ISLAMABAD: The government has decided to limit the contract validity period for net metering consumers to five years, with periodic revisions to the buyback rates, sources in Power Division told Business Recorder.
The Power Division, which has faced criticism from net metering consumers across the country due to the approval of a reduction in net metering buyback rates from Rs 27 to Rs 10 per unit, has dispatched policy guidelines to the power sector regulator.
On March 23, 2024, Prime Minister Shehbaz Sharif presided over a meeting on Net Metering and directed Power Division to remove confusion in the minds of people.
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According to sources, Nepra has been directed to revise the buyback rate from the National Average Power Purchase Price to Rs 10 per unit. Moreover, Nepra may revise the buyback rate periodically in the future.
The settlement mechanism will be updated so that imported and exported units are treated separately for billing purposes. The exported units will be bought at the approved buyback rate, while imported units will be billed at the applicable peak/off-peak rate during the monthly billing cycle.
Furthermore, in any monthly billing cycle, if the total bill for exported units exceeds the total bill for imported units from the distribution company, the net amount will be credited to the consumer in the subsequent billing cycle(s). However, there will be no provision for consumers to redeem or cash out the credited amount at any time.
Nepra will provide guidelines on the percentage or cap of hosting capacity on each distribution transformer and feeder, in accordance with a comprehensive study to be conducted by each distribution company within six months from the approval of these guidelines.
Nepra will also ensure the incorporation of updated inverter standards within the legal and regulatory framework. This will require all new net metering consumers to comply with these updated standards.
Compliant inverters will facilitate real-time grid interaction, including voltage and frequency regulation, anti-islanding protection to prevent back-feeding during outages, remote monitoring and control by the distribution company, and communication interfaces such as Wi-Fi, GSM, or IoT-based monitoring systems.
The capacity of the proposed Distributed Generation (DG) facility will not exceed the sanctioned load of the consumer’s premises. If the actual Maximum Demand Indicator (MDI) for export units exceeds more than 10% of the sanctioned load, all exported units will not be adjusted or credited to the consumer’s bill for the respective billing month as a penalty. The contract validity period for net metering consumers under the revised regulatory framework will be limited to five years.
Under the current net-metering regime, the net-metering consumers are avoiding the fixed charge component. This shift, along with the increase in CPP, decline in energy sales, and decrease in recovery of fixed charges, has contributed to the rise in electricity tariffs.
The quantum of net metering capacity has resulted in the sales reduction of approx. 3.2 billion kWh in FY-2024, impacting other consumers with an additional financial burden of approx. Rs 101 billion resulting in average increase of approx. Rs. 0.9/kWh in consumer tariff.
The financial impact on existing grid customers is projected to increase with an expected sales reduction of 18.8 billion kWh in FY2034, impacting grid customers with an added burden of approx. PKR 545 billion resulting in average increase of approx. Rs. 3.6/kWh in consumer tariff.
Additionally, pursuant to the proposed IGCEP 2025, the cumulative quantum of net-metering additions of more than 8,000 MW till FY-2034 has also been considered as forced addition thereby posing a detrimental impact on the principle of least cost expansion.
Copyright Business Recorder, 2025
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