Nepra, intervenors surprised Discos’ faulty plan ignores 8,000MW cost-effective renewables

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) and the intervenors were surprised by the seriously flawed five-year power acquisition plan (PAP) by state-owned Discos that had ignored 8,000MW of renewable projects known for their cost-effectiveness.

The power regulator was left baffled during briefings by power distribution companies who failed to grasp crucial aspects of the power acquisition plan. It found major flaws in the plan of Discos for procuring electricity from power plants. Notably, it also lacks an assessment of its impact on consumer electricity tariffs. Additionally, it was highlighted that the power acquisition plan failed to address the critical issues of electricity evacuation and system constraints.

Nepra and the intervenors termed it as the most confusing power acquisition plan raising serious concerns for the power regulator. The latest approved Indicative Generation Capacity Expansion Plan (IGCEP 2022-31) had originally included 8000 MW of renewable optimized power plants. However, they were excluded from the proposed power acquisition plan from FY 2022-23 to FY 2026-27, as submitted by XWDISCOs. They initially omitted to include electricity from the KAPCO power plant. However, in response to queries from the power regulator, they clarified that they intended to procure electricity from KAPCO.

Furthermore, it was observed that the Power Acquisition Plan (PAP) lacked several committed projects. The power regulator pointed out that power distribution companies had significantly deviated from the IGCEP already approved by Nepra. IGCEP had proposed an addition of 8000 MW of electricity, which was notably absent in the PAP. Moreover, visible gaps in the plan were also noted and the system operator was not consulted. The system operator determines the operation of power plants to ensure the reliability and stability of the power system is not compromised. Even more concerning, the system operator was forced to run power plants out of merit order to stabilize the system.

Discos officials tried to clarify that the power distribution companies had only accounted for the electricity to be acquired from contracted power plants in their plan. They indicated that the installed electricity capacity currently stands at 43,000 MW and is expected to increase to 51,000 MW in the near future. Nepra officials emphasized the need to heed requests from system operators, stating that Discos must undertake projects to ensure system reliability. Nepra warned that if the Power Acquisition Plan is not aligned with reliability, chronic constraints could plague the power system.

In Lahore and Faisalabad, furnace-based power plants are operated to maintain system stability which is a long-standing system deficiency. Nepra officials also noted the absence of a structured document for the Power Acquisition Plan (PAP). Discos officials claimed the power acquisition plan was based on a forthcoming IGCEP which remains to be finalised, while the previous IGCEP used an inflated GDP. They said that the new IGCEP would align with Discos’ demand. Nepra officials countered, emphasizing the binding nature of the IGCEP for system operation.

Nepra officials stressed the need to inform the public about the impact of the Power Acquisition Plan (PAP) on end consumer tariffs. They raised a critical question: “Who will bear the cost of the new power acquisition plan?” Nepra questioned whether the Discos could bear the cost and suggested they might need to request fuel cost adjustments. They also questioned how the regulator could approve the PAP without assessing the impact on consumers’ end tariffs. Senator Nauman Wazir raised concerns, highlighting the consideration of the Planning Division’s growth cost. He asked the Discos to provide information regarding the growth in electricity consumption over the past two years. He also noted the absence of data about off-grid solarization and the exclusion of the impact of the Competitive Trading Bilateral Contracts Market in the plan.

Furthermore, Senator Wazir pointed out that Discos lacked knowledge about the actual electricity acquisition in the proposed power acquisition plan. Another intervenor pointed to the presentation by Discos, which indicated their inability to calculate the plan’s impact effectively.