NE plan, SEC rules: Nepra concerned at proposed amendments

Business Recorder

4 days ago

ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has expressed serious reservations over certain proposed amendments to the National Electricity (NE) Plan 2023–27 and the Supplier Eligibility Criteria (SEC) Rules, 2023, warning that some provisions may hinder the implementation of the Competitive Trading Bilateral Contract Market (CTBCM).
According to sources close to the Nepra Registrar, the concerns were raised in response to an Office Memorandum issued by the Ministry of Energy (Power Division) on April 21, 2025. The memorandum sought the Authority's feedback on amendments to both the NE Plan and SEC Rules.
Nepra emphasised that the framework for recovery of stranded costs, a critical issue under market liberalisation and open access, should be embedded in the NE Plan itself. Addressing such matters through secondary documents, the Authority noted, runs counter to the intent of Section 14A of the Nepra Act.
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Nepra strongly opposed the interim approach laid out in Strategic Directive 87, which proposes recovering stranded costs equal to total generation capacity charges from bulk power consumers of suppliers of last resort. This method previously obstructed the rollout of the CTBCM, the Authority observed. Instead, it recommended that a comprehensive cost recovery mechanism be integrated directly into the NE Plan to avoid further delays and ensure the regulatory predictability.
The Authority also questioned the proposed 800MW cap on open access. It pointed out that the Nepra Act, the NE Policy, and the approved CTBCM design do not specify any such a limit. Furthermore, there is no clarity on the method of allocation—whether it would be uniform, phased annually, or whether it includes bilateral contracts, merchant generation, or captive generation.
Nepra advised against a fixed ex-ante cap, warning it could lead to market confusion and delay. As an alternative, it suggested that the NE Plan include a clause allowing the Federal Government, in consultation with Nepra, to impose a temporary cap based on market response. Such a cap should be executed through a transparent, competitive regulatory framework, ensuring flexibility and responsiveness without harming regulated consumers.
With respect to the SEC Rules, Nepra reaffirmed its position that Rule 5, which pertains to the determination, recovery, or collection of specific charges, exceeds the legal mandate under Section 23E of the Nepra Act. That section only authorises the Federal Government to set eligibility criteria based on solvency, technical capability, and public service obligations.
Nepra previously raised these objections in a letter of May 17, 2023, during an earlier consultation process. It also noted that Rule 5 is currently under litigation in Writ Petition No. 4492/2023 (APTMA v. Federation of Pakistan & Others) in the Islamabad High Court. In light of this, Nepra recommended that Rule 5 be deleted and the SEC Rules brought into full compliance with the Nepra Act to avoid jurisdictional conflict and legal ambiguity.
Wrapping up its comments, Nepra urged the Ministry to revisit the proposed amendments to both the NE Plan and the SEC Rules, taking into account the Authority's legal and operational concerns. It stressed that ensuring consistency with the Nepra Act and facilitating a smooth rollout of the CTBCM is critical to achieving market liberalization objectives without regulatory or legal setbacks.
Copyright Business Recorder, 2025