LAHORE: The National Electric Power Regulatory Authority (Nepra) has expressed grave concerns over three critical issues that are affecting the operational performance of all power distribution companies (Discos). Given their significance, the regulator has decided to initiate a comprehensive review process, supported by a structured consultation involving all relevant stakeholders.

The three issues identified by Nepra as requiring urgent attention are: the need for a tailored Time of Use (ToU) tariff structure that reflects local conditions; the financial and operational impact of net metering on Discos, necessitating a thorough assessment of its benefits and challenges; and the potential of mini and micro grids as a viable alternative to the national grid, particularly for remote or commercially unviable areas.

To address these matters, Nepra has called for input from all Discos and K-Electric to finalise the draft Terms of Reference (TORs) related to ToU tariffs, net metering, and the development of mini and micro grids. The regulator has set a deadline of August 4 for feedback, after which a consultative session will be held in Islamabad on August 11 to finalise the TORs. Once approved, each Disco will be tasked with hiring a consultant to conduct studies within its jurisdiction.

Nepra has emphasised the urgent need to review and localise the identification of peak and off-peak hours specific to each Disco. The regulator noted that the current uniform structure does not align with local realities and may result in inequitable tariff applications. A more customised approach would not only ensure fairness but also enhance efficiency across the distribution network.

Seeks input from Discos on tariffs, net metering, development of micro grids

While acknowledging that net metering has been a positive step towards empowering consumers and bolstering the grid, Nepra has called for a detailed assessment of its financial and operational impacts on Discos. The regulator stressed the need for an objective analysis of the benefits, challenges, and potential unintended consequences as the adoption of net metering continues to grow.

The third critical issue concerns the deployment of mini and micro grids. These grids offer a promising alternative for regions where connecting to the main grid is challenging due to geographical constraints or commercial non-viability. Nepra aims to evaluate their feasibility, cost-effectiveness, and their potential role in improving energy access in underserved areas.

It is noteworthy that Nepra had earlier directed all Discos to conduct studies on these issues, particularly ToU tariffs and net metering, as part of its decisions on the quarterly adjustment for the third quarter of FY25 (May 5, 2025) and annual tariff rebasing for FY26 (June 23, 2025). However, despite these directives, the Discos have made little progress in initiating the necessary studies.

In response to formal requests for guidance from Gepco and K-Electric, Nepra took the initiative to draft initial TORs for all three issues and sent them for review. The regulator has urged all Discos and K-Electric to carefully examine the draft TORs and submit written feedback, comments, or proposed amendments by August 4.

Additionally, Nepra has advised Discos and K-Electric to designate their respective Director Generals as focal points for coordination and oversight. It also recommended that each Disco establish a dedicated team comprising experienced technical and commercial personnel to support the study and ensure meaningful outcomes.

The regulator has stressed that the ultimate goal is to find a pragmatic and balanced solution that ensures the operational sustainability of Discos while safeguarding consumer interests. This approach is intended to deliver a mutually beneficial outcome for all stakeholders involved.

Published in Dawn, August 3rd, 2025