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Friday April 12, 2024

Nepra orders probe into Discos’ affairs

Nepra Chairman Waseem Mukhtar chaired the session alongside members Engineer Maqsood Anwar Khan and Rafique Ahmad Shaikh

By Our Correspondent
February 24, 2024
The Logo of NEPRA can be seen in this image. — APP/File
The Logo of NEPRA can be seen in this image. — APP/File

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday ordered an investigation into the operations of Power Distribution Companies (Discos) following their consistent demands for non-substantiated multi-billion rupee claims, citing concerns of casual handling of affairs and burdening consumers.

The regulator announced this investigation under the Nepra Act, into the affairs of Discos, with plans to summon each CEO post-Eid to address technical losses, sales, and other issues.

The power regulator ordered this investigation during a public hearing held Friday regarding the Central Power Purchasing Agency (CPPA)’s petition for Fuel Price Adjustments (FCA) for January 2024 where it claimed Rs7.13/unit additional charges from power consumers.

Nepra Chairman Waseem Mukhtar chaired the session alongside members Engineer Maqsood Anwar Khan and Rafique Ahmad Shaikh.

The regulator expressed serious concerns over the staggering demand of Rs7.13/unit FCA by distribution companies, deeming it unsustainable for consumers and attributing it to systemic deficiencies. This has Rs56.6 billion impact on power consumers. He said, “We will not rubber-stamp each of your claims. We are accountable to the government and the masses.” Half of the total claims, these companies want to allow them to collect Rs26.7 billion (Or $95.5 million) due to the transmission system constraints, but the CPPA contested the regulator saying this is not constraints, but system stability issues.

The chairman asked if there was any accountability [Power Division level]. He directed the officials of the Power Division to convey resentment regarding the Discos’ poor affairs to the incoming new power minister as to address the matter more seriously.

“We regulate the power sector, and we are accountable to the government and consumers,” he stated. “As of now, business as usual is not feasible for the government, economy, and the sector. The sooner we acknowledge this, the better off we’ll be.”

He elaborated on the complaints received against the Discos regarding the lack of power connections, stating, “We need to assess the performance of the Discos. Currently, 550MW remains unserved within the Discos.” He issued a directive for zero tolerance towards any failure to provide connections.

Regarding the request for over seven rupees of Fuel Cost Adjustment (FCA) despite stable fuel prices and exchange rates against the reference value, he asserted, “Do not expect us to continue rubber-stamping each of your claims.”

The Power Division is urged to devise a viable plan to tackle the issues causing chaos, warned the chairman. Without a solution, the cycle of high prices and demand will persist.

Nepra chairman highlighted a change in protocol, stating that CEOs of Discos will now be required to attend meetings in person, a departure from previous practices. Referring to a recent hearing on quarterly tariff adjustment (QTA), he remarked, “That was entirely disappointing.”

On February 14, Discos requested over Rs85 billion in recoveries from consumers for the second QTA (Oct-Dec) FY24. However, they failed to provide adequate evidence when questioned by the regulator. Criticising the casual attitude of Discos, it was decided that CEOs must henceforth attend meetings in person. Expressing disappointment, the Nepra chief stated, “The Authority is disappointing. The lack of improvement concerns us.”

Member Nepra Rafique Ahmad Shaikh questioned the petitioner (CPPA) about the significant claim concerning system constraints, particularly in the South-North transmission corridor, which has persisted for several years. The petitioner attributed the issue to system stability rather than constraints.

Further probing by the Shaikh inquired about potential solutions to mitigate such substantial losses. However, the petitioners remained silent, only noting that power demand was low.

The member pointed out data showing an average of eight hours of loadshedding, with K-Electric experiencing six hours. Despite expectations of increased demand in the south, FESCO recorded 10 hours of loadshedding, MEPCO 4 hours, HESCO 10 hours, and QESCO 10 hours. The petitioner defended the situation, citing the need to maintain system stability through diesel and furnace-based plants.

Concerning the Rs7.13/unit claim, the Member questioned the feasibility of consumers to bear such a burden, emphasising the escalating issue. He criticised the persistence of loadshedding in the south, noting the decline in the entire industry and the loss of 1200MWs due to net metering. The Member also highlighted a substantial backlog of around 160,000 pending power connections in Discos, equivalent to 550MW.

Shaikh queried why loadshedding persists despite apparent demand issues, suggesting that without such issues, the claim could have been Rs3/unit instead of its current magnitude.

Regarding the impact of increased insurance costs due to unrest in the Arabian Sea on electricity charges, the petitioner indicated no immediate impact in the January FCA but anticipated potential increases in the coming months.