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, 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 , 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’ 1 ST QUARTER TARIFF DETERMINATIONS

9  Review of the performance of DISCOs during  Determination of 4 th Quarter, FESCO8 September, 2010 QESCO8 September, 2010 GEPCO8 September, 2010 HESCO9 September, 2010 IESCO9 September, 2010 LESCO8 September, 2010 MEPCO18 October, 2010 PESCO20 October, 2010 DISCOs’ 1ST QUARTER TARIFF DETERMINATIONS

10  Determinations for all DISCOs and KESC for Q will be made during November and early December,  Relevance of Ordinance # XIV dated 20 April, 2010 and tariff determination for the remaining period of  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’ 1 ST QUARTER TARIFF DETERMINATION Contd…

11  NTDC Tariff was determined in  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, STATUS OF NTDC TARIFF

12 Subsequent to the directions of the Planning Commission: GENCO-I (JPCL): Multiyear tariff, Control Period up to 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, Reminder to the above letter sent on 17 September, 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, 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,  Reminder to the above letter sent on 17 September,  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, 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,  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,  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 PublicSector 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 Limited165 MW24 April, 2009 Atlas Power Limited224 MW15 December, 2009 Engro Energy Limited226 MW23 March, 2010 Saif Power Limited231 MW23 April, 2010 Orient Power Limited225 MW20 May, 2010 Nishat Power Limited202 MW4 June, 2010 Nishat Chunian Limited202 MW16 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 11 th January,  Performance Standards (Transmission) Rules, 2005 notified on 15 th November,  Performance Standards (Generation) Rules, 2009 notified on 17 th 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, 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 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 PERFORMANCE INDICATORS OF GENCOs

24  As per Performance Standards (Transmission) Rules, 2005, the Licensee is required to submit to the Authority every year, before the 31 st 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 4 th March,  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 3 rd February,  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 YearComplaints Received Complaints Addressed through Provincial Offices of Inspection/DISCOs COMPLAINTS HANDLING