Concept of Availability Based Tariff (ABT)

Availability Based Tariff (ABT) is a frequency based pricing scheme adopted in Indian Power Sector to maintain Grid discipline by implementing incentive / disincentive during unscheduled power interchange (UI). This scheme was introduced in the year of 2002. It is imperative here to understand the need for ABT, for better understanding the concept. 

Need of Availability Based Tariff (ABT):

Indian Power System is characterized by low frequency system due to continuous power deficit for most of the time. There is always supply and demand mismatch. The power demand is always more than the power supply. Due to this the frequency of Grid remains on lower side. Before the introduction of Availability Based Tariff, Generating Stations used to deliver the same amount of MW in spite of need for lower MW demand during the period of lower power demand. This causes the Grid frequency to be at higher side. Similarly during the period of higher power demand, Generating Stations used to supply same MW. Subsequently, the Grid frequency reduces. This type of Grid operation did not have any provision to maintain a discipline.

Under normal condition, the Grid frequency is expected to be constant at 50 Hz. But during peak load period the frequency goes down to 48-48.5 Hz for many hours a day. Similarly during off-peak hours, the frequency goes up to 50.5-51 Hz for many hours a day. Sometimes there is wide frequency variation like up to 1 Hz in 10 to 15 minutes for many hours. All theses contribute to the Grid disturbance leading to tripping of connected Generators and tripping of lines. Tripping of lines leads to interruption of power supply to large block of consumers.

Availability Based Tariff

In the above figure, when power demand is more, say P1 (during peak load hours) the Grid frequency is f1. Similarly when power demand is less (during off-peak hours) at P2, Grid frequency f2 is at higher side.

So the question is who / what are the factors causing such Grid disturbance? Let us address them.

During peak load hours, the demand is more than the supply and it is expected that Generating Stations should supply more power to meet the demand or load curtailment equal to deficit by State Load Dispatch Centers (SLDCs). This will reduce the gap between supply and demand and hence frequency of Grid will be maintained near about 50 Hz. During off-peak hours, Generating Stations should back down their generation to maintain the demand. But the existing tariff scheme does not encourage Generating Stations to back down their generation during off-load hours.

As per the existing tariff scheme Generating Stations get paid for the power supplied. This necessitates a new pricing scheme which encourages Generating Stations to back down their generation during off load hours by providing incentive. Similarly, this scheme should also provide incentive to Stations to supply more power during low frequency Grid condition and penalize beneficiary for drawing power more than the schedule power during low frequency Grid condition. This is why Availability Based Tariff (ABT) was introduced. Thus the new pricing scheme helps to maintain the Grid discipline and stability.

What is Availability Based Tariff (ABT)?

Availability Based Tariff is a three part pricing scheme i.e. Fixed charge, Variable charge and Unscheduled Power Interchange (UI) Incentive / Penalty.


1)    Fixed Cost is basically imposed on beneficiaries in proportion to their entitled power from the Generating Station. This means fixed cost is directly proportional to the plant capacity shared by the beneficiaries. This is the reason Fixed Charge is often called Capacity Charge. But this does not mean that Generating Station can claim any amount of fixed cost irrespective of its availability. The reimbursed Fixed Charges payable to Generating Station is dependent on the availability of plant. If the plant availability for a year is more than the set norm, the generating station gets paid higher. In case the plant availability is less than the set norm over a year, the generating station is going to be paid lower. This is why this tariff is called Availability Based Tariff. In earlier tariff, fixed charge was dependent on Plant Load Factor but in Availability Based Tariff, it is linked with Plant Availability.

2)      Variable charge is the cost incurred by Generating Station to produce MW day to day. Variable charge is also called Energy Charge. It comprises of Fuel charge (like coal for thermal power plant, Nuclear Fuel Bundle for Nuclear Power Plant, Gas for Gas Power Plant etc.), Operating expenses etc.

3)   Unscheduled Interchange Charge (UI Charge): Unscheduled Interchange means deviation from the scheduled generation of plant or deviation from scheduled drawl of power by beneficiary. Suppose a generating station is scheduled to deliver 600 MW but actually on a day it is supplying 700 MW, even then the station will be paid Energy Charges for scheduled generation i.e. for  600 MW. For surplus 100 MW, the rate of energy charge will depend upon the prevailing Grid frequency at the time. This energy charge for surplus supply i.e. 100 MW (for our example) is called Unscheduled Interchange Charge (UI Charge). The UI charge is linked with Grid frequency. If the Grid frequency is higher i.e. more than 50.2 Hz, the rate of UI charge is zero. This means Generating Station will not be paid for excess generation of 100 MW when Grid frequency is more than 50.2 Hz. Thus the station is forced to reduce its generation to maintain Grid frequency.

Similarly when the Grid frequency is lower, the generating station is paid incentive for excess generation at UI rate. Let us say the Grid frequency at that time is 49.4 Hz. In this case, a UI charge at the rate of around 875 Paisa / kWh is paid to the station. This encourages to supply excess power into the Grid by the stations so that Grid frequency do not decrease further. The rate of Unscheduled Interchange Charge versus Grid frequency is shown in figure below.

Unscheduled Interchange Charge-UI Charge

Following points can be observed from the UI rate versus frequency graph:

1) UI rate have two distinct slopes.

2) UI rate increases linearly from zero at 50.2 Hz to 387.5 paisa/kWh at 49.7 Hz. Thus the first slope = (387.5 – 0) / (50.2 – 49.7) = 387.5 / 0.5 = 775 paisa/kWh / Hz

3) After 49.7 Hz, the UI rate increases linearly up to 49.5 Hz with a slope of 2350 paisa/kWh.

4) Beyond 49.7 Hz, the rate is flat at 873 paisa / kWh.

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