The National Electric Power Regulatory Authority has withdrawn nearly Rs. 42 billion in penalties previously imposed on the National Transmission and Dispatch Company, reversing a decision that had been in place for over three years.
In its latest ruling, Nepra stated that withholding funds from NTDC’s Use of System Charges was not fully aligned with the intent of the regulatory framework. The authority noted that issues such as transmission constraints should be handled through enforcement actions, compliance monitoring, and performance mechanisms rather than deductions made through fuel cost adjustments.
The decision marks a significant shift in the regulator’s position. NTDC had long argued that deductions amounting to more than Rs. 41 billion were affecting its financial stability and delaying key national infrastructure projects.
The dispute had earlier reached the Islamabad High Court, which initially suspended the deductions and later directed Nepra to review the matter on merit.
After reassessing the case, Nepra acknowledged that its earlier interpretation of economic dispatch had been too narrow. While the framework prioritizes low-cost power generation, the regulator said it also allows flexibility where necessary to maintain grid stability and system reliability.
Nepra further explained that the law does not strictly define economic dispatch and recognizes that deviations may be required for operational stability, including voltage support. In such situations, power producers may be entitled to compensation from NTDC.
Previously, Nepra had held NTDC responsible for not fully utilizing efficient power plants and directed the Central Power Purchasing Agency to recover related costs by deducting amounts from NTDC’s system charges. These deductions began in 2019 and continued until October 2023.
NTDC had consistently maintained that these deductions weakened its financial position, created risks for loan obligations, and slowed progress on important transmission projects.
With the new decision, Nepra has ordered an end to the practice of withholding funds at the fuel cost adjustment stage. It added that a separate mechanism will be announced for the release of previously withheld amounts.
In a separate development, Nepra also approved a fuel cost adjustment of around 10 paisa per unit for electricity consumers, including those served by K-Electric, which will be reflected in current billing cycles.
