ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Wednesday announced the long – awaited determination on CTBCM Final Test Run (FTR) and Market Commercial Code, a concrete step towards operationalization of electricity trading market in the country
This determination has been finalized after months long consultation with experts and all stakeholders including industry. NEPRA”s entire team led the Authority and experts made it possible after untiring hard work, consultation and best international practices.
” Good job Mr. Bhutto and all team associated with this work. Lot of effort and brain storming has been put in. Let’s hope that this step pawys way for a prospering competitive market in Pakistan,” said one of the power sector experts, residing outside Pakistan.
The following stakeholders namely All Pakistan Textile Mills Association (APTMA), Arzachel Pvt. Limited (Arzachel), Gul Ahmed Energy Limited (GAEL), K-Electric Limited (KE), Multan Electric Power Company (MEPCO), Pakistan Association of Large Steel Producers (PALSP), Amreli Steels, Board ofInvestment (BOI), Punjab Power Development Board (PPDB), Pakistan Atomic Energy (PAEC), National Power Control Center (NPCC/SO) of the National Transmission & Despatch Company (NTDC, now NGC), and Korangi Association of Trade and Industry (KATI), Khyber Pakhtunkhwa Textile Mills Association (KPTMA) gave valuable suggestions for improvements in the draft CTBCM.
APTMA supported CTBCM for its potential to lower electricity costs, facilitate transition to net-zero, and preserve export competitiveness. It cautioned against burdening CTBCM with stranded costs or legacy inefficiencies that could make B2B contracts unviable and urged protection of legacy wheeling contracts and inclusion of hybrid consumers. APTMA argued CTBCM would not collapse DISCOs, which are already failing to meet regulatory standards, but could improve their performance by shifting some demand away from the regulated sector, allowing DISCOs to better serve their remaining consumers. It stressed transparency and real-time data access as essential to avoid delays and cost distortions. Finally, APTMA emphasized the need for structural reforms, including separation of wires and supply businesses, to address circular debt, contending that CTBCM with such reforms would stimulate growth, reduce inflation, lower circular debt, and create fiscal space for welfare measures.
KATI emphasized that UoSC charges must be reduced to Rs. 8-10/kWh to ensure CTBCM’s viability, objecting to the transfer of DISCO inefficiencies and extraordinary cross-subsidies onto industry. It called for strict verification of testrun action items with continuous monitoring, robust IT infrastructure with certified backups, consolidation of bank accounts, and standardized terminology aligned with international practice.
According to the determination, Market Operator (MO) submitted that all preconditions for operationalization of CTBCM had been completed by the relevant entities. The Market Management System (MMS) had been fully developed, rigorously tested, and operational since June 2022, producing monthly settlements without significant difficulties. It was submitted that MO had formed a committee to specify benchmarking parameters for the MMS and was coordinating with donor agencies to complete this activity by the end of 2024. Further to the said, MO stated that considerable progress has been made in implementing the merit order on a daily basis, even though it is not a precondition for Competitive Market Operations Date (CMOD), but necessary IT infrastructure has been developed and is undergoing testing.
Regarding the enrolment of market participants and service providers, MO received applications from all DISCOs, with applications from KE and NGC still pending. Draft agreements had been submitted to NEPRA for review, and MO had requested the Authority to instinct KE and NGC to submit their enrolment applications. The last step involved signing Market Participation Agreements (MPAs) with existing SoLRs and Service Provider Agreements (SPAs) with network licensees. MO proposed that these entities be declared deemed Market Participants/Service Providers and be” directed to sign the respective agreements within six months of the CMOD. Later on in August 2025, MO informed that its bank accounts i.e., security cover account and settlement guarantee cover account required for market settlements as mentioned in the MCC have been operationalized.
SO submitted that action items pertaining to it have been completed.
KE commented that completion of its action items is linked with the approval of CTBCM Integration Plan and will be completed in accordance with the same.
RE first submitted the successful completion of the twenty-four action items is essential for the effective implementation of the CTBCM. Given the completion of the FTR, a definitive date for the CMOD may be declared to avoid any unnecessary delays that could hamper the operationalization of competitive wholesale market.
The Authority has examined the FTR report, as well as subsequent submissions during the proceedings and is satisfied that the action items approved for the test run stand completed except those discussed in the succeeding paragraphs.
The two pending actions are (i). enrollment of market participants and service providers; (ii). benchmarking of MMS with those of international equivalents. In this regard, the Authority has accepted the request of MO for declaring the DISCOs, KE, and NGC as deemed Market Participants and Service Providers for their respective roles under CTBCM. These entities shall execute Market Participation Agreements and Service Provider Agreements with the MO within three (03) months from the date of issuance of this determination. Regarding benchmarking of MMS, the Authority allows a similar extension of three (03) months for the completion of this action item. Regarding action items linked with KE, the directions of the CTBCM Integration Plan approved vide determination of the Authority dated May 26, 2025, shall be followed in letter and spirit.
In addition to the foregoing, the Authority has noted that prospective market participants, such as industrial chambers, associations, bulk power consumers and generators, are not adequately aware of the CTBCM design and its features. Such knowledge gaps could hinder their meaningful participation in the market. The Authority therefore finds it imperative to direct that within one month of CMOD and in coordination with NEPRA team, the 1SMO shall initiate a structured capacity-building campaign through workshops, seminars and interactive sessions in major cities, with the initial phase to be completed within three (03) months. This campaign shall initially focus on generators, prospective competitive suppliers, BPCs, industrial associations and chambers of commerce, etc., covering eligibility requirements for market participants, types of contracts, security cover, trend of marginal prices, balancing mechanisms, firm capacity certification, open access charges recovery mechanism, captive and merchant generation. The MO shall submit periodic updates to the Authority on all actions and measures taken in pursuance of this direction.
The Authority further observes that transparency of information is a fundamental requirement for the efficient functioning of a competitive electricity market. Timely access to settlement statements, marginal prices, and related reports is essential for market participants to make informed decisions, assess market outcomes, and ensure accountability. The Authority hereby obligates ISMO to ensure the provision of complete, accurate, and publicly accessible market data, thereby upholding the principles of transparency, fairness, and informed participation. Accordingly, the ISMO shall, on the date of CMOD, publish on its website the results of the FTR, including settlement statements and marginal prices for the preceding two years.
The Authority determines that the majority of action items have been completed, thereby warranting the declaration of CMOD. However, in terms of Strategic Directive 88 of the National Electricity Plan, the declaration of CMOD is contingent upon the determination of open access charges under Strategic Directive 87. Subsequently, the Federal Cabinet, vide its decision dated July 29, 2025, amended the Strategic Directive 87, and bifurcated the open access charges into two, namely grid charges and the stranded cost framework. Under the new amendment, the National Electricity Plan provides that the grid charges will be approved by the Authority, while the stranded cost framework will be issued by the Federal Government. Accordingly, the Authority decides that the CMOD shall be the later of(i) the date of determination of grid charges by the Authority; or (ii) the date of issuance of the Framework/Policy Guidelines by the Federal Government under National Electricity Plan.
MO submitted that the basic purpose of the trial run was to rigorously test the IT infrastructure by conducting transactions on the same. The MO and the SO have been conducting all the transactions using these systems since June 2022 and have successfully processed billions of records to produce the settlements on monthly as well as annual basis. During the test run, these systems have been continuously improved in order to cater to the needs of the competitive market. Regarding the backup or alternative measures, it was reported that MO is following state of the art system security and data protection protocols and there are backup and restoration procedures in place in case of any system failure. Reportedly, the IT systems and protocols are duly certified under the relevant standards. The market settlements are based on the (i). metering data collected through the secured metering system (SMS) installed at Common Delivery Points (CDPs) by NGC; (ii). System Operator Data Exchange Portal (SDXP); (iii). Marginal Price Application of the SO; and (iv). the MMS deployed by the MO. Further, the MO confirmed that all the aforementioned systems remained functional throughout the test run and have been tested successfully. Therefore, the absence of SCADA will not impact the successful implementation of the market.
The Authority is satisfied with the submissions of the MO and the SO regarding readiness of their IT systems to support CTBCM implementation. They have also demonstrated the readiness of their systems during the proceedings of the FTR. Further, as reported, the IT systems incorporate advanced security, data protection, and backup mechanisms. The Authority observes that MMS has been tested for all market transactions wherein settlements for DISCOs were based on actual data, whereas dummy contracts were used for BPCs.
The Authority has found it important that although SCADA deployment will enhance operational efficiency, its absence does not prevent the commencement of CTBCM. However, delays in SCADA are noted with concern, as it is critical for secure grid operations and market evolution, including ancillary services market. In this regard, ISMO is hereby directed to submit a comprehensive progress report on deployment of SCADA, covering its implementation status, bottlenecks, integration milestones, and measures for full functionality across generation, transmission, and distribution segments. The report shall demonstrate readiness for market evolution, including real-time spot markets and ancillary services market, and shall be submitted to the Authority by December 2025.
In addition, the Authority directs ISMO to ensure its IT systems remain fully updated, functional, and capable of supporting CTBCM operations at all times, with robust backup and disaster recovery mechanisms in place.
The Authority has noted the confirmation from MO that hypothetical scenarios were simulated to test the systems for prospective transactions by BPCs. The Authority observes that as the market has not yet commenced, therefore, actual data pertaining to market transactions of BPCs was not available. In the circumstances, reliance on hypothetical data for testing is considered adequate. In addition, as reported by the MO, the systems have been tested for real-time operational data of DISCOs and legacy contracts. This combination of simulated and actual testing demonstrates that the IT systems are sufficiently capable of processing and settling prospective contracts under CTBCM, consistent with the analysis.
The Authority observes that historically, the shifting of capacity invoices to a coincidental system peak based mechanism was constrained due to the absence of reliable metering data at all CDPs. Since the commencement of the test run in June 2022, metering data of coincidental system peaks for the last three (03) years has been recorded and is available, with the sole exception of CDPs between PESCO and TESCO. This dataset is sufficient to enable immediate transition to coincident-peak based allocation factors following the CMOD.
Moreover, the Authority does not find any merit in the proposal of the MO to delay implementation of the BMC, linking it with the transition to commercial allocation factors based mechanism. The availability of metering data for coincidental system peaks provides sufficient grounds for implementation of the BMC without delay. Accordingly, the Authority hereby directed the MO to implement the BMC as per the provisions of the MCC without any delay.
The Authority further finds that Strategic Directive 45 of the National Electricity Plan clearly vests responsibility for determining allocation factors in the Ministry of Energy (Power Division). Until such determination is issued, allocation factors shall continue to be calculated in accordance with the MCC. As an interim arrangement, the MO shall calculate allocation factors using coincident-peak data. However, this role is strictly temporary. Given the significant impact on DTSCOs and direct implications for the BME and BMC, the MO shall, without delay, engage the ministry forthwith for the formal determination of allocation factors. Ends
