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Bilateral Interconnection Agreement Model

Presented to HAPUA Working Group 5 (ESI Services), Project 6

ByPower Purchase Agreement Division

Electricity Generating Authority of Thailand (EGAT)

February 25, 2009 Jakarta, Indonesia

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Contents

1. Introduction

2. Assumptions of the Model

3. Bilateral Interconnection

Agreement (BIA) Model

4. Summary

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1. Introduction• Interconnected power system means

system connection of two (or more) utilities (or group of utilities) that control

their own generators and/or transmissions to regulate their own system frequency.

• Goals of interconnection are:(i) continuity of the service and;

(ii) economy of power production.

• We are looking forward to Asian Power Grid.

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2. Assumptions of the Model

• There are three assumptions used in creating the BIA model.

- Both Control Areas agreed to connect their own power system together.

- Load control center was established in each Control Area.

- Tie transmission line(s) was constructed and commissioning phase was already completed.

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2. Assumptions of the Model

Technical Assumptions

This is minimum Requirements for interconnected Power Systems.

It does not depend on your Electric Supply Industries (ESI) scheme.

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3. BIA ModelDefinitions and Interpretation

Term

Coordinating Committee

Interconnections

Interconnected Utility Responsibility

Miscellaneous Provisions

Sale and Purchase of Electrical Energy Billing and Payments

Tax and Tariff

Metering

Default and Termination

BIAConditions Precedent

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Definitions and Interpretation

• This clause defines meaning of necessary words used in the Bilateral Interconnection

Agreement (BIA) which shall remain in effect during the Term of the Agreement

but may be amended from time to time as agreed in writing by the Parties.

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Term• This Clause specifies the day when the Agreement

shall be effective and expired. It also provides means to extend the term of Agreement or to terminate the Agreement prior to the specified

expiration date. Provisions of survival of rights on termination should also be presented.

• Items to be incorporated :-- Term of Agreement

- Commencement Date

- Extension of the Term

- Expiration of the Term

- Survival of Rights on Termination

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Conditions Precedent

• This Clause specifies conditions to be fulfilled by the Parties before the Agreement

shall take effect. Generally, they are the approval and ratification of the Agreement by the Approval Authorities of both Parties and also the readiness of the system for

commercial operation.

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Coordinating Committee

• This Clause specifies the establishment of the Coordinating Committee, together with its obligation and responsibility concerning technical issues. Procedures for the appeal

in case any matters cannot be resolved within its jurisdiction is also required.

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Interconnections

• This Clause explains the transmission line(s) that connect two electrical systems.

Description of the Interconnection Facilities, diagram of the transmission line

and specifications of the conductors, towers, insulators, and others necessary information related to the transmission

facilities should be provided in this Clause and the Attachment.

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Interconnected Utility Responsibility• This clause describes responsibility of the

Transmission System Operators (TSOs) of both Parties in order to maintain

instantaneous and continuous operation of the interconnected power system.

• Items to be incorporated are :-

- General Obligation of the TSOs

- Control Area Responsibility

- Reserve Capacity

- Responsibility for Operating Reserve

- System Protection Coordination and Load Shedding

- Reactive Power and Voltage Responsibility

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Sale and Purchase of Electrical Energy

• This clause describes the principle of “as and when available” basis for the energy sale and purchase under the specified transfer limitation. The arrangement and issuance of Price Quotation, Day Ahead Schedules including how to manage and pay the “Commercial Energy” that transacted following the Day Ahead Schedules in various cases will be explained in details.

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Metering

• This clause specifies metering system and obligation of each party in maintain metering system. Locations of revenue metering system which measure electrical energy are also specified herein. Process and resolution of meter inaccuracy are presented which will lead to adjustment and correction of invoices and payments.

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Billing and Payments

• This clause provides billing and payment process and its duration. Currency, means of payment and interest rate for late payment are also specified. In case there is a dispute on the billing, process of handling the disputed amount and referring such dispute for dispute resolution will be provided.

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Tax and Tariff • This Clause stipulates the responsibility of each

party in any taxes that may occur due to the electricity transaction. Usually, in bilateral

Agreement, each party shall bare the cost of taxes occurs in its own territory.

• Tax and other tariff to be imposed are as follows:

- Value Added Tax (VAT)

- Import and Export Tax

- Tariffs

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Default and Termination

• This Clause specifies events which shall be considered an Event of Default e.g. default

in the payment of any amount due and payable, process to cure such event of default and eventually to terminate the

Agreement.

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Miscellaneous Provisions • Items to be incorporated are :

- Force Majeure

- Liability for Damages

- Assignment of Rights and Obligation

- Dispute Resolution

- Modification Due to Change in Circumstances

- Confidential Information

- Severability

- Notices

- Modification of the Agreement

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Attachments

- The Attachment provides necessary information of the tie transmission line and one line diagram including important parameters.

- Form of the Day Ahead Schedule.

- Energy Price or Tariff

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4. Summary• The BIA model provides necessary provisions for bilateral interconnected

power system which concern technical, commercial and legal obligations, tax

and other tariffs.

• This BIA model is expected to be a benchmark Bilateral Interconnection Agreement for “Subsystem A” and

other Subsystems.

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Thank you very much for

your kind attention.