ISLAMABAD : At least three provinces have reportedly raised concerns on Strategic Directive 87 of National Electricity (NE) Plan including the stranded cost approved by the Cabinet Committee on Energy (CCoE) presided over by the provinces, Newzshewz has learnt reliably.
The governments of Sindh and Balochistan have written letters to Power Division for not sharing the summary of CCoE whereas KP has also conveyed the similar sentiments through other official channels, sources added.
The CCoE presided over by the Prime Minister, Shehbaz Sharif has approved wheeling charges of Rs 12.55/kWh aimed at opening bilateral contracts between the suppliers and buyers, which was one of the demands of private sector.
A meeting presided over by the Finance Minister, Senator, Muhammad Aurangzeb endorsed the following recommendations for recovery of optimal wheeling charges from open access users opting for wheeling or open access: (a) uniform application of Grid Charges including Cross-Subsidy, as being paid by equally placed consumer of Supplier of Last Resort / DISCOs ;(ii) uniform application of Debt Service Surcharge (DSS), as being paid by equally placed consumer of Supplier of Last Resort / DISCOs; ( c) on the issue of stranded cost, the Committee agreed with the recommendation to allocate the 800 MW quantum through a competitive auction process based on contribution to stranded cost ; and (d.) for the implementation of the above, the amendments in Supplier Eligibility Criteria Rules and National Electricity Plan to be made.
In the final test run report implementation of CTBCM. the Committee The committee endorsed the following recommendations for recovery of optimal wheeling charges from open access users opting for wheeling or open access: (i) uniform application of Grid Charges including cross-subsidy, as being paid by equally placed consumer of Supplier of Last Resort / DISCOs ;(ii) uniform application of Debt Service Surcharge (DSS), as being paid by equally placed consumer of Supplier of Last Resort / DISCOs ;(iii) on the issue of stranded cost, the Committee agreed with the recommendation to allocate the 800 MW quantum through a competitive auction process based on contribution to stranded cost. and (iv) for the implementation of these recommendations, the amendments in Supplier Eligibility Criteria Rules and National Electricity Plan to be made.
Section I4A (4) of the Regulation of Generation, Transmission and Distribution of Electric Power Act 1997 provides that the Federal Government, in consultation with the Provincial Governments, shall prepare a national electricity plan and notify such plan once in five years. with proviso that Federal Government shall publish the draft inviting suggestions/objections within thirty days.
Accordingly, National Electricity Plan 2023-2027 , was formulated and notified via SRO No. 1284 of September 13, 2023. Strategic Directive (SD) #87 provides that the cost arising from open access (the “stranded cost”) shall be fully paid by the exiting consumer. However, the cost to be determined under this directive is on higher side which makes wheeling unviable.
In this backdrop, CCoE of November 22, 2023 constituted a Committee comprising Minister for Finance, Revenue & Economic Affairs (Convener), Minister for Commerce, Industries & Production, Minister for Power & Petroleum, Secretary Power Division, Member Energy, Ministry of Planning, Development & Special Initiatives, as members to deliberate on the issue of Wheeling Charges in a holistic manner and suggest viable way forward thereon, to the CCoE.
To bring up a complete proposal to the Committee, Minister for Power constituted a working group to undertake deliberations and stakeholder consultations on the wheeling charges . The working group recommended amendments in SD # 87 of NE Plan and corresponding changes in Rule 5 of the Eligibility Criteria (Electric Power Supplier) Rules, 2023. As per mandate of the working group to hold consultations and in accordance with the requirements of the Act ibid, the amendments were circulated through official correspondence to relevant ministries/divisions, provincial governments and NEPRA. The proposed amendments were also posted on the Ministry’s website to invite public comments.
Under these amendments, the Federal Government shall issue frameworks/policy guidelines to deal with stranded costs. Such frameworks will include a mechanism for transparent and competitive auction to allocate the allowed quantum of demand and ensure social policy objectives of the Federal Government. The initially allowed quantum of demand for wheeling has been set at 800 MW for a period of five years, subject to revision by the Federal Government under the framework/policy guidelines. The amendments further provide that in the absence of such framework/policy guidelines, all open access users will be allowed to undertake wheeling by paying the stranded costs equal to the generation capacity charges paid by equally placed consumers of the supplier of last resort.
According to plan, the grid charges, shall include, but not limited to, the use of transmission and distribution system charges, market and system operator fee, metering service charges and cross subsidy. Such grid charges shall be imposed on a uniform basis upon all bulk power consumers and any other open access user to provide level playing field to equally placed bulk power consumers of the respective supplier of last resort.
The frameworks / policy guidelines issued by the Federal Government, from time to time, stipulating the mechanism to deal with stranded costs on account of market liberalization and open access. The framework / policy guidelines shall be applicable for a period of five years and the quantum of demand allowed for wheeling under the framework/ policy guidelines shall be 800 MW, such quantum may be revised by the Federal Government based on market realities and the need for further liberalization.
The frameworks/ policy guidelines shall (a) reflect market realities;(b) include measures and incentives to facilitate open access / wheeling of an allowed quantum of demand for a given period under the CTBCM ;(c) provide mechanism for a transparent competitive auction process for allocation of the allowed quantum and applicability of contribution to the stranded costs thereto; and (d) such other matters as deemed necessary to safeguard consumer interests and advance the economic and social policy objectives of the Federal Government. The Authority shall approve the competitive auction results within thirty days of submission by the Independent System and Market Operator of Pakistan (Guarantee) Limited (ISMO).
In the event the framework / policy guidelines is not in field or the quantum of demand allowed for a particular period has been exhausted or any person intends to avail open excess without the competitive auction process stipulated in the frameworks / policy guidelines, then the Authority shall, on an application made by respective licencee or ISMO( as the case may be) determine other costs equal to the total generation capacity charges recovered from the equally placed bulk power consumers of the suppliers of last resort, either in a volumetric form (kWb) or through fixed charges. Such costs shall continue to be paid in the said manner till such time as may be reviewed by the Federal Government as per the procedure laid down in the applicable rules.
