ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has endorsed the creation of an Independent System and Market Operator (ISMO) by merging the Central Power Purchasing Agency (CPPA-G) and the National Power Control Center (NPCC). This move is contingent on resolving certain issues to ensure smooth and independent operation, sources close to NEPRA’s Chairman informed Business Recorder.
NEPRA’s support follows a July 5, 2024, letter from the Power Division regarding the operationalization of ISMO. The restructuring aligns with the National Electricity Policy, National Electricity Plan, and decisions by the Cabinet Committee on Energy (CCOE), Federal Cabinet, and Prime Minister.
Key recommendations from NEPRA include:
Legal and Regulatory Review: Thorough evaluation of legal, policy, regulatory, and techno-commercial aspects to ensure the merger aligns with the current regulatory framework. This includes the Regulation of Generation, Transmission, and Distribution of Electric Power Act, 1997, and the separate licenses and codes for the Market Operator (MO) and System Operator (SO).
Cost-Benefit Analysis: Assessment of how the merger will benefit the power sector compared to the existing structure, where the MO and SO operate independently.
Regulatory Framework Adjustment: Review and adjustment of the regulatory framework, including licenses, Grid Code, Market Commercial Code, and relevant rules and regulations, to support the successful implementation of ISMO.
Transition Plan: Development of a detailed transition plan for existing resources and employees of the MO and SO to ensure effective on-boarding and inclusiveness of human resources.
Independence of ISMO Board: Ensuring the ISMO Board’s independence, modeled after best practices from developed markets, to foster credibility and trust among market participants.
NEPRA emphasizes that while the merger of the MO and SO can complement each other, maintaining their functional independence and performance is crucial. The restructuring aims to achieve a competitive wholesale electricity market, in line with the objectives of the Competitive Trading Bilateral Contracts Market (CTBCM).
Minister for Power, Awais Leghari, has sought permission from Chairman Senate Standing Committee, Mohsin Aziz, to present these power sector reforms, with NEPRA ready to hold a public hearing on the matter.
Story by Mushtaq Ghumman
