DISCOs seek fixed charges on solar

Ask NEPRA to impose levy on solar net metering to help offset losses

ISLAMABAD:

Power distribution companies (DISCOs) have sought the imposition of fixed charges on solar net metering in an apparent move to recover losses.

In terms of fixed charges on electricity units exported by net metering users to the extent of transmission and distribution charges, the National Electric Power Regulatory Authority (Nepra) may impose such a levy, said Multan Electric Power Company (Mepco) and Gujranwala Electric Power Company (Gepco) at a public hearing on Tuesday. They claimed that they were suffering losses due to solar net metering. The proposal was also backed by the Ministry of Energy (Power Division).

Minister for Power Division Awais Ahmad Leghari has made a couple of attempts to change the solar net metering system by replacing it with a new policy. But those moves sparked a backlash and Prime Minister Shehbaz Sharif too refused to approve the new policy, which proposed an end to the exchange of units and a reduction in the solar net metering rate to Rs10 per unit.

Nepra on Tuesday conducted two public hearings – one related to the multi-year tariff petitions filed by Gepco for tariff determination for power distribution and supply for financial year 2025-26 to FY 2029-30 and the second pertaining to multi-year tariff petitions filed by Mepco for FY 2025-26 to FY 2029-30.

The two companies sought approval of the power-sector regulator for imposing fixed charges on solar net metering. The Power Division has also pleaded the case against solar net metering, saying that consumers had been out of the national grid and the burden of capacity charges was shifted to those consumers who were receiving electricity from the national grid. Experts say that high electricity tariffs are the key reason that has forced consumers to switch from the national grid to solar net metering. Exorbitant tariffs have also pushed down the demand for electricity, leading to a glut in the gas sector.

For the past many years, Pakistan State Oil (PSO) has been importing liquefied natural gas (LNG) from Qatar under a government-to-government contract but power plants are not willing to procure the committed re-gasified LNG. Therefore, the government has to take up the matter with the Qatari government to divert LNG cargoes.

The government has recently announced a three-year scheme for the consumption of incremental electricity at lower rates to prevent consumers from shifting to solar net metering. It is also aimed at increasing the demand for electricity to address the issue of low LNG consumption. At the public hearing, DISCOs' officials said that the imposition of fixed charges would make their business viable. The regulator also raised the issue of payment to consumers for the export of electricity through solar net metering.

Power companies' officials said that payments were calculated after the end of three months. But the consumers have to apply for the payments. These payments are shifted to the coming months for adjustment, if the consumers do not apply, the officials said and dismissed the notion that the payments lapse if the consumers do not apply to receive them after every three months.

On the occasion, Nepra officials warned Gepco over the illegal installation of Advanced Metering Infrastructure (AMI) on small meters. They said that Gepco was installing AMI without approval of the regulator and even without data backup. Gepco also came under fire over failure to install new meters within a month's time. There were several applications that were pending for the last over two months.

Mepco said that it had achieved 100% recovery targets during FY 2024-25. However, the 100% recovery was not realised within the same financial year. Typically, around 12-13% of the billed amount remains outstanding and is recovered in the subsequent months.

However, 100% recovery target for each year under the multi-year tariff control period has been provided. In this cyclical process, around Rs900 million is irrecoverable each year despite disconnections and other legal proceedings for the recovery of arrears.