The framework for open markets must be aligned with the National Electricity Policy approved by the Council of Common Interests and the Cabinet Committee on Energy (CCOE) principles for competitive wholesale markets, enabling a sustainable transition, suggested private power utility K-Electric.
In this regard, K-Electric submitted an integrated plan for Competitive Trading Bilateral Contract Market (CTBCM) model to the National Electric Power Regulatory Authority (Nepra), which was reviewed at a public hearing on Thursday.
On the occasion, the utility showed its commitment to a sustainable transition towards open markets in line with the government and Nepra objectives.
It emphasised the need to develop a mechanism for ensuring recovery of associated costs, enabling a transition with no additional burden on the regulated consumers.
K-Electric recommended that in order to promote competition and eliminate stranded capacity, the existing generation capacity in the national grid should be allocated to power distribution companies (DISCOs).
“New power procurement should be allowed only when there is a shortfall in any specific DISCO,” it added.
Moreover, the power utility proposed that the threshold to participate in open markets should be lowered gradually to match it with supply-demand situations, ensuring no capacity was left stranded while also providing for greater competition.
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Keeping in view the international precedents, stranded costs arising from consumers opting for open access be recovered under a staggered approach over a length of time with a clear cut-off provided to market participants for gradual and sustainable development, K-Electric suggested.
The utility advocated for a dry run to be conducted that would be critical for assessing the readiness of the system at large. “This would also help in the identification of any subsequent revisions that may be required to the market design or any other reforms that may be needed to ensure a sustainable and more efficient competitive power market.”
The public hearing was presided over by Nepra Chairman Tauseef H Farooqi and attended by representatives of Nepra, Central Power Purchasing Agency, National Transmission and Despatch Company and several industrial associations of Karachi.
Published in The Express Tribune, December 31st, 2021.
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