1

Second Workshop on Power Sector Reform –

Role of NEPRA

Lahore: November 12, 2010

2

FUNCTIONS OF NEPRA

As per Section 7(1) and (2) of NEPRA Act, the Authority shall be exclusively responsible for:

Grant Licenses for Generation, Transmission & Distribution of electric power;

Prescribe procedure and standards for investment programs by Generation, Transmission and Distribution Companies;

Prescribe and enforce performance standards for Generation, Transmission and Distribution Companies;

Establish a uniform system of accounts by Generation, Transmission and Distribution Companies;

Prescribe fee including fees for grant of licenses and renewal thereof;

3

Prescribe fines for contravention of the provisions of this Act;

Perform any other function which is incidental or consequential to any of the aforesaid function.

As per Section 7(3) of NEPRA Act, the Authority shall: Determine tariff, rates, charges and other terms and

conditions for supply of electric power services by the Generation, Transmission and Distribution Companies and recommend to the Federal Government for notification;

FUNCTIONS OF NEPRA Contd…

4

Regulation of Generation, Transmission and Distribution of Electric Power Act (XL of 1997): to regulate generation, transmission and distribution of electric power.

Application Modification Procedure Regulations, 1999: to standardize the manner for submitting applications and filing petitions to NEPRA.

Licensing Generation Rules, 2000: to streamline the process for becoming a licensee under NEPRA Act.

Tariff Standards Procedure Rules, 1998 & Fees Pertaining to Tariff Standards & Procedure Regulations, 2002: to highlight the procedure of tariff determination and standards to be adopted.

REGULATORY INSTRUMENTS

5

National Electric Power Regulatory Authority Licensing (Distribution) Rules, 1999 & Eligibility Criteria for Consumers of (Distribution) Companies, 2003: to regulate the process of acquiring licenses by distribution companies.

Interim Power Procurement (Procedures and Standards) Regulation, 2005: to streamline the manner for acquiring permission for sale of power to transmission and distribution companies.

Performance Standards (Distribution) Rules, 2005: to provide standards of performance for distribution companies.

Performance Standards (Transmission) Rules, 2005: to provide the standards of Performance for transmission companies.

NEPRA Uniform System of Accounts Rules, 2009.

REGULATORY INSTRUMENTS Contd…

6

Under Section 7 (3) (a) of the Regulation of Generation, Transmission and Distribution of Electric Power Act (XL of 1997) NEPRA is exclusively responsible to determine tariff, rates, charges and other terms and conditions for supply of electric power services by the Generation, Transmission and Distribution Companies and recommend to the Federal Government for notification.

Discharging its responsibilities under Act, NEPRA has to determine/approve Tariff in respect of Generation, Transmission and Distribution Companies.

TARIFF DETERMINATION

NEPRA determines tariffs for the three sectors namely Generation, Transmission and Distribution:

7

Currently NEPRA’s determinations include: Quarterly determination in respect of 9 Distribution Companies

including KESC. Monthly Fuel Price Adjustment in respect of 9 Distribution

Companies including KESC. Generation Tariff determinations in respect of Public Sector

Generation Companies, IPPs, WAPDA Hydel etc. Tariff determination in respect of NTDC. Fortnightly Fuel Price Adjustments in respect of GENCOs,

IPPs etc. Adjustment of determined generation tariff of IPP at COD.

TARIFF DETERMINATION

During 2009-10, the Authority made 311 determinations/adjustment regarding tariff of generation and distribution companies. These included 41 tariff determinations, 3 decisions on review motions and 267 tariff adjustments in respect of Fuel Price, CPI, COD, tax and quarterly indexation.

Contd…

8

All statutory requirements have been complete for all DISCOs and KESC.

Forms the basis for the remaining quarters of the year as Key parameters are required to be set

Policy questions have to be addressed

- Tariff rationalization, Subsidy and cross subsidy

Experts appointed by the USAID were specifically tasked by NEPRA to provide inputs on the Cost of Service Study for different DISCOs.

DISCOs’ 1ST QUARTER TARIFF DETERMINATIONS 2010-11

9

Review of the performance of DISCOs during 2009-10

Determination of 4th Quarter, 2009-10

FESCO 8 September, 2010

QESCO 8 September, 2010

GEPCO 8 September, 2010

HESCO 9 September, 2010

IESCO 9 September, 2010

LESCO 8 September, 2010

MEPCO 18 October, 2010

PESCO 20 October, 2010

DISCOs’ 1ST QUARTER TARIFF DETERMINATIONS

10

Determinations for all DISCOs and KESC for Q1 2010-11 will be made during November and early December, 2010.

Relevance of Ordinance # XIV dated 20 April, 2010 and tariff determination for the remaining period of 2010-11

Difficulties in quarterly determinations -- NEPRA’s views

All participatory and transparency requirements under the NEPRA laws also need to be satisfied for quarterly determinations. Court binds to conduct hearing for decision on Monthly adjustments.

DISCOs’ 1ST QUARTER TARIFF DETERMINATIONContd…

11

NTDC Tariff was determined in 2007. NTDC filed tariff petition subsequent to a series of NEPRA

letters. NTDC requested for extensions in time on different pretexts.

Hearing was held in October 2010, however it was adjourned due to information requirement from NTDC.

Major issues concern about losses in the transmission system.

Determination expected by February, 2011.

STATUS OF NTDC TARIFF

12

Subsequent to the directions of the Planning Commission:

• GENCO-I (JPCL): Multiyear tariff, Control Period up to 2014.

• GENCO-II (CPGCL):

Letter about the need for a multiyear tariff up to 2014 along with direction to file Tariff Petition sent on 18 August, 2010.

• Reminder to the above letter sent on 17 September, 2010.

• Response by CPGCL on 1 October, 2010 requesting for extension in time.

• Authority granted extension till 20 October and informed that on failure, suo-moto proceedings will be initiated.

• CPGCL requested for further extension on 20 October, 2010.

STATUS OF GENCOs’ TARIFF

13

GENCO-III (NPGCL):

Letter about the need for a multiyear tariff up to 2014 along with direction to file Tariff Petition sent on 18 August, 2010.

Reminder to the above letter sent on 17 September, 2010. Response by NPGCL on 1 October, 2010 requesting for

extension in time. Authority granted extension till 20 October and informed

that on failure, suo-moto proceedings will be initiated CPGCL requested for further extension on 18 October,

2010.

STATUS OF GENCOs’ TARIFF Contd…

14

GENCO-IV (LPGCL):

Letter about the need for a multiyear tariff up to 2014 along with direction to file Tariff Petition sent on 18 August, 2010.

Reminder to the above letter sent on 17 September, 2010 Response by LPGCL on 22 September, 2010 requesting

for extension in time. Authority granted extension till 20 October and informed

that on failure, suo-moto proceedings will be initiated LPGCL Filed on 18 October, 2010. After completion of information requirements (Board

Resolution) received in November It will be placed for admission shortly.

STATUS OF GENCOs’ TARIFF Contd…

15

Heat Rate tests also needed to work out tariffs under the present state of plant and equipment.

Capacity tests are critical.

GENCOs’ unwilling response is not helpful, possibility of unrealistic tariffs being passed to the consumers. The Planning Commission may take notice.

STATUS OF GENCOs’ TARIFF Contd…

16

NEPRA has established a division headed by a Director General and supported by Director for the monitoring of the performance of the sector.

Monitoring of the sector is being conducted in the following modes: Monitoring pursuant to Performance Standards Monitoring pursuant to Authority Determinations Monitoring on need

Monitoring Activities: Monitoring of Generation Companies (IPPs) at COD Monitoring of Distribution Companies Monitoring of Generation Companies including Public Sector GENCOs

MONITORING OF POWER SECTOR

17

A team headed by Director (Thermal) Inspects the IPPs at the time of COD for verification of their technical, financial and legal aspects.

FUNCTIONS OF MONITORING TEAM: To observe the tests like RRT, IDC HRT etc. carried out at the time

of COD as per the guidelines provided in the test Protocols, Power Purchase Agreement and International Engineering Codes.

To carryout physical verification of existence and reasonableness of various claims allowed in the Tariff determination such as, Generation facility equipments, electro-mechanical and civil works construction etc.

List of IPPs visited:Attock Gen Limited 165 MW 24 April, 2009Atlas Power Limited 224 MW 15 December, 2009Engro Energy Limited 226 MW 23 March, 2010Saif Power Limited 231 MW 23 April, 2010Orient Power Limited 225 MW 20 May, 2010Nishat Power Limited 202 MW 4 June, 2010Nishat Chunian Limited 202 MW 16 July, 2010

MONITORING AT COD

18

Special Audit have been commissioned by NEPRA for MEPCO.

NEPRA Team lead by Director General carried out evaluation of HESCO losses.

NEPRA Team lead by Director General carried out inquiry about KESC operations during black out of the system.

Financial Audits have been carried out to verify CPPA purchases from IPPs and GENCOs.

Evaluation of calorific values of the Fuel.

SPECIAL PERFORMANCE AUDITS

19

In exercise of the powers conferred by Section 46 of the Regulation of Generation, Transmission and Distribution of electric Power Act, 1997 read with Section 34 thereof, National Electric Power Regulatory Authority, with the approval of the Federal Government has prescribed and notified:

MONITORING THROUGH PERFORMANCE STANDARDS

Performance Standards (Distribution) Rules, 2005 notified in 11th January, 2005.

Performance Standards (Transmission) Rules, 2005 notified on 15th November, 2005.

Performance Standards (Generation) Rules, 2009 notified on 17th November, 2009.

20

• Performance Standards are designed to encourage safe, efficient and reliable service, including standards for service characteristics such as voltage and stability as well as scheduled and unscheduled outages.

• Under Performance Standards (Distribution) Rules, 2005 distribution companies are required to maintain a prescribed overall systems in term of electric reliability, voltage and frequency of power supply. The standards include:

― Power supply restoration time (Hrs).

― Annual number and duration of individual consumer power supply interruptions.

― Voltage range of + 5% and frequency range + 1% from nominal voltage and frequency of power supply at the consumer supply terminals.

― Time limits for new connections categorized based on size of the load and voltage level.

― Electric safety standards.

― Non-discriminatory principles and priorities of load shedding to be followed by the distribution companies.

• Rules are enforced through Licenses under which periodic reporting is required by Licensees.

MONITORING OF DISTRIBUTION COMPANIES

21

NEPRA has held various meetings with DISCOs to educate them about APRs.

Considering DISCOs weak understanding about APRs, the Standards Division has held a special campaign of workshops at each DISCO Head Quarter to closely interact with them for their enhanced understanding about implementation of Performance Standards (Distribution) Rules, 2005. The team comprising of DG (Stds.) and other professionals has visited all DISCO Head Quarters and delivered presentations to educate their engineers up to SDO level.

MONITORING OF DISTRIBUTION COMPANIES

22

• The Performance Standards (Generation) Rules, 2009 have been formulated with to ensure that the Electric Generation Facilities and Power Plants are operated efficiently, and to ensure Electrical Service Reliability and Adequacy for the Transmission and Distribution Service Providers within Prescribed Parameters

• Reporting requirements are:-

1. For Overall Standards with regard to Quality of Supply, the Licensee

shall supply compliance report every year to the Authority, before 31st of October, for the preceding year

2. Reports required for the Key Performance Indicators (KPI) shall be

submitted on a quarterly basis.

3. The Generation companies have been asked to submit reports regarding compliance with PSGR.

4. The received APRs are being processed by Standard Division for their

presentation to the Authority.

MONITORING OF GENERATION COMPANIES

23

Director (Thermal) of NEPRA monitors the availability of power plants.

Data is obtained from NTDC and KESC to ascertain the daily load position of their systems.

Comprehensive technical data is obtained on monthly and annual basis on E.form to monitor the efficiency of the power plants.

MONITORING OF KEY PERFORMANCEINDICATORS OF GENCOs

24

As per Performance Standards (Transmission) Rules, 2005, the Licensee is required to submit to the Authority every year, before the 31st of March of the succeeding year, an Annual Performance Report (APR) containing all relevant Information with respect to Compliance with these Rules during the Year including a Statement of Comparison with the Last APR submitted

The Standards Division is responsible to obtain and analyse the APRs from Transmission companies.

APR of NTDC for YEAR 2009 Have been analyzed and Meeting with Senior Officers of NTDC held on 4th March, 2010. Requirement of System Expansion as per Grid Code PC 4.6, was also

discussed during the meeting.

APR of KESC for YEAR 2009 Senior Officers of KESC held meeting on 3rd February, 2010. Purpose was to guide KESC for proper compliance of PSTR and

understanding Proformas. KESC agreed to provide the APR as per PSTR after the issuance of License.

MONITORING OF TRANSMISSION COMPANIES

25

THANK YOU

26

NEPRA pursuant to Section 39 of the Act, deals with complaints by any interested person against a licensee for violation of its rules, regulations and orders.

Pursuant to Section 21(2) (b) of the Act, NEPRA has issued Regulations for Eligibility Criteria for Consumers for non discriminatory provision of distribution services and sale of electric power.

Consumer Service Manual in respect of 9 distribution companies was approved and circulated to all DISCOs for implementation.

Complaint Handling and Dispute Resolution Procedure Rules, 2009 is under review and will be sent to Federal Government shortly for approval and notification.

Since creation of a Consumer Affairs Division in 2002, NEPRA received 5,553 complaints, out of which 5,326 were resolved.

CONSUMER INTERESTS

27

Year Complaints Received

Complaints Addressedthrough Provincial Offices

of Inspection/DISCOs

2001 76 76

2002 187 172

2003 237 225

2004 354 325

2005 1098 1025

2006 548 527

2007 503 503

2008 469 469

2009 663 654

2010 1418 1350

COMPLAINTS HANDLING