NEPRA Fines Power Firms Over Costly Failures

The National Electric Power Regulatory Authority has imposed monetary penalties amounting to Rs60 million on National Grid Company and Central Power Purchasing Agency Guarantee for regulatory non-compliance, including planning deficiencies, inaccurate reporting, and operational inefficiencies that contributed to increased electricity costs for consumers during January 2024.

As per regulatory findings, a penalty of Rs50 million has been levied on the National Grid Company, while CPPA-G has been fined Rs10 million for violations under the NEPRA Act.

The Authority observed that the National Grid Company failed to fully utilise the 4,000 MW Matiari-Lahore HVDC transmission line, operating it at approximately 2,800 MW due to delays associated with the Lahore North Grid Station. Despite this reduced utilisation, consumers were effectively billed on full-capacity assumptions.

Additionally, wind forecasting discrepancies of up to 15%—significantly exceeding permissible thresholds—resulted in generation curtailment, compensation claims amounting to Rs4.4 billion, and increased reliance on comparatively expensive thermal power generation.

During the review period, approximately 852 GWh of electricity was generated from Residual Fuel Oil (RFO) and High-Speed Diesel (HSD)-based plants outside the economic merit order, thereby elevating overall system costs. Concurrently, lower-cost generation sources, including local coal and nuclear plants, remained underutilised due to transmission constraints.

The Authority further noted that the National Grid Company failed to submit mandatory system reliability reports for 2022 and 2023 within prescribed timelines, thereby limiting effective regulatory oversight.

In respect of CPPA-G, the regulator identified submission of inaccurate fuel cost data, failure to account for RLNG supply obligations, and non-provision of required dispatch and outage information. These deficiencies resulted in an inflated and unrealistic cost base, contributing to increased fuel charges passed on to consumers.

Both entities have been directed to settle the imposed penalties within 15 days and submit comprehensive corrective action plans to address the identified shortcomings.