Nepra slaps Rs1mln fine each on CPPA, power utility

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) slapped one million rupees in fines each on a power purchasing company and distribution utility for taking in electricity without signing a formal buying agreement with the producer and maneuvering tariffs, officials said on Tuesday.

The officials said the Central Power Purchasing Agency (CPPA) and Peshawar Electric Supply Company (Pesco) had been taking electricity from a hydropower project of Pakhtunkhwa Energy Development Organization (Pedo) for the past seven years without signing power purchase agreement (PPA), while the buying tariffs were four-time below what Nepra determined.

Pedo’s Pehur hydropower project, with 18 megawatts capacity, started production in March 1, 2010 and Nepra awarded it Rs4.0180/unit tariff on December 6, 2010. Under the law, CPPA and Pesco were bound to sign PPA with the Pedo and purchase electricity at the determined tariff, but they bought electricity at Rs1/unit till July 2016.

“Even after July 2016 not a single penny was paid to Pedo despite that they continued to take electricity from the project,” a senior official told The News. Officials said Nepra took penalty decision on Nov 22. CPPA and Pesco were apprised of the decision, they added.

“In case of non-execution of PPA within three months, another fine of half a million rupees per day shall be imposed on the delinquent,” the official said. Officials said acts of CPPA and Pesco were blatant violation of the Renewable Energy Policy 2006 as well as the Nepra’s rules.

“It shall be mandatory for the power distribution utilities to buy all the electricity offered to them by RE (renewable energy) projects,” the policy reads. “The power purchaser shall enter into a specific power purchase agreement based on a standard model agreement with the RE power producer.”

Officials said Nepra took cognizance of non-payment of dues when Pedo’s officials approached Nepra for settling the issue in January. In August, the authority held a public hearing over the issue and concluded that Pesco failed to execute the PPA for the last seven years and purchased power on rates not approved by Nepra.

Pesco failed to submit any plausible reason for non-payment of dues during the legal proceedings. It couldn’t comply with the directions of provision of information required by the authority and disregarded its letter.

Consequently, Nepra declared Pesco as delinquent, while it said CPPA failed to fulfill its obligation and also forced the power producer to agree on terms and conditions, which were never approved by the authority. Nepra has already imposed five million rupees in fine on the National Transmission and Despatch Company for non-compliance with the performance standards transmission rules 2005. It said NTDC violated the permissible voltage and frequency limits in fiscal 2013/14.