Key Takeaways
- Speakers questioned the new electricity charges system at a seminar.
- They called for greater clarity and non-discriminatory treatment of consumers.
- Experts highlighted concerns about the tariff structure and its impact on industrial consumers.
ISLAMABAD: At a seminar on Tuesday, energy experts and industry representatives raised significant concerns over the newly introduced electricity charges system in Pakistan. The seminar, titled 'Powering Change: UoSC Finalisation and the Dawn of CTBCM in Pakistan,' was jointly organised by the Sustainable Development Policy Institute (SDPI) and the Pakistan Renewable Energy Coalition (PREC).
The Use of System Charges (UoSC) framework, recently finalised by the National Electric Power Regulatory Authority (NEPRA), is a key component of the Competitive Trading Bilateral Contract Market (CTBCM). This reform aims to allow eligible consumers to purchase electricity directly from competitive suppliers, rather than through their local distribution company.
Muhammad Ayub, former Managing Director of the National Transmission and Despatch Company (NTDC) and former Chief Executive Officer of KP Transmission Company, expressed reservations about the UoSC components tied to network infrastructure. He suggested that NEPRA should require at least a 10-year loss-calibration assessment for new transmission lines before finalising related charges.
Ayub also raised concerns about how supply disruptions and network faults would be reflected in billing mechanisms. He warned that the recent formation of separate provincial electricity regulatory authorities in Sindh, Khyber Pakhtunkhwa, and Punjab could complicate the implementation of a nationally coordinated competitive trading market, given the need to reconcile decisions across multiple regulatory bodies.
Engineer Ubaid-ur-Rehman Zia, Head of the Energy Unit at SDPI, highlighted the extensive debate around determining an ideal set of charges for transmission and distribution companies. He stated that the seminar would bring together stakeholders to explore the gaps and shortcomings that have emerged following the market liberalisation reforms, particularly with respect to the tariff structure applied to consumers using transmission and distribution network services.
Muhammad Usman Bin Ahmad, Energy Transition Officer at Alternate Development Services (ADS), presented a detailed technical breakdown of the UoSC components, including transmission and distribution charges, transmission and distribution loss reflections, cost adjudication, and the standard cost.
The speakers at the seminar emphasised the need for a transparent system and called for ensuring a non-discriminatory treatment of consumers. They warned that if the current trajectory of rising UoSC components, losses, and associated charges continued, the resulting tariff would eventually become unaffordable for industrial consumers under any market structure, including CTBCM.
The seminar underscored the importance of addressing recovery and losses first, including through privatisation or restructuring of specific loss-making distribution circles, rather than adding new charges to offset those losses.
The CTBCM was designed to introduce competition among power sector participants and was never intended to directly benefit ordinary consumers.
Muhammad Ayub, Former Managing Director of NTDC and former CEO of KP Transmission Company
