ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Tuesday reserved determination on final test-run report of Competitive Trading Bilateral Contract Market (CTBCM), which will be formally operationalised soon.
The Nepra held a public hearing on the final test run report of CTBCM, where the representative of CPPA-G shared the final version of private sector energy market and the participants from different sectors also shared their views.
Industry leaders unite for urgent implementation of CTBCM regime
Stakeholders’ comments were mainly focused on: (i) timely operationalisation of the CTBCM and finalization of the Use of System Charges (UoSC); (ii) safeguarding the CTBCM from past liabilities like stranded costs arising due to legacy contracts; (iii) recommending tariff adjustments to accurately reflect costs and eliminate cross-subsidies; (iv) advocating for continuation of legacy contracts and accommodating “hybrid consumers”; (v) ensuring protection of existing wheeling agreements with private suppliers; (vi) dismissing concerns that CTBCM might lead to the collapse of DISCOs; (vii) emphasizing need for real-time data transparency to ensure fairness and efficiency in the market; (viii) calling for structural reforms, particularly the separation of DISCO wire and sales businesses; (ix) urging technical improvements in trading platforms, data access, grid infrastructure; (x) requesting clarity on contractual obligations, MCC amendments, & dispute resolution mechanisms; and(xi) highlighting concerns related to legacy generators & new institutional roles under the CTBCM.
According to the CPPA-G, the firm capacity of the thermal generation plants will be based on actual availability of the last three years during the system peak hours. The firm capacity of the thermal generation plants will be based on dependable capacity and a forced outage rate.
The existing methodology for determination of the initial firm capacity is provided in the approved Commercial Code, however consideration of actual availability of the last three years involves many operational issues due to structure of the legacy contractors.
In order to address practical issues, it was deemed appropriate to adopt a simplified method at the start of the market which is also aligned with the IGCEP.
The Authority was informed that all the formulas included in the approved Commercial Code for test run were tested in the market management system during the trial run.
Majority of originally approved formulas were executed successfully without any issue. However, in some formulas changes were made and these revised formulas were also tested successfully.
CPPA-G further noted that in the approved commercial code for test run, two congested zones (NTDC and KE were established.
CPPA-G argued that in consultative sessions held during the trial run, it was highlighted that the System Operator is responsible for safe and reliable operation of the grid system and it has visibility of the whole network, therefore, it is prudent to put this responsibility on the System Operator to identify the congested zones and get it approved from the Authority.
The CPPA-G maintained that it is justified to delay the compensation till the System Operator identifies the congested zones within three months of the CMOD as per the provisions of revised Commercial Code.
Chairman Nepra highlighted the issue of manpower retention in System Operator and mentioned that highly skilled human resource is leaving the System Operator. He pressed that considering the importance of System Operator function, an urgent and amicable resolution of this issue is essential.
The CPPA-G provided detailed rejoinder addressing stakeholder concerns; (i) observations regarding stranded costs during market transitions were acknowledged, and a proposal for burden sharing among consumers was put forward as a viable solution; (ii) current power purchase agreements would be honored under the new market framework; (iii) claims of data exchange delays were refuted.
Anticipated advantages of the CTBCM were highlighted, including enhancements in power sector performance, reduced payment pressure on distribution companies, heightened transparency, and potential reductions in circular debt; (iv) CTBCM to enhance performance through strategic investments and improved planning practices; (v) separation of wire and sale business was acknowledged as a future objective; (vi) positive outcomes such as economic growth, job creation, and circular debt reduction were expected; (vii) specific feedback on attracting new participants, capacity payment reform, technical enhancements; and (viii) Use of System Charges (UoSC), cross-subsidies, bilateral contracts, data transparency, dispute resolution, stakeholder engagement, losses, system peak hours, consumer tariff impacts, and security cover returns was addressed.
Copyright Business Recorder, 2024
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