ISLAMABAD: A meeting of the Cabinet Committee on Energy (CCoE) has been called on Monday to consider approval of the oil refining policy 2021, cheaper electricity rates to domestic and commercial consumers to encourage incremental consumption for space heating in winter and retention of some old power plants ordered by the federal cabinet.

To be presided over by Planning Minister Asad Umar, the meeting would also consider a policy direction for the operation of Re-gasified Liquefied Natural Gas (RLNG)-based power plants out of merit and Asian Development Bank-funded advanced metering infrastructure (AMI) in three distribution companies.

The meeting will also review a monthly report on power plants operated out of merit order (security-constrained economic dispatch) and be given an explanatory presentation by the cabinet division on the roles and domains of the CCoE and the Economic Coordination Committee (ECC) of the cabinet.

Sources said the power division was seeking policy directions for the National Electric Power Regulatory Authority (Nepra) to allow violation of merit order for RLNG-based power plants in case of unavoidable fluctuation in liquefied natural gas (LNG) supplies or other technical constraints. The power regulator has been disallowing some of these violations in monthly fuel cost adjustments, saying consumers could not be penalised for inefficiencies of the companies in arranging sufficient LNG supplies.

Meeting will also consider operation of RLNG-based power plants out of merit

The power division has sought the CCoE’s intervention to change the criteria followed by Nepra by allowing flexibility to the National Power Control Centre (NPCC) in RLNG flow rate on daily, weekly and monthly basis to adjust the unutilised RLNG on account of power system dynamics.

The Sui Northern Gas Pipelines Limited (SNGPL) and the petroleum division had last month blamed the power companies for switching the committed RLNG supplies around eight times during the last fiscal year.

The power division has proposed to the CCoE that SNGPL ensure the incorporation of flexible RLNG flow-rate requirements in its allocation of the gas to the power sector, on the best effort basis. This will enable optimal utilisation of resources on a least cost basis and assist in reduction of net proceed differential (NPD) on the power sector.

As the SNGPL faces system constraints in view of the fluctuating linepack, the power division has suggested that to safeguard the company’s pipeline network from damage, the violation of merit order be allowed on the account of operational system constraints leading to mandatory consumption of the allocated RLNG.

Such deviations should be dealt with by passing on the cost of deviation from merit order to the other gas sector consumers other than the power sector, and the power companies be given the right to claim the cost of such non-compliance on monthly basis to SNGPL, which shall be adjusted within 30 days of such claim.

And Nepra would be asked to recognise the flow-rate regulation requirement as an ‘operational system constraint’ of the energy value chain, and correspondingly the cost of such constraint shall be allowed in the monthly Fuel Charge Adjustment (FCA) or the cost of such deviation should be shared by the gas and power consumers on proportionate basis.

Published in Dawn, September 11th, 2021