ISLAMABAD: National Electric Power Regulatory Authority (Nepra) is facing a frustrating situation in so far as approval of amendments to Net Metering Regulations is concerned as the “affected” influential parties have pressurized the government to put the proposed decision on hold, well-informed sources told Business Recorder.

Power Division, sources said, has already conveyed its dismay to the regulator on its “speed” on Net Metering decision after received “misperceived” complaints from many influential stakeholders, including Federation of Pakistan Chambers of Commerce and Industry (FPCCI), approached the Prime Minister’s Office to stop the regulator from announcing its decision.

Meanwhile, Competition Commission of Pakistan (CCP) in a letter to Chairman Nepra claims that it has also received concerns regarding recent proposed/draft amendments, in sub-regulation 5 of Regulation 14 of the National Electric Power Regulatory Authority (Alternative & Renewable Energy) Distributed Generation and Net Metering Regulations, 2015.

The amendments as proposed by Nepra envisage that the price payable for net kWh by Discos to Distributed Generators will be the National Average Energy Purchase Price (NAEPP) instead of the National Average Power Purchase Price (NAPP).

Net metering: Nepra to protect interests of ‘all’ consumers

According to CPP, currently the National Average Power Purchase (NAPP) of Rs. 19.32kWh is applicable, which as per the amendments will stand replaced by the National Average Energy Purchase Price (NAEPP), which is Rs 9/kWh.

The government, since 2006, has encouraged the development of renewable energy projects by offering various incentives under federal government policies. A large proportion of the existing renewable capacity has been set up under the Renewable Energy Policy 2006 framework and, more recently, the Alternative and Renewable Energy Policy 2019 offers a similar array of incentives to increase the quantum of renewables in energy mix.

To this end, CCP has proposed a meeting with senior officer or officers concerned to understand viewpoint of the regulator on different issues brought to its notice.

The ARE Policy 2019 sets ambitious, albeit achievable, targets, promising a 20 percent renewable energy generation capacity by 2025 and at least 30 per cent by 2030. Broadly, for the issues/concerns highlighted, it is apprehended that the net metering policy under consideration of revision, if formalized, may act to the detriment of those who produce and consume and would attract competition concerns: (i) the prosumers/Distributed Generators (‘DGs’) have made investment in solar systems premised on policy provisions that are now being altered to their detriment. Such amendment would result in discrimination of treatment against DGs particularly keeping in view the existing agreements/arrangement with their respective Discos and a Distributed Generator Licence from Nepra; (ii) DGs sell excess units generated to DISCOs and are thus engaged in the provision of a service and are expected to be treated at par with other power generation companies, IPPs, CPPs etc. The proposed amendment puts these DGs at a disadvantage vis-a-vis other generation companies who are selling electricity to the system at Energy Purchase Price (EPP) plus Capacity Purchase Price (CPP); and (iii) the proposal to provide only EPP payment to DGs also seems counter-intuitive since solar energy does not have any EPP component and it does not consume any fuel or have similar associated variable costs.

According to CCP, as per Nepra’s own figures regarding the capacity and energy invoiced by power generators, the entire amount invoiced by solar generators is under the head of capacity charges.

CCP further argues that under the proposed amendments, seemingly the DGs are not to be treated at par with Solar IPPs. The average EPP+CPP for solar IPPs is calculated by Nepra at Rs 21.22/kWh. Out of this, the EPP component is zero and CPP is Rs 21.22/kWh. Whereas, in some instances, the solar IPPs are paid up to Rs 34/kWh. Contrary to this, the revised rates for DGs are at Rs 9/kWh.

CPP maintains that excess units produced by DGs are purchased by the respective DISCOs which, after this proposed amendment, will essentially purchase units at Rs 9/kWh from DGs and sell these back to other end user consumers on the grid at a significant mark-up approximately at Rs 28.07kWh.

Pakistan’s energy sector is dependent on imported fuels, given limited domestic energy sources. Costly thermal power accounted for the highest share (60%) of Pakistan’s electricity generation mix in 2021-22 with share of renewables standing at a meagre 4%. As per Nepra’s figures, in the FY21-22, Pakistan spent a total of Rs 1.29 trillion on fuel costs for thermal based plants. DGs on the other hand exported 150.67 (MWh) in 2021-22 and resulted in savings of costly RFO or HSD run thermal plants.

Copyright Business Recorder, 2022

Comments

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Imran Sheikh Dec 20, 2022 12:09pm
If solar IPP's are paid between Rs.21 to Rs 34 per kwh to generate clean power, where is the justice in paying DG's doing exactly the same Rs. 9 per kwh? In all cases, the utility companies sell to captive consumers at a mark-up. So this is all about increasing their profits only. And they ask for approval for this rate reduction after committing to the higher rate earlier, to get DG's to invest in solar power production to add to their supply for selling on! Is justice no longer a part of the equation in Pakistan?
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Bilwani Dec 20, 2022 12:48pm
Yet an other mafia is waiting to hijack the energy sector depriving the SME to generate their own energy and the mafia buy at lowest possible while selling too high
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Haroon Dec 20, 2022 01:09pm
Incompetent bureaucrats trying to justify their fraudulent actions! I am glad that so-called 'influential' parties are standing up for what is right. Bureaucrats in Pakistan have no understanding of the ground-realities nor any expertise in the fields of energy or economics. No wonder this country plummets to new lows every day!
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Mushtaque Ahmed Dec 20, 2022 10:28pm
The entire IPPs saga is a story that has helped the favoured investors to skim the consumers to the hilt to the detriment of the national economy and the decision-makers were hand-in-glove to put up all fool-proof legal covers for the deal.
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Zahid Dec 21, 2022 07:17am
This is punishing those who helped Pakistan by investing in solar power for domestic use reducing load on national grid. They are being betrayed. Can we have faith in anything in this country?
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Kamran Dec 21, 2022 01:16pm
Do whatever you want. Now we know the power of self sufficiency. We will disconnect Govt Power Supply from our homes if this unjust regulation is imposed. We will shift the whole nation on self generated power including Solar, Wind, Hydal and other means of production depending on the geographical locations.
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Nasir Raza Dec 21, 2022 02:36pm
A non professional chairman of NEPRA is not aware alternate energy is the only and best solution to EXPENSIVE grid electricity world wide further atleast 50% conversion of residential consumer conversion on SOLAR and renewable energy is optimum point of solution
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jehanzeb Ahmad Dec 21, 2022 07:46pm
Nepra chairman should be removed for trying to destroy renewable energy in Pakistan.
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