ISLAMABAD: Eligible industrial consumers will move closer to having the right to choose their electricity suppliers after NEPRA approved a uniform charging structure for bulk power consumers of DISCOs and K-Electric under the open-access system.
The regulatory approval is a key step towards replacing Pakistan’s traditional single-buyer electricity model with a competitive market in which eligible consumers can purchase power directly from suppliers through bilateral agreements.
Federal Minister for Energy Sardar Awais Ahmad Khan Leghari welcomed the decision, calling it a major milestone in the establishment of a competitive electricity market in Pakistan.
He said the determination of Use of System Charges was the final major regulatory step required for the Competitive Trading Bilateral Contract Market and would pave the way for its auction.
The federal government plans to auction 400MW of electricity in the first phase, compared with the 200MW initially proposed under the competitive wheeling framework.
Under the new system, eligible industrial consumers will be able to select electricity suppliers according to their requirements, while using the existing transmission and distribution network to receive the electricity.
To make this system workable, NEPRA has approved a uniform structure of Use of System Charges, covering transmission charges, distribution charges and cross-subsidy.
The regulator determined that variable grid charges for consumers participating in the competitive wheeling auction would range from Rs6.23 to Rs19.62 per unit, depending on the consumer category.
A fixed grid charge of Rs1 per kilowatt per month, based on sanctioned load, will also be applicable.
For B-3 consumers, the approved UoSC is Rs6.23 per unit, while B-4 consumers will pay Rs9.09 per unit. The charge has been set at Rs14.95 for C-3, Rs19.62 for C-2(a), Rs17.74 for C-2(b), Rs19.14 for A-2(c), Rs19.10 for A-3 and Rs6.72 for D-2(b).
NEPRA also approved stranded-cost components for consumers who opt for open access without participating in the competitive wheeling auction.
The stranded-cost component is Rs12.94 per unit for consumers connected at 11kV and Rs16.35 per unit for those connected at 132kV or 66kV.
Including stranded costs, the total variable UoSC has been determined at Rs19.17 per unit for B-3 consumers, Rs25.45 for B-4, Rs31.30 for C-3, Rs32.56 for C-2(a), Rs30.68 for C-2(b), Rs32.08 for A-2(c), Rs32.04 for A-3 and Rs19.66 for D-2(b).
The regulator also approved uniform transmission and distribution loss factors for open-access consumers. At the 11kV level, the factor was fixed at 8.04 percent, compared with 8.42 percent proposed by the Power Division.
For consumers connected at 132kV, NEPRA approved a loss factor of 1.51 percent.
The decision followed detailed consultations with the Power Division, ISMO, K-Electric and other stakeholders over the treatment of inter-DISCO differences, cross-subsidies and transmission and distribution losses.
The Power Division had argued that consumers using the wheeling system should not alone bear inter-DISCO differences arising from uniform UoSC.
NEPRA agreed that imposing such differences exclusively on wheeling consumers could create unequal charges for similarly placed consumers and undermine the principles of uniformity and non-discrimination.
The regulator also approved the application of an additional charge to all consumers, including open-access consumers and those supplied by suppliers of last resort, in line with the principle of uniformity.
However, NEPRA deferred approval of a mechanism for settling differences arising from uniform transmission and distribution losses, observing that the matter had not yet been fully discussed among all stakeholders.
The decision has been sent to the federal government for notification in the official Gazette within 30 calendar days under Section 31(7) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997.
If the federal government does not notify the decision within the stipulated period, NEPRA will notify it in the official Gazette itself under Section 31(7).
Leghari said the competitive market would take Pakistan beyond the traditional single-buyer system and give eligible industrial consumers greater choice in purchasing electricity.
He said competition in electricity procurement could encourage more efficient generation, better prices and improved use of existing power plants.
The minister said the new market could also help reduce inefficiencies throughout the electricity value chain and promote renewable energy, battery storage and greater use of low-cost local energy resources.
He added that greater use of domestic resources could help reduce dependence on expensive imported fuels.
According to Leghari, NEPRA’s decision has provided the regulatory framework needed for direct access, while the CTBCM auction will represent a major structural change in Pakistan’s electricity market.
The approval therefore sets the stage for a gradual shift towards a more competitive and consumer-focused electricity market, with the first 400MW auction now moving closer to reality.
