NEPRA’s annual report: DISCOs cause Rs123bn loss in FY19

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ISLAMABAD: Due to inefficiency, poor recovery through electricity bills and transmission and dispatch (T&D) losses, the country’s power distributing companies (DISCOs) caused a loss of approximately Rs123 billion in the financial year 2018-19 alongside 152 fatal accidents.

In its annual report, the National Electric Power Regulatory Authority (NEPRA) disclosed that the DISCOs, including K-Electric had caused loss of around Rs45 billion due to inefficiency and T&D losses whereas a Rs78 billion loss was registered due to poor recovery through electricity bills. The report revealed that 5,854 complaints were filed in the fiscal year while 5,440 complaints were disposed of/redressed and 414 are currently under process.

According to the report, 12 generational licences for coal, hydel, wind, solar, bagasse and solid waste were issued with a cumulative installed capacity of 652.54MW while 1,143 distributed generation licences with a total installed capacity of 19.55MW were issued under the net metering regime. Moreover, modifications in the previously granted generation licences were approved to five licencees for different reasons, including addition/deletion of BPCs, extension of term of licence, change of fuel, change of technology, enhancement of capacity, exclusion of units, enhancement of useful life and supplying power to BPCs through wheeling besides cancellation of four generation licenses on the request of licencees.

Similarly, tariff was determined for successful bidders, through competitive bidding, of two medium sized hydropower projects of 100MW each to be constructed in Khyber Pakhtunkhwa (KP), while generation tariff was also determined for 640MW Mahl Hydropower Project and generation tariff for 300MW coal-fired power plant at Gwadar was also determined. Likewise, generation tariff was determined for 16 companies based on wind power. In addition to this, decisions regarding review motion filed by three companies were also issued. For solar power, generation tariff was determined for two companies based on solar power and decisions regarding review motion filed by three solar power companies were also issued. For nuclear power, tariff was also determined for 340MW Chashma Nuclear Power Plant Unit-4 and in the matter of tariff modification of Chashma Nuclear Power Plant 2 (C-2) regarding reference capacity charge due to Initial Dependable Capacity (IDC) Test was issued.

The report also highlighted that 1,155 generation licenses were issued for conventional power plants, including renewable energy projects, hydropower projects and net metering, while generation tariff was determined for 300MW coal-fired power plant at Gwadar. The existing mechanism of fuel cost component was modified on account of utilisation of RLNG for Northern Power Generation Company Limited and Jamshoro Power Company Limited. Determination was issued regarding review against decision in the matter of induction of security cost for China-Pakistan Economic Corridor (CPEC) projects in the power tariff to ensure security sustainability. Generation tariff determinations were issued to 16 companies based on wind power and two companies based on solar power. Decision was also issued on use of RLNG by K-Electric as alternative fuel.

The report also revealed that Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) was registered as market operator, while the review filed by K-Electric against decision regarding transmission tariff for Sindh Transmission & Dispatch Company Limited was also processed. For distribution and supply business, four applications were admitted for the grant of electric supplier license and request of the federal government for determination of uniform consumer-end tariff, as per the amended NEPRA Act, was decided in December, 2018 and notified by the federal government. Market Operator Fee for CPPA-G for FY 2017-18 was determined.

Consumer complaint closure rate of 93 per cent was achieved and 116 authority regulatory meetings and 104 public hearings were held. Legal proceedings against GENCOs for excess auxiliary power and higher outage hours were initiated, while legal proceedings against CPPA-G on account of non-imposition of liquidated damages on GENCOs and against NTDC on account of poor operational performance, underutilisation of power plants, delay in approval of grid interconnection studies and frequent grid failure were initiated and legal proceedings against DISCOs for violating performance standards, distribution code and other applicable documents were under process. Moreover, for the first time, the authority [NEPRA] conducted public hearings at Karachi through video link.

The report states that NEPRA has decided to establish five additional offices of NEPRA at Gujranwala, Faisalabad, Multan, Hyderabad and Sukkur, in addition to already established existing offices at Karachi, Lahore, Peshawar and Quetta.

Sharing goals for 2019-2020, the report stated that the authority would ensure migration of existing physical servers running on tower-based hardware to blade servers in a virtual environment.  Further enhancement of internet connectivity would be undertaken to increase redundancy and to keep up with growing demand for internet bandwidth. The policy and rules set on the external firewall would also be strengthened. The technology support would be improved by taking proactive steps, including additional training, documentation, software updates and enhanced configuration to minimise the support needed by employees. The newly-established regional offices would be integrated with the head office.

Detailing important decision taken by NEPRA in FY19, the report stated that the decisions were given for HSD testing on combined cycle in post synchronisation period before COD for Quaid-e-Azam Thermal Power for Bhikki Power Project and National Power Parks Management Company for Balloki Power and Haveli Bahadar Shah Power Projects. Similarly, decision was issued in the matter of review filed by CPPA-G regarding determination of marginal cost/ incremental price for merit order in case of take & pay arrangement for Fatima Energy Limited. Likewise, decisions pertaining to K-Electric were taken regarding use of RLNG by K-Electric as alternative fuel and power acquisition of up to 4MW from International Industries Limited. More, decision regarding motion for leave for review filed by CIHC Pak Power Company Limited against decision dated December 19, 2018, was issued. Market Operator Fee for CPPA-G was determined for FY18. Moreover, decision was issued regarding adjustment of tariff of renewable energy power projects availing State Bank of Pakistan’s (SBP) revised financing scheme. Adjustments at commercial operation date were made for 13 projects. In addition, review motion filed by four projects were also decided. Comprehensive performance evaluation reports were approved for FY17 and FY18, based on data provided by GENCOs, as per requirement of performance standards generation rules. Poor performers were penalised/fined.

NEPRA said that revision to Grid Code Addendum II for grid integration of Solar Power Plants submitted by NTDC is under process of approval. A comprehensive performance evaluation report for FY18 was prepared for both NTDC and K-Electric wherein performance parameters were analysed and areas for improvement suggested.

Distribution license for 50MW was issued to Lasbela Industrial Estate Development Authority and processing of 11 applications for grant of distribution licences by different housing societies/colonies/industrial estates, etc. could not be finalised due to different reasons such as reluctance of the host DISCOs and being sub-judice in the court of law. After amendment in the NEPRA Act, the authority has decided to further process these applications for which the applicants have been directed to apply for the grant of supplier license under the new regime.

Four applications were admitted for the grant of electric supply licence, including Lake City Management (Private) Limited (Lahore), Aujla & Associates Town Developers (Private) Limited (Gujranwala), Punjab Industrial Estate Development & Management Company (Sundar-Lahore) and Bahria Town (Private) Limited (Lahore).

The NEPRA Act 1997 has been amended to foster competition in the power sector by removing the exclusive right to provide distribution services in a given service territory. Therefore, the existing distribution licences are required to be modified to bring consistency with the statutory provisions of the NEPRA (Amendment) Act, 2018 and implement the market reforms introduced there under. In this regard, the Authority Proposed Modification (APM) proceedings for 13 distribution licencees were initiated.

During the period NEPRA determined tariff of DISCOs for the FY17 and FY18, including adjustment of Multi-Year Tariff (MYT) of IESCO, FESCO & LESCO and impact of variation in Power Purchase Price (PPP) till June 30, 2018.

Request of the federal government for determination of uniform consumer-end tariff, as per the amended NEPRA Act, was also decided in December, 2018, and notified by the federal government with effect from January 1, 2019. Quarterly adjustments in the determined tariff of DISCOs for the period July-December 2018, and monthly fuel cost adjustments were also made.

The reconsideration request filed by the federal government against determination of motion for leave for review of MYT for the period July 1, 2016 – June 30, 2023, of K-Electric was decided by the authority and notified by the federal government in May 2019.

A detailed study was carried out to determine the circumstances and total number of fatal accidents occurring in DISCOs and K-Electric during the last seven years which revealed that 1169 fatal accidents occurred from July 1, 2011, to June 30, 2018. Accordingly, NEPRA professionals visited LESCO to identify causes and verify implementation of safety standards. Visit to K-Electric would be made soon.

NEPRA team visited K-Electric for physical verification of record pertaining to power supply outages occurring on August 20-21, 2017. Based on the inquiry, K-Electric was called to make a detailed presentation on the rollout plan regarding Smart Metering and Meter Data Management (MDM) for automatic recording of power outages. K-Electric committed to complete the project by November, 2019 and pledged to provide system generated reports by February, 2020.

In view of the amendment in NEPRA Act, 1997, NEPRA said it is anticipated that during the year 2019-20,  Performance Standards (Generation) Regulations, Performance Standards (Distribution) Regulations, Electric Power Supplier Regulations, Electric Power Trader Regulations, detailed SOP/Manual to carry out the investigation proceedings will be developed while revision of the Grid Code, 2005 by including technical standards for construction of electrical plants, electric lines and connectivity to the grid, grid standards for operation and maintenance of transmission lines and grid code for HVDC will be initiated.

NEPRA has established regional offices at all the provincial capitals in order to facilitate electricity consumers for speedy redressal of their grievances. The complaints received by the authority mainly relate to excessive and detection billing, delay in provision of connections and in replacement of defective meters, low voltage problem, slow augmentation of transformers, non-receipt of electricity bills, delay in replacement of damaged transformers, and excessive load shedding, etc.

Provincial Offices of Inspection (POI) have been established under Section 38 of NEPRA Act, 1997, and powers conferred on the electric inspector appointed by the provincial government under the Electricity Act, 1910, to make the determination in respect of disputes over metering, billing and collection of the tariff. Appeals against the decision/order of provincial office of Inspections are heard by the appellate board constituted by the authority.

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