NEPRA approves National Grid Company's three-year UoSC for FY2022-25, cuts tariff claim by Rs146bn

ISLAMABAD:The National Electric Power Regulatory Authority (NEPRA) has approved the National Grid Company's three-year Use of System Charges (UoSc) for FY2022-23 to FY2024-25 after reducing its claimed revenue requirement by nearly Rs146 billion.

The National Electric Power Regulatory Authority has approved the National Grid Company Pakistan Limited's multi-year Use of System Charges for FY2022-23 to FY2024-25 after allowing a cumulative revenue requirement of Rs332.3 billion against the company's request for Rs478.28 billion, reducing its claim by nearly Rs146 billion. The approved revenue requirement includes Rs81.466 billion for FY2022-23, Rs95.604 billion for FY2023-24 and Rs155.230 billion for FY2024-25.

The regulator (NEPRA) approved Use of System Charges of Rs382.15 per kilowatt per month for FY2022-23, Rs454.94 per kilowatt per month for FY2023-24 and Rs710.25 per kilowatt per month for FY2024-25 based on the approved system demand for each financial year.

During the proceedings, Central Power Purchasing Agency (Guarantee) Limited (CPPA-G), All Pakistan Textile Mills Association (APTMA, the Punjab Power Development Board and other stakeholders raised concerns over the proposed tariff, arguing that higher transmission charges could increase electricity costs, hurt industrial competitiveness and discourage electricity demand from the national grid at a time when consumers are increasingly shifting to alternative energy sources.

Besides determining the tariff, NEPRA issued a series of directions to improve the performance of the National Grid Company. The regulator directed NGC to ensure timely completion of transmission projects, remove network constraints affecting economic merit order dispatch, improve evacuation of electricity from upcoming thermal, hydel, wind and solar power projects, install Secured Metering Systems at all remaining Common Delivery Points, implement reliability indices for future projects and submit regular compliance reports to the Authority.

The Authority also instructed NGC to strengthen monitoring and risk management systems, maintain complete compliance with the Grid Code, preserve transparent operational records, hire an independent third party to monitor NEPRA-approved investments and submit annual audit reports before filing future tariff petitions. It further directed the company to execute Transmission Service Agreements with DISCOs, K-Electric and other relevant entities to clearly define the responsibilities and liabilities of all stakeholders.

The determination also carries a separate note by Member Tariff and Finance Amina Ahmed, who disagreed with the Authority's treatment of Rs19.752 billion payable to CPPA-G. She argued that the amount should not have been treated as a loan for calculating the company's equity because doing so unnecessarily reduced the equity base and, consequently, the return allowed to the company. She also called for replacing the existing methodology based largely on historical financial statements with a more forward-looking, performance-based framework and stressed that multi-year tariff determinations would improve regulatory predictability and stability.

The Authority has forwarded its determination to the federal government for notification in the official gazette under Section 31(7) of the NEPRA Act.