ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has approved combined Power Acquisition Programme (PAP) for FY 2022-23 to FY 2026-27 submitted by power Distribution Companies (Discos) to the extent of committed projects and 500 MW Kapco which is required in lieu of the system constraints.
According to the determination, the Authority considered PAP in its regulatory meeting and admitted the same on April 26, 2023, and further decided to seek comments from the general public and stakeholders.
In this regard, comments were received from eight (08) stakeholders, ie, Uch Power (Private) Limited (UPPL), Uch-Il Power (Private) Limited (UPPL-II), Revenue Division, Federal Board of Revenue (FBR), JDW Sugar Mills Ltd., Unit-Il (JDW-II), JDW Sugar Mills Ltd., Unit-Ill (JDW-III), Private Power Infrastructure Board (PPIB), Ministry of Planning, Development & Special Initiatives (MoPD&SI) and Pakhtunkhwa Energy Development Organization (PEDO).
The public hearing in the matter was held on October 24, 2023, wherein representatives of XW-DISCOs, CPPA-G, National Power Control Centre (NPCC) of NTDC, Private Power Infrastructure Board (PPIB), interested stakeholders, and the general public participated and presented their point of view on the matter.
The IGCEP 2022-31 is also considered as a major input for PAP. Further, the Capacity Obligations Report issued by the Market Operator as part of the test run plan is another major input and the same is prepared as per procedure laid down in the MCC. The demand forecasts provided by Discos to the Market Operator are also in line with the MCC and Distribution Code.
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The CPPA- G argued that Discos PAP has not been prepared in accordance with IGCEP as required by the NE Policy 2021, as they have only taken committed projects and not considered projects required for cost reduction, stability and reliability of the overall system as given in approved IGCEP 2022-31.
The NEPRA observed that the PAP submitted by XW-DISCOs is not in line with the approved IGCEP 2022-31 and there is a significant difference to the tune of 8411 MW. Further, as stated during the Public Hearing by the NTDC, there is no confirmation with respect to the timely evacuation of the proposed projects to be connected at the transmission voltage level due to non-availability of the TSEP that can be firmed up through upcoming TSEP.
Further the Authority observed that since the PAP has been prepared based on the capacity obligations calculated during the test-run period, therefore, variance is expected based on the proposed amendments in Market Commercial Code (MCC) and methodology for calculation of COs as also confirmed by the Market Operator in its submission.
In addition, it has also been observed that the demand forecast of XW-DISCOs submitted in the PAP differs from that submitted in their investment plans. Given this the Authority is of the considered opinion that largely PAP does not meet the requirements of the Procurement Regulations.
The NTDC as System Operator submitted that PAP presented by the XW-DISCOs for FY 2022-23 to FY 2026-27 is not synchronized with IGCEP 2022-31: the IGCEP was developed in the summer of 2022 when international fuel prices were very high.
On the demand side an optimistic growth rate was considered based on higher GDP forecasts than was actually realized in the base year of 2022/23. PAP was developed later and independently using bottom-up demand growth estimates from Power Market Surveys (PMS).
The upcoming IGCEP 2024-33 will be submitted by the System Operator as Board approval has been secured. The demand forecast for the first five years would be the recently updated PMS forecast, same as the PAP. Therefore, for the first five years of the IGCEP, there will be no difference in demand forecasts for IGCEP and PAP.
After going through available records and deliberations during the public hearing, the Authority approved the PAP to the extent of committed projects and 500 MW KAPCO which is required in lieu of the system constraints with the following directions: (i) tariff for the approved projects/procurements, if not already determined, shall be subject to separate tariff proceedings in accordance with the regulatory framework and subsequent proceedings; (ii) DISCOs to ensure compliance of the next iteration of the PAP with the NEPRA (Electric Power Procurement) Regulations, 2022 including, but not limited-DISCOs to submit financial analysis/impact of the projects proposed in the PAP on consumer end tariff including the power purchase price, capacity purchase price and energy purchase price within next iteration of the PAP to alignment with the approved IGCEP, TSEP, Investment Plans, and Capacity Obligations Report; (iii) DSCOs to submit status of evacuation arrangements for the projects proposed in the PAP on the performa with the determination and clearly identify the mode of procurement for firm as well as indicative projects along with justifications thereof; (iv) DISCOs to consider the impact of rooftop solar and captive generation in the next iteration of the PAP.
DISCOs to ensure consultation with the IAA prior to submission of the PAP to the Authority especially with respect to timelines for conducting competitive auctions, where applicable, for proposed project in the PAP; and (v) DISCOs to coordinate with KEL for reflection of the capacity quantum to be supplied to KEL from National Grid in the PAP so that no misalignment with respect to the quantum of supply is observed between the two PAPs.