Fines imposed on five power firms for ‘illegal loadshedding’


ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday imposed a fine of Rs50 million each on five power distribution companies including K-Electric for carrying out commercial-based excessive loadshedding in violation of laws penalising honest consumers.

It is for the first time the regulator has moved from issuing warnings against collective punishments in the power sector which started more than a decade ago in Karachi and was adopted by public sector companies with the tacit approval of the federal government and penalised power companies for revenue-based loadshedding.

In its similar but separate judgments, the power regulator observed that collective punishment to all consumers for the wrongs of a few could not be allowed indefinitely through disconnection of electricity to consumers on the basis of aggregate technical and commercial (AT&C) losses. It issued judgments on five power distribution companies from Karachi, Quetta, Peshawar, Hyderabad and Sukkur.

The regulator said it had taken up the issue to investigate several complaints regarding unscheduled loadshedding by the general public during public hearings on monthly fuel price adjustments and written means. “Upon inquiry, it was revealed that loadshedding is being carried out based on AT&C losses policy which is not in line with the provisions of the Nepra Act, 1997, and Performance Standards (Distribution) Rules, 2005, and has never been recognised by Nepra”, it said.

It sought views and reports from the power companies and, having found unsatisfactory responses, formally issued show-cause notices and provided companies with an opportunity to defend themselves. While some of them gave varying reasons, most of them conceded AT&C-based power cuts and claimed they were being done under the government’s policy.

It said the power companies, under the documents they submitted to the regulator, it was “obligatory” on power utilities to “provide and ensure fair, reliable, equitable, and uninterrupted distribution of electricity services” in accordance with the eligibility criteria, performance standards, safety health, and environment protection.

However, it was noted that licensees were even violating their own so-called AT&C policies and carrying out excessive loadshedding as compared to the scheduled one. Moreover, a few feeders were randomly selected, and observed that the licensees had failed to make improvements in technical and financial health of those feeders since many years despite having been allowed colossal amounts for operations and maintenance. They were “continuing their operations in status quo, due to which, even good paying consumers suffer a lot”.

The KE contended that a major component of AT&C loss-based load shed policy was the recovery ratio based on which the feeders were categorized into respective load shed categories. Over the years the paying propensity of the consumers has been significantly impacted due to the ongoing economic condition of the country, leading to significant challenges on the recovery front, distorting the recovery ratio, especially in the last 12 months, consequently affecting the loss profile of feeders. Similar views also came from other companies.

The Nepra observed that attributing economic conditions alone overlooked potential internal inefficiencies and shortcomings in the companies’ operations and management. Moreover, instead of solely relying on recovery ratios as the basis for load-shedding policies, the companies should explore alternative measures to address financial challenges, such as improving billing and collection processes, reducing technical losses, and enhancing consumer awareness regarding the importance of timely payments.

Additionally, companies should prioritise transparency and accountability in their operations to rebuild consumer trust and ensure fair treatment for all consumers regardless of economic conditions.

It noted that there was still AT&C-based load shedding on 30pc of the KE’s feeders and weekly monitoring reports suggest that KE was “not even following its so-called AT&C-based load shedding criteria and the consumers are experiencing extended hours of load shedding even more than their scheduled hours”.

The regulator said that Nepra laws permit load shedding solely for technical reasons, without any allowance for load shedding based on commercial considerations, such as a regime that differentiates between higher and lower-paying consumers.

The Nepra noted that public sector companies were “admitting the allegations” and claiming that the loadshedding priorities under Nepra standards and rules were “deliberately not being followed by all and that the law is impractical & ultra vires… the load shedding is happening on the instruction of the Ministry of Energy”.

The loadshedding hours were ranged from 2.5 to 10 hours. Companies were “trying to hide” inefficiencies and showing a reduction in line losses by implementing AT&C load shedding for most consumers instead of implementing corrective measures to improve feeder losses.

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