- Bulk consumers can buy electricity from private suppliers.
- Electric surplus government auction.
- Nepra to set wheel costs for private buyers.
Islamabad: the authorities plan to reduce wheel costs to RS10-12 per unit to ensure the success of the Bilateral negotiation contracts (CTBCM) for private electricity trading, The news reported on Monday.
This setting is only possible when the stranded cost is excluded.
“Authorities wish to establish the wholesale private energy market by March-April with acceptable wheel fees for buyers and electricity sellers,” said a senior official.
Ideally, he added, the wheel charges should be located at RS6-7 per unit, but the government wants the RS5-6 cross subsidy per unit within the framework of wheel loads.
However, if the burden of 50% of the stranded cost is shared by the government and 50% by consumers, wheel costs would hang at RS17-18 per unit compared to the unit RS27-32 per unit. Here, the question arises as to why consumers under the regime of the private energies market pay the sins they have not committed.
Under the standard cost, the government wants consumers to pay capacity payments against 45,888 MW knowing that electricity consumption is down 2.4%.
The ironic part is that the government also adds more electricity production because of which capacity payments would also increase, but consumers are not responsible for existing and new additions in electricity production.
“We are also working on the creation of the private energy market in March-April, followed by the retail private energy market. Once the CTBCM is in place and will become functional, the government would not buy electricity with PPIs which signed the revised contracts on a base of taking and remuneration. They would be free to join the CTBCM. This could be a paradigm shift in the structure of the existing powers sector.
In this competitive regime, there will be a system of several sellers and multi-buyers of electrical energy. However, buyers will pay the transmission and use of the distribution of system costs also for the electricity which they will bilaterally exchange.
Currently, investments in the electricity sector are dominated by the government which also has power plants and sells electricity to put an end to consumers under a monopoly structure by controlling its discs with the network and the ‘Supply activity.
Consumers have no choice but to buy electricity from distribution companies belonging to the government.
Thus, under the new implementation of the competitive market, consumers of bulk electricity will be able to buy electricity from any private supplier, merchant and generation companies with electrical energy rates agreed by parties without determination of The Nepra involved and after having included wheel costs as loading as wheel loads as a load determined by NEPRA for the use of transmission and distribution.
In addition, the government is in the process of developing its cheaper excess electricity sales plan for bulk consumers at auction for 2 to 3 years.
“Under the plan, we will first fix the reference price of electricity and the interested parties would be invited to offer excess electricity offers, no less than the reference price.
“Central Power Officials Purchase Agency (CPPA) and National Transmission Dispatch Company (NTDC) are also currently working on the implementation mechanism and the reference price.
“It will also help to tackle the monster of capacity payments. The country’s installed capacity reached 45,888 MW. The maximum summer request amounts to 29,000 MW, but the system is unable to transmit the 29,000 MW of electricity, but it is able to transmit an electrical power of 26,000 MW. However, average demand per month amounts to 11,000 to 12,000 MW. We must increase the demand for electricity of the network during every month across the country. The main customer can be the industrial sector to obtain excess power at an auction price for 2-3 years.
The country has cheaper electricity in the southern part of the country which cannot be transmitted to the north – Punjab, the load center, mainly due to transmission constraints, but the government pays the capacity payments of a power Even cheaper, which is available but cannot be evacuated.
Thus, the excess power can be offered to customers at prices sold and this is how the government would reduce the load of capacity payments and excess electricity would be used.