Q.1. What are the reasons and objectives of deregulation of various power sys…

Accepted Answer

Power system deregulation aims to introduce competition into generation and retail supply (previously monopolized under vertically-integrated utilities) to improve efficiency, reduce costs, encourage innovation and private investment, and give consumers choice, while retaining regulated treatment for the natural-monopoly transmission and distribution wires segments.

Question 19

Q.2. Briefly explain the Four pillars of market design.

Accepted Answer

The four pillars of electricity market design are: (1) a competitive wholesale energy market for efficient short-term dispatch and pricing, (2) an open-access transmission regime with non-discriminatory network access, (3) a robust ancillary services/system-security framework, and (4) an independent regulatory and market-monitoring structure to ensure fair competition and prevent market power abuse.

Question 20

Q.3. What are the importance and effects of congestion management?

Accepted Answer

Congestion management is important because unmanaged transmission congestion can compromise system security and cause inefficient, non-cost-reflective dispatch; its effects include locational price separation, re-dispatch/counter-trade costs, generation curtailment, and altered incentives for generation siting and transmission investment.

Question 21

Q.4. Write a short note on transmission pricing.

Accepted Answer

Transmission pricing allocates the cost of building, maintaining and operating the transmission network among its users, using methods ranging from simple rolled-in/postage-stamp pricing to more cost-reflective approaches like MW-mile, contract path, and locational marginal (nodal) pricing, each balancing simplicity, equity and economic efficiency differently.

Question 22

Q.5. Discuss the Wholesale competition model with suitable block diagram.

Accepted Answer

The wholesale competition model allows generators to compete freely to sell power to distribution companies/large consumers through a wholesale market (power exchange and bilateral contracts), while retail supply to small/residential consumers remains a regulated distribution company function — an intermediate restructuring model between the fully regulated vertically-integrated utility and full retail competition.

Restructured Power System