Nepra fines QESCO, PESCO Rs75 million for load shedding, high losses

The National Electric Power Regulatory Authority (Nepra) has imposed fines totaling Rs75 million on the Quetta Electric Supply Company (QESCO) and the Peshawar Electric Supply Company (PESCO) for violations related to load shedding practices and failure to reduce transmission and distribution (T&D) losses.

As per reports, Nepra fined QESCO Rs50 million after investigations found that the utility was carrying out load shedding based on Aggregate Technical and Commercial (AT&C) losses, a policy not recognised under the Nepra Act, 1997, or the Performance Standards (Distribution) Rules, 2005.

The issue came to light during hearings on monthly Fuel Price Adjustments (FPAs) for distribution companies and K-Electric, when Nepra received multiple complaints about unscheduled load shedding.

The regulator found that QESCO was exceeding scheduled load shedding and had not improved the technical and financial performance of selected feeders over the past four years despite receiving operation and maintenance allocations.

Following legal proceedings, Nepra imposed the penalty through an order issued on April 3, 2024, citing violations of Rule 4(f) of the Performance Standards (Distribution) Rules, 2005, Section 21(2)(b) and (f) of the Nepra Act, and Article 11 of QESCO’s distribution licence.

QESCO later filed a review petition, which Nepra rejected, stating the company had failed to provide adequate justification. The authority directed the utility to stop AT&C-based load shedding and imposed an additional fine of Rs0.1 million per day for each day of continued violation until compliance.

Separately, Nepra imposed a Rs25 million fine on PESCO after reviewing the Circular Debt Report for June 2024 submitted by the Central Power Purchasing Agency-Guarantee (CPPA-G).

The report showed that electricity purchases by distribution companies fell to 115,142 GWh in FY2023-24, down 1 percent from the previous fiscal year. However, overall T&D losses increased to 18.31 percent from 16.84 percent, exceeding Nepra’s allowed average target of 11.77 percent by 6.54 percent.

These losses contributed around Rs276 billion to circular debt despite Rs163.1 billion allocated for network improvements.

For PESCO specifically, T&D losses increased to 38.14 percent in FY2023-24 from 37.54 percent in FY2022-23, raising financial losses to Rs97.2 billion from Rs78 billion.

PESCO cited challenges such as illegal connections, security issues in areas affected by militancy, a large domestic consumer base, staff shortages and operational constraints.

Nepra rejected these explanations, stating that the utility had failed to provide satisfactory responses to the show-cause notice and had not demonstrated improvement in losses and recovery performance.