Islamabad - The National Transmission and Despatch Company (NTDC) has alleged that the Central Power Purchasing Agency (CPPA-G) had overcharged the company at an average tariff of Rs15.076/unit for excess loss which is almost double than the average Rs7.368/unit determined by the National Electric Power Regulatory Authority (NEPRA) on account of monthly FCA for FY 2020.

The NEPRA has directed CPPA-G to finalise the agreement with NTDC regarding losses being incurred in excess of the authority’s allowed limit by June 30, 2022. In a letter written to National Electric Power Regulatory Authority (NEPRA), NTDC has said that formal agreement for treatment of excess losses is yet to be executed between NTDC and CPPA-G and in the absence of such finalised agreement and mechanism thereof, the unilateral deduction on account of excess losses is not justified.

It further said that fuel cost payments (whether excess or not) of generation licensees are the payment obligation of power purchaser (i.e. CPPA-G) and NTDC has no contractual liability on its part to pay for same. Moreover, these two entirely different financial transactions (i.e. NTDC Use of System Charges & T&T loss deduction) cannot be interchangeably adjusted against each other in absence of any agreement. Any such inappropriate adjustment is without merit. It is important to refer to the regulator determination for CPPA-G which clearly states that “impact of any losses incurred by NTDC over and above the authority’s allowed target of T&T losses, cannot be passed on to the consumers”, the letter said. The burden of the same has to be borne by NTDC. In the light of above, NTDC is only responsible for the kWh loss in its 500 & 220kv network exclusively.

NTDC has been burdened by the CPPA-G with disallowed costs (not related to the 500 & 220kV Network). The letter also contested the assumptions in units allowed values undertaken by CPPA-G from the NEPRA FCA decisions and highlights the need for reconciliation between CPPA-G and NTDC on the matter.

In NTDC’s view, the CPPA-G month-wise calculations for excess losses are in violation of this principle. It is important to highlight the example of CPPA-G calculations for FY2020, wherein NTDC has been charged month-wise for a total of 228,343.228 kWh excess units, whereas, the CPPA-G own annual calculations reflect only an excess of 100,164.497 kWh units. As a result, NTDC has been charged for more than twice the excess loss units in FY 2020 due to this distorted calculation.

As per the CPPA-G working for excess loss calculation, the average basket cost of PPP per excess unit for FY 2020 comes out to be Rs15.076/kWh. Whereas, the average PPP cost per unit has never exceeded Rs7.368/kWh in the NEPRA FCA decisions for corresponding months of FY 2020. This calculation of CPPAG is incomprehensible, and it is unjustified to charge the PPP rate of RFO/HSD for losses at 500 & 220kV level when a major portion of cheaper hydel and natural gas generation is connected with NTDC 500 & 220kV network.