Nepra plans doubling of licensing fees

ISLAMABAD: Following in the footsteps of power companies, the National Electric Power Regulatory Authority (Nepra) has decided in principle to increase by at least 100 per cent its annual and one-time registration fee for all its licensees like those dealing in generation, distribution, transmission, trading, operators and suppliers.

At the same time, Nepra is also seeking the imposition of an annual fee on a class of upcoming electricity traders based on per megawatt forecasted energy trade as the Competitive Trading Bilateral Contracts Market (CTBCM) becomes functional shortly. The prevailing fee structure was notified on May 31, 2021.

The power companies have been increasing electricity rates on multiple grounds every month like fuel cost, quarterly adjustments, base tariff adjustments, equalisation surcharge, financing cost surcharge and so on.

The regulator has decided to notify revised rates after it receives comments from all the stakeholders including existing and future licensees who are required to submit their views before the close of the current month. The revised rates are expected to be effective from July 1, 2024.

The biggest increase of about 215,000pc has been proposed for the annual fee for Special Purpose Transmission Line (SPTL). The new annual fee for SPTL shall be calculated at the rate of Rs5.37 million per megawatt (MW) which currently stands at Rs2,500 per MW. However, the maximum annual fee for the SPTL would now be fixed at Rs21.50m instead of Rs10 million at present, an increase of 115pc.

In a similar case, the annual fee for a generation company would be calculated at the rate of Rs44,786 per MW instead of Rs20,000 per megawatt, showing an increase of about 125pc. This would be charged on the basis of the capacity for which the licence is issued.

The national grid company would now be charged a fixed rate of Rs21.50 million per year against Rs10m, up 115pc.

In contrast, the fixed annual fee for provincial grid companies used to be Rs2.5m which is now proposed to be increased to Rs5.3743m attracted annual fee of Rs2.5m, an increase of 115pc. The national grid company would now be charged a fixed rate of Rs21.50m per year against Rs10m, up 115pc.

The K-Electric would now be charged an annual transmission licence fee of Rs15.048m instead of Rs7m, up 115pc.

Likewise, the distribution licence has been proposed to be Rs13,973 per MVA (megavolt amperes) to a maximum of Rs2.58m instead of Rs6,500 per MVA or a maximum of Rs1.2m. This is also about a 115pc increase.

Similarly, market and system operators would be charged a fixed annual fee of Rs21.50m, up by 115pc from Rs10m.

In addition, Nepra also plans to impose three additional annual charges, which do not exist at present, for three separate types of regulatory registrations. An annual fee of Rs19.42m each has been suggested for independent auction for suppliers of last resort or competitive bidding for new capacity and administration of existing long-term power procurement contracts before CTBCM operations. Another Rs1.942m fixed fee would be charged against any other electric power service.

Moreover, a new fee structure has been announced for electric power traders. This new genre of power traders would be charged an annual fixed fee of Rs948,060 up to power capacity of 50MW of 300 billion units (300 GWh) per year. This fee would double to Rs1.896m for 50-100MW or 600bn annual units and then keep on increasing with the same proportion to Rs9.48m for above 1,000MW.

The relevant regulations of Nepra have also been proposed for amendments to include electricity traders as the market gradually opens up to multiple suppliers from existing monopolies of the distribution companies and KE and their fresh roles as suppliers of last resort.