By Staff Reporter
ISLAMABAD: Pakistan’s power regulator approved uniform grid-access fees for large electricity users, clearing a final hurdle before the country launches competitive trading in a market long dominated by state-run distributors.
The National Electric Power Regulatory Authority, in a decision issued on Monday, set use-of-system charges ranging from 6.23 rupees to 19.62 rupees per unit for bulk power consumers that agree to buy electricity through an upcoming wholesale auction. The fees cover the cost of moving power across transmission and distribution networks regardless of which company generates it, a mechanism regulators consider essential to opening the market to private suppliers.
The ruling paves the way for the Independent System and Market Operator, a newly created entity overseeing grid operations, to auction 400 megawatts of electricity capacity within the next few months. The government has earmarked 800 megawatts for sale in two phases as part of a broader push toward a bilateral trading system in which power buyers and sellers negotiate contracts directly rather than through state distributors.
Bulk consumers who choose not to participate in the auction will pay substantially more. Nepra approved additional stranded-cost charges of 12.94 rupees per unit for consumers connected at 11 kilovolts and 16.35 rupees for those at higher voltage levels, pushing total charges as high as 32.56 rupees per unit for some categories. The regulator said the gap is designed to reflect the fixed network costs that must still be recovered from consumers who opt out of the competitive framework while continuing to draw power from the grid.
A fixed grid charge of 1 rupee per kilowatt per month, based on each consumer’s sanctioned load, will apply across all categories.
The decision resolves a dispute over how to treat K-Electric, the privatized utility serving Karachi, within the new pricing structure. Pakistan’s Power Division had asked Nepra to apply the uniform charges to K-Electric while recovering any resulting revenue shortfall from consumers who use open-access arrangements, rather than through a government subsidy. Nepra rejected that approach, ruling that isolating the cost recovery to open-access users would discriminate against them relative to comparable customers served by distributors of last resort. The regulator ordered instead that the charge be spread across all consumers, both those participating in the competitive market and those remaining with traditional suppliers.
Nepra applied similar reasoning to a separate financing question. The Power Division had proposed collecting cost differences among distribution companies exclusively from consumers using the new wheeling arrangements, then reconciling the amounts annually. The regulator again declined, saying it would settle those inter-company differentials through the same mechanism already used to manage gaps in the uniform consumer tariff, without requiring a new formula.
The debt-servicing surcharge, a federal levy collected by power suppliers under the Nepra Act, will apply to competitive-market consumers on the same basis as it applies to regulated customers, Nepra said. The regulator directed the federal government to keep the surcharge within limits set by law.
On technical losses, Nepra set a uniform transmission and distribution loss factor of 8.04% for consumers connected at 11 kilovolts, below the 8.42% the Power Division had proposed, and 1.51% for those at 132 kilovolts, matching the Power Division’s recommendation. The regulator acknowledged that applying uniform loss rates across distribution companies with varying actual losses could create energy surpluses in some utility territories and shortfalls in others, but said it would not approve an adjustment mechanism until the system operator’s proposal receives further review from stakeholders. Nepra ordered the Power Division, the distribution companies, K-Electric and the system operator to develop a mechanism for handling those energy differentials ahead of future rate proceedings.
The regulator instructed distribution companies to submit their own use-of-system charge filings based on 2026 tariffs, along with demand and sales data needed to calculate rates for consumers seeking to join the wholesale market.
Pakistan set the pricing framework in motion after declaring the wholesale market commercially operational on Jan. 22, with the first auction originally slated for June. The Power Division had pressed Nepra to move quickly, arguing in a May 25 filing that liberalization could not wait for further delay. Under conditions attached to Pakistan’s International Monetary Fund program, the government had committed to finalizing auction guidelines by December and securing Nepra’s approval of uniform wheeling charges by January — both benchmarks now met, though later than originally scheduled.
The decision must still be published in Pakistan’s official gazette. Under the Nepra Act, the federal government has 30 days from notification to publish the ruling; if it does not, Nepra will publish the decision itself.
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