The National Electric Power Regulatory Authority has withdrawn nearly Rs42 billion in penalties imposed on the National Transmission and Dispatch Company, marking a major reversal in a dispute that had persisted for more than three years.
In a fresh ruling, the power regulator said the continued deduction of funds from NTDC’s Use of System Charges was not fully consistent with the purpose of the regulatory regime. It added that delays in removing transmission bottlenecks should be dealt with through enforcement action, compliance oversight and performance-based mechanisms, rather than through monthly fuel cost adjustment deductions.
The decision represents a significant shift in the regulator’s position. NTDC had long argued that the withholding of roughly Rs41.44 billion was straining its cash flow and hampering the timely execution of key transmission projects of national importance.
The matter had earlier landed before the Islamabad High Court, which initially suspended the deductions and later sent the case back to the regulator for a ruling on merits.
After reconsidering the issue, Nepra concluded that its earlier reading of economic dispatch had been too restrictive. The authority said that while the legal framework gives preference to lower-cost electricity generation, it also allows room for system security and grid stability to take precedence when required.
According to the ruling, the Nepra Act does not specifically define economic dispatch. However, the regulator observed that departures from least-cost generation may sometimes be unavoidable to ensure voltage support and maintain reliable grid operations. In such situations, it said, power producers may have a right to compensation from NTDC.
Previously, Nepra had held NTDC responsible for not fully utilizing more efficient power plants and instructed the Central Power Purchasing Agency to recover the resulting financial impact by deducting amounts from NTDC’s system charges payable by distribution companies. Those recoveries started in September 2019 and continued on a regular basis from August 2020 until October 2023.
NTDC had maintained before both the regulator and the court that the ongoing deductions had materially damaged its financial health, created risks around compliance with loan covenants and endangered the progress of critical transmission schemes.
Nepra has now directed that the provisional withholding of funds from NTDC’s dues at the fuel cost adjustment stage must stop. It said the procedure for releasing the withheld amount would be determined separately.
In a separate development, the regulator also approved an additional fuel cost adjustment of around 10 paisa per unit for all electricity consumers, including those receiving power through K-Electric, to be recovered in the current billing cycle.
