ISLAMABAD: The National Electric Power Regulatory Authority has imposed a penalty on Central Power Purchasing Agency Guarantee Limited for financially overburdening consumers through violations of the Economic Merit Order (EMO) and curtailment of cheaper wind-generated electricity.
The regulator took action after CPPA-G claimed a Fuel Charges Adjustment (FCA) of Rs7.13 per kWh for January 2024, against an actual pooled fuel cost of Rs14.60 per kWh — nearly double the reference fuel cost of Rs7.49 per kWh determined earlier for FY2024-25. The sharp deviation triggered concerns and led to a public hearing in February 2024, followed by a formal investigation under Section 27-A of the Nepra Act.
According to Nepra, the excessive fuel cost imposed a financial burden of billions of rupees on electricity consumers. CPPA-G failed to refute the estimated impact or provide adequate justification, including cost-benefit analyses for curtailing wind power, substitute dispatch details, and plant-wise outage schedules.
A five-member investigation committee, formed in March 2024, found that CPPA-G’s projections excluded generation from RLNG-based power plants despite binding commitments under Gas Supply Agreements (GSAs) and directives of the Economic Coordination Committee (ECC). This omission resulted in flawed tariff references and inflated fuel cost adjustments.
The regulator rejected CPPA-G’s defence that erratic winter demand necessitated keeping gas-based plants on standby, stating that RLNG quotas and take-or-pay contractual obligations were known in advance and should have been incorporated into planning.
The inquiry also highlighted CPPA-G’s failure to address legal ambiguities arising from Sui Northern Gas Pipelines Limited not signing revised GSAs, further contributing to regulatory uncertainty.
Additionally, the authority noted that CPPA-G did not provide required data to assess wind curtailment decisions and related Net Power Miscellaneous Variation (NPMV) claims, which amounted to approximately Rs4.4 billion in January 2024 alone.
After reviewing the findings, responses, and hearings conducted through 2025, Nepra concluded that CPPA-G violated Section 31(3)(i) and Section 44 of the Nepra Act, along with tariff determination guidelines and its responsibilities as Market Operator.
As a result, CPPA-G has been directed to pay a fine of Rs10 million, with Nepra emphasizing the need for transparency, accurate forecasting, and strict adherence to merit order principles to protect consumers from undue financial burden.
Story by Mushtaq Ghumman
