Nepra clears key hurdle to competitive power market

• Approves uniform charges for all Discos; participating bulk power consumers to pay Rs6.23-Rs19.62 per unit • Clears path for first 400MW open-access electricity auction ISLAMABAD: The Nat­ional Electric Power Regu­latory Authority (Nepra) on Monday approved use of system charges (UoSC) ranging from Rs6.23 to Rs19.62 per unit for bulk power consumers (BPCs) of all distribution companies participating in the competitive electricity trading market. The approval paves the way for open-access consumers to participate in an upcoming 400-megawatt auction. The consumers will pay the fee to the national grid to transport electricity from the source to the user. The charge includes transmission and distribution costs, fixed grid charges and cross-subsidies. Put together, a B-3 industrial consumer will be charged Rs6.23 per unit by the national grid, while a B-4 industrial consumer will pay Rs9.09 per unit. These charges will be in addition to the power supply rate, including generation costs, to be settled between private-sector power suppliers and BPCs. Currently, there are more than 3,000 BPCs across the country. The UoSC for C-3 and C-2 single-point distribution consumers is set bet­ween Rs14.95 and Rs19.62 per unit. General supply consumers in the A-2 and A-3 categories will be charged Rs19.14 per unit. Bulk power consumers who choose not to participate in the competitive wheeling auction will face significantly higher transport rates, ranging from Rs19.17 to Rs32.56 depending on their category. Non-participating B-3 and B-4 consumers will be charged Rs19.17 and Rs25.45 per unit, respectively. C-2 and C-3 consumers will pay Rs31.30 and Rs32.56, while A-2 and A-3 categories face a Rs32.08 charge. A fixed grid charge of Rs1 per kilowatt per month, based on sanctioned load, will apply to all categories regardless of whether they participate in the competitive auction. The uniform rate announcement for all distribution companies, incl­uding K-Electric, is aimed at formally launching the competitive wholesale elec­t­ricity market. Under the first phase, the Inde­pendent System Oper­ation (ISMO), a new power division entity, will auction 400MW of electricity within the next few months. The government has already allocated 800MW for auction in two phases. Nepra issued the determination after reviewing submissions from the Power Division, ISMO, K-Electric and BPCs regarding the mechanism for determining and settling UoSC, including inter-Disco differentials, cross-subsidies and transmission and distribution (T&D) losses. The Power Division had proposed that the impact of inter-DISCO differentials arising from uniform application of UoSC should not be imposed solely on wheeling consumers. Nepra had earlier circulated a draft adjustment mechanism among relevant stakeholders for settling inter-Disco differentials. The regulator said the key principle was to ensure that UoSC applicable to open-access consumers remained equal to those applicable to similarly placed consumers of suppliers of last resort (SOLRs). Based on the T&D losses of individual Discos, Nepra determined a uniform loss factor of 8.04 per cent at the 11kV level. For consumers connected at 132kV, the regulator approved a uniform loss factor of 1.51pc, as suggested by the Power Division. Nepra ruled that the additional charge would apply to all consumers, inc­luding open-access consumers and SOLR consumers, to cover differences among distribution companies and K-Electric while maintaining uniformity. The federal government had already appr­oved framework guidelines for the wheeling auction of 800MW of electricity through bilateral competitive trading and to move towards integrated energy planning across Pakistan. Under the guidelines, 800MW of generation capacity will be sold through a competitive auction for five years. The volume will gradually increase after the initial trial phase, subject to government approval. Nepra was tasked with determining uniform wheeling and grid charges for bulk power consumers. ISMO will now formally conduct an auction for 400MW under a process approved by Nepra a few days ago. The entity will announce the auction calendar and detailed procedures within days, without imposing an upper or lower limit on bid values, which will remain fixed for one year. Under timelines set under the IMF programme, approval of the auction guidelines was targeted for December, while Nepra’s approval of uniform wheeling charges was scheduled for January 2026. Both deadlines have already been met. Published in Dawn, September 8th, 2026