NEPRA identifies mismanagement in energy generation mix

The National Electric Power Regulatory Authority (NEPRA) has highlighted issues regarding the mismanagement of the merit order in April 2024, resulting in an additional financial burden of Rs32 billion on electricity consumers. NEPRA identified a key problem in the energy generation mix, particularly the underutilization of Thar coal. In April 2024, only 881 GWh of electricity was produced from local coal, falling short of the expected 1,690 GWh, leading to increased costs.

During the review, the Central Power Purchasing Agency (CPPA) explained that the higher costs were not solely due to low generation from local coal but were also influenced by weather conditions impacting electricity demand.

NEPRA members questioned the decision to prioritize more expensive RLNG over local coal, with the CPPA official mentioning high demand in central Pakistan and other contributing factors. NEPRA emphasized that utilizing local coal could have helped avoid the reliance on costly power sources, ultimately reducing expenses for consumers. The regulator also discussed the impact of net metering on the national grid, with an estimated 2000 MW of capacity connected through this system.

In April 2024, a total of 8,639 GWh of electricity was generated at a cost of Rs79.55 billion, with consumers being charged Rs75.2 billion after refunds. Power generation decreased compared to the previous year but showed an increase from March 2024, although it remained below the reference demand. The generation cost fluctuated but was higher than the previous month. Renewable energy production decreased, while hydropower and nuclear energy exhibited varying trends. Notably, no electricity was generated from high-speed diesel and furnace oil during this period.

The findings from NEPRA's review in April 2024 underscore the importance of efficient energy generation and the utilization of local resources to minimize costs for consumers. Addressing the issues identified, such as optimizing the use of Thar coal and balancing power sources effectively, can lead to a more sustainable and cost-effective electricity supply for Pakistan.