National Electric Power Regulatory Authority
Islamic Republic of Pakistan
NEPRA Tower, Attaturk Avenue (East), G-511, Islamabad.
Tel: +92-51-9206500, Fax: +92-51-2600026
Web: www.nepra.org.pk, E-mail: registrar@nepra.org.pk

Registrar
No. NEPRA/DG(M&E)/LAD-08/

4'

April 03, 2024

Chief Executive Officer,
Hyderabad Electric Supply Company Limited (HESCO),WAPDA House, Hussainabad,
Hyderabad
Subject:

ORDER OF THE AUTHORITY IN THE MATTER OF SHOW CAUSE NOTICEISSUED TO HESCO UNDER REGULATIONS 4(8) & 4(9) OF NEPRA (FINE)REGULATIONS, 2021 ON ACCOUNT OF AT&C-BASED LOAD SHEDDING

Please find enclosed herewith, the Order of the Authority (total 12 pages) in the subject matterfor information and compliance.
Enclosure: Order of the Authority (total 12 Pages)(Engr. Mazhal Ranjha)

OJ

National Electric Power Regulatory Authority

ORDER
IN THE MATTER OF SHOW CAUSE NOTICE ISSUED TO ITESCO UNDERREGULATIONS 4(8) AND 4(9) OF NEPRA (FINE) REGULATIONS, 2021 ON
ACCOUNT OF AT&C-BASED LOAD SHEDDING.

Hyderabad Electric Supply Company Limited (HESCO) (the "Licensee") was granted
a Distribution License (No. DL/05/2023) by the National Electric Power Regulatory
Authority (the "Authority") on 09.05.2023, for providing Distribution Services in its
Service Territory as stipulated in its said Distribution License, pursuant to section 20
read with 21 of the Regulation of Generation, Transmission and Distribution of ElectricPower Act, 1997 ("NEPRA Act").
2.

During hearings in the matter of Monthly Fuel Price Adjustments (FPAs) for DISCOs
and K-Electric being held on monthly basis, number of complaints regarding
unscheduled load shedding by general public had been and are being received by the
Authority. Upon inquiry, it was revealed that load shedding is being carried out on thebasis of AT&C losses policy which is not in line with the provisions of the NEPRA
Act, 1997, and Performance Standards (Distribution) Rules, 2005, and has never beenrecognized by NEPRA.

3.

According to Rule 4 (0 of NEPRA Performance Standards Rules:() A distribution company shall have plans and schedules available to shed up
to 30% of its connected load at any time upon instruction from NTDC. This
30% load must be made up from separate blocks of switchable load, which
can be disconnected in turn at the instruction from NTDC. A distribution
company shall provide copies of these plans to NTDC.
('ii) Wherever possible NTDC shall give distribution companies advancewarning of impending need for load shedding to maintain system voltage
and/or frequency in accordance with the Grid Code.
(iii)As per the provisions of the Grid Code, NTDC shall maintain an overview
and as required instruct each distribution company the quantum of load tobe disconnected and the time of such disconnection. This instruction shallbe given in clear, unambiguous terms and related to prepared plans.
(iv) When instructed by NTDC, the distribution companies shall shed the loadin the following order, namely: —(a) Supply to consumers in rural areas; and residential consumers in urban
areas where separate feeders exist.
(b) Supply to consumers, other than industrial, in urban areas.
Page 1 of 12

'1

NEPp
AU THORITY¼1

(c) Supply to agriculture consumers where there is a dedicated power supply.
(d) Supply to industrial consumers.
(e) Supply to schools and hospitals.
Supply to defense and strategic installations.
(v) A distribution company shall prepare schedules of load disconnection,
which demonstrate this priority order and which rotate load disconnections
within the above groups in a non-discriminatoiy manner. The principle ofproportionality shall be kept in mind so as not to excessively burden aparticular consumer class.
4.

The Authority further observed that the Licensee is even violating its own so-called
AT&C policy and carrying out excessive load shedding as compared to the scheduledone. Moreover, few feeders were randomly selected, and observed that the Licensee
has been failed to make improvements in technical and financial health of those feeders
since last four years despite allowing colossal amounts under O&M head by NEPRA
and continuing their operations in status quo, due to which, even good paying
consumers are being suffered a lot.

5.

Therefore, the Authority decided to initiate legal proceedings against the Licensee
under NEPRA Fine Regulations, 2021.

6.

In view thereof, an Explanation was served to the Licensee under Regulation 4(1) and4(2) of NEPRA (Fine) Regulation, 2021 on January 03, 2023, on account of providing
electricity on a non-discriminatory basis by carrying out AT&C-based load shedding
and failure to comply with Performance Standards (Distribution) Rules.

7.

Tn response, the Licensee vide its letter dated January 13, 2023, requested NEPRA for
extension of three weeks more time to formulate its position with respect to the
Explanation served. The Authority considered the request of the Licensee, even though
the response was not received as per committed timelines, and a final notice was issued
in this regard. Accordingly, the Licensee vide its letter dated March 13, 2023, submitted
its reply, and a hearing in the matter was held on May 29, 2023.

8.

The Authority considered the submissions of the Licensee as given in reply against
Explanation & during the hearing and found the same as unsatisfactory. Therefore, theAuthority decided to issue a Show Cause Notice (SCN) to the Licensee under
Regulation 4(8) & (9) of the NEPRA (Fine) Regulations, 2021.

9.

Accordingly, a Show Cause Notice (SCN) along with the Order recording reasons forthe rejection of Explanation was issued to the Licensee on September 22, 2023. The
salient features of the said SCN are narrated as under:
3. "WHEREAS, pursuant to section 2] (2) (b,) of the NEPRA Act, the Licensee is
responsible to provide distribution service and make sales of electric poweriv ithin its territory on a non-discriminatory basis to all the consumers who meetthe eligibility criteria laid down by the Authority; andPage 2 of 12

4. WHEREAS, pursuant to section 21(2) of the NEPRA Act, the Licensee isrequired to follow the performance standards laid down by the Authority for
distribution and transmission of electric power, including safety, and
5. WHEREAS, Rule 4(t) of NEPRA Performance Standards (Distribution) Rules,
2005, states below:'4) A distribution company shall have plans and schedules available to shed up

to 30% of its connected load at any time upon instruction from NTDC. This
30% load must be made upfron separate blocks of switchable load, which
can be disconnected in turn at the instruction from NTDC. A distribution
company shall provide copies of these plans to IVTDC.
(ii) Wherever possible NTDC shall give distribution companies advancewarning of impending need for load shedding to maintain system voltage
and/or frequency in accordance with the Grid Code.
(iii)As per the provisions of the Grid Code, NTDC shall maintain an overview
and as required instruct each distribution company the quantum of load tobe disconnected and the time of such disconnection. This instruction shallbe given in clear, unambiguous terms and related to prepared plans.
(iv) When instructed by NTDC, the distribution companies shall shed the loadin the following order, namely:(g) Supply to consumers in rural areas; and residential consumers in urban
areas where separate feeders exist.
(h) Supply to consumers, other than industrial, in urban areas.
(1) Supply to agriculture consumers where there is a dedicated power
supply.
(') Supply to industrial consumers.
(k) Supply to schools and hospitals.
(1) Supply to defense and strategic installations.
(v) A distribution company shall prepare schedules of load disconnection,
which demonstrate this priority order and which rotate load disconnections
within the above groups in a non-discriminatory manner. The principle ofproportionality shall be kept in mind so as not to excessively burden aparticular consumer class.
6. WHEREAS, the Authority issued an Explanation to the Licensee under
Regulation 4(1) and 4(2) of NEPRA (Fine) Regulation, 2021 on January 03,
2023, on account of AT&C-based load shedding and failure to comply with
Performance Standards (Distribution) Rules. The salient points of the said
Explanation are reproduced below:
3. WHEREAS, contraly to above, the Licensee is carrying out load
shedding in their service territories on the basis of the Aggregate
Technical and Commercial (AT&C) losses policy following the criteria
hereunder:
Page 3 of 12

II
Category - I.
%AT&C 0-10 10.120(%)
Losses(%)
0
Load0
Shedding Hours Hours
Hours
03
No.
of 136
FeedersIII
20.130
(%)
2
Hour

IV
30.140
(%)
4
Hours

V
40.160
(%)
8
Hours

Vt
60.180
(%)
12
Hours

7,ôtdl
VII
80.1%
and
of
above Feeders
16
Hours
-

03

24

78

305

23

572

4. WHEREAS, the load shedding carrying out by the Licensee following theabove said criteria is not in line with the provisions of the NEPRA Act,
1997, and Performance Standards (Distribution) Rules, 2005 and has
never been recognized by NEPRA. According to NEPRA PerformanceStandards Rules, the Licensee can never do load shedding on its own until& unless instructed by NTDC. Hence, the Licensee is prima facie inviolation of Rule 4(j) of Performance Standards (Distribution) Rules,
2005 read with Section 21(2)(b) & j) of the NEPRA Act andArticle 11 of
the terms & conditions of Licensee 's License; and5. WHEREAS,from the data offew randomly selectedfeeders for the periodof four years (FY 2018-19 to FY 2021-22), it is noted that their AT&C
losses have increased, the details of which are given in the table below.
Sr.
#

Name of Feeder

I
2
3
4
5
6
7

IJKVNERUNKOTMEHMOODA BAD
P. HEALTHJIKVFATEH
QASIMA BADSEHRISHNAGARSYEDMASOOM
SHAH
L-8

8

%AT&C
losses inJuly2018-15.17
54.07
66.06
54.17
40.15
61.01
-13.48°AT&C
losses inJune2022
64.23
73.71
80.27
63.38
45.40
66.25
-9.22

Incie4
DecPease

61.39

65.52

4.14

79.40
19.64
14.21
9.21
5.25
5.24
4.25

6. WHEREAS, from the above data it is evident that despite spending
colossal amount of billions of rupees under the investment head, theLicensee has failed to take measures to improve the technical & financial
health of]] k Vfeeders, rather they have found an easy way to carry out
load shedding on such feeders based on A T&C policy; and7. WHEREAS, the power Generation capacity, that too on Take or Pay
basis is underutilized; the underutilization factor of thermal power
generation plan during last four years is given in following table:&

Page 4 of 12

Year

2018-192019-20
2020-212021-22

Thermal Power Plants in cPPA-G System
Utilization
EnergyIn stalled(%)
Generated
Capacity(GWli)(MW)
40.02
85025.53
24,25337.61
78504.04
23,82739.59
86599.28
24,97238.22
91404.82
27,304

8. WHEREAS, the consumers ofelectricity on one hand are paying capacity
charges for idle power generation capacity while facing load shedding onother hand, and
9. WHEREAS, the Licensee was repeatedly directed to submit concrete
plan containing specific measures and timelines to avoid such undue load
shedding in their service territories. However, no such specific plan has
been submitted by the Licensee instead they submitted generic responses.
Therefore, the Licensee has prima facie non-complied with the
Authority's directions; and"7. WHEREAS, the Licensee ivas given fifteen (15) days to either admit or deny theoccurrence of the said violations and submit a reply against the aforementioned
Explanation, failing which it shall be presumed that the Licensee has nothing to say
in its defense and the Authority shall proceed based on available record inaccordance with NEPRA Act, Rules, and Regulations. However, despite the lapseof the given time period, no response from the Licensee was received; and8. WHEREAS, in pursuance of the fair administration of justice, the Authority
deemed it necessary to provide a fair opportunity to comply before any further
action is taken. Therefore, a Reminder dated January 31, 2023, followed by a Final
Notice dated March 10, 2023, were also issued to the Licensee to submit its
response. However, no response was submitted by the Licensee, despite expiry of
the additional time given. This demonstrates an obvious disre gardfor the repeateddirections of the Authority and a clear dereliction of its obligations; and9. WHEREAS, later, the Licensee submitted its reply vide letter dated March 13, 2023('received in NEPRA on March 21, 2023), and hearing in the matter was also heldon May 29, 2023. Consequently, the Authority after detailed deliberations
concluded that the Licensee has failed to provide any satisfactory reply to the
Explanation served to it; and10. WHEREAS, the Licensee has ftüied to satisfy the Authority with its replies andprima facia, has committed the violations of Rule 4('f of Performance Standards('DistribUtion,) Rules, 2005, read with Section 21(2ft'b,) & ('9 of the NEPRA Act andArticle 11 ofthe terms & conditions ofLicensee 'sLicense, and is in non-compliancewith the directions of the Authority. Therefore, the Authority hereby rejects the
response of the Licensee against the Explanation served, and an Order dated
September 22, 2023, is attached herewith, mentioning the reasons of rejection;
and"

Cv

Page 5 of 12

In response, the Licensee vide its letter dated October 05, 2023, submitted its reply.
0.
The salient points of the submitted response are as follows:"Preliminary Objections and Submission:
1. That it is respectfully submitted at the outset that HESCO, being a distribution
licensee of NEPRA is fully aware of its responsibilities to provide safe andreliable electric power services to its consumers and has always endeavored tofulfil its obligations in accordance with the applicable laws.
2. That no "Rules"providing for the "procedures" in case of any contravention of
the provisions of applicable documents as per requirement of section 46(2)(d)of the NEPRA Act, 1997 are infield, therefore, the subject "show cause notice"
is illegal and not maintainable in the eyes of law.
3. That the 'Regulations" under which the 'show cause notice" has been issued
are ultra vires to the provisions of NEPRA Act, 1997 in so far as section 47
does not provide for formulation of any regulations for the purpose; rather
section 46(2)(d) required for prescribing "Rules"for the purpose but no such
Rules are in field, therefore, prima fade, the subject "show cause notice" iswithout any lawful authority.
Parawise reply oft/ic Show-Cause Notice:Paras 6 It is submitted that HESCO duly filed its reply to the referred"explanation", however, HESCO never received any order of the Authority
regarding rejection of its response. It may also be worth mentioning here thatHESCO hadfiled its reply in the month of March, 2023 and the same was required
to be examined by the Authority within 7 days as per the referred "Regulations" buta hearing into the matter was conducted after two months, i.e., in May 2023,
however, unfortunately, the subject show cause notice has been issued after lapse
ofa period of almost six months from the date of reply filed by HESCO which seems
to be very unreasonable. In the reply of "explanation", the allegations were duly
replied but the same were not appreciated by the Honorable Authority. It was also
explained in the reply to the "explanation" that for carrying out the "load she dding"in the country, though there were certain standards provided in the NEPRA
Perform ance Standards Rules but unfortunately those standards were neverfollowed by any of the licensees; rather the load shedding is carried out inaccordance with the policy of the Government of Pakistan conveyed through the
Ministry of Energy (Power Division) Islamabad. It is submitted that NEPRA isalready in the knowledge of the criteria of load shedding being followed by all theDistribution licensees but it took no action and there involves a principle of"estoppel".
Para 7-8 In reply to these paras, it is submitted that HESCO had filed theappropriate reply to the "explanation" which was accepted by the Authority andthereby the opportunity of hearing was also granted which is an admitted fact as
per contents of these paras.
Para 9-10 It is submitted that the AT&C-based load she ddingfor 11 kVFeeders of
Category-I and II is already exempted a. licv of Ministry of Energy (Power
Page 6 of 12

cv

NEPRA
AUTHORITY<Division) Isianiabad and directions of the NEPRA Authority as referred above.
Further the allegation of violation of NEPRA Performance Standards Rules is also
not correct for the reason that Apex Court oft/ic counhly, i.e., Honorable Supreme
Court of Pakistan in ajudgnient dated 10.12.2013 in Human Right Case No. 790G of2 009 has already inter-alia ruled as under:"Loadsheddinq of electricity in the country is manageable subject todedicated and committed efforts to ensure the maximum possible generationof electricity which is sufficient to cater to the requirement of all thecategories of the stakeholders/consumers. The competent authority must
concentrate its efforts to n,inimize the sufferings of the consumers byendeavoring to provide uninterrupted supply of electricity. If, however,loadshedding is the only way out, it must be administered without having
distinction between rural and the urban areas as well as domestic,
commercial and industrial seclors. Moreover, a formula must be put in place
to ensure (lie distribution of electricity on equitable basis"
This it is very much clear that even Supreme c'ourt of Pakistan had directed for
carlying out load-shedding, f needed, the same is to be done on equitable basis,
therefore, the requirement of observing of Performance Standards Rules is alreadyoverruled by the Honorable Supreme Court, therefore, NEPRA cannot make any
allegations against HESCO for non-observance of those Standards.
Para 11. For the reasons stated above, the subject show cause notice is not
maintainable and is liable to be withdrawn.
It is however added that HESCO has launched the anti-theft campaign, as per the
directions of Ministiy of Energy (Power Division) GoP, Islamabad with the cooperation and assistance of Law enforcing agencies. In this regard, random
checking of the energy meters of sub-divisions under all tariff categories is being
carried-out to check the involvement of the consumer using the electricity by illegalmeans (i.e. direct hooking, tampering of meters or else). The outstanding amountfrom receivables is also being recovered.
In case of involvement of consumers in pilferage of electricity, detection bills arebeing served including lodging the FIR's against those consumers to make adeterrent in order to eliminate the theft of electricity. This drive will definitely
improve the position of recoveries as well as also reduce/cap the losses ofHESCO,
resulting increases the performance of HESCO including the reduction ofA T&Cbased load shedding.
11.
Moreover, in order to follow the due process of law, a hearing in the matter was held
on December 21, 2023, wherein, the CEO HESCO along with its team participated and madethe following submissions:i.

The Category-wise details of HESCO feeders are as below:
Category
CAT-I
CAT-IlNumber of
Feeders
158
4
Page 7 of 12

CAT-Ill
CAT-IV
CAT-V
CAT-Vl
CAT-Vu
Total

12.

3
8
33
108
291
605

ii.

In HESCO service territory, out of 605 feeders, 162 feeders came under CAT-I andII, upon which there is no load shedding.

iii.

At present, HESCO is on loss of around 60%, and recovery is around 70-73%.

iv.

In the service territory of HESCO, few districts i.e. Thatha, Sajwal, etc. are almost
entirely running on direct connections. We have recently removed around 600-700
Transformers.

v.

Similarly, in the vicinity of Hyderabad, we have removed around 16 Transformers.
The entire markets are running on direct connections.

vi.

In Mirpurkhas, we have made improvements in AT&C losses with a reduction ofaround 17%.

vii.

HESCO has disconnected 46 transformers from different villages upon which themassive arrears are accumulated.

viii.

Nobody among the 46 villages is willing to pay bills, so we have disconnected theirconnections.

FINDINGS/ANALYSIS:The Licensee has submitted that being a distribution licensee of NEPRA is fully
aware of its responsibilities to provide safe and reliable electric power services to its
consumers and has always endeavored to fulfill its obligations in accordance withthe applicable laws. The Licensee has further submitted that no "Rules' providing
for the "procedures" in case of any contravention of the provisions of applicable
documents as per the requirement of section 46(2)(d) of the NEPRA Act, 1997 arein the field, therefore, the subject "show cause notice" is illegal and not maintainable
in the eyes of law. The Licensee also submitted that the "Regulations" under which
the "show cause notice" has been issued are ultra vires to the provisions of NEPRA
Act, 1997 in so far as section 47 does not provide for formulation of any regulations
for the purpose; rather section 46(2)(d) required for prescribing "Rules" for the
purpose but no such Rules are in field, therefore, prima facie, the subject "showcause notice" is without any lawful authority.
The Authority after considering the submissions of the Licensee is of the view that
the Licensee is a distribution company that has been granted a distribution licenseby NEPRA under Sections 21 and 23 E of the NEPRA Act, to undertake the
distribution of electric power. Moreover, as a distribution licensee, it possesses anumber of legal and regulatory obligations under various statutory instruments,
A Act, Distribution license, NEPRA
including but not limited toR
Page 8 of 12

Performance Standards (Distribution) Rules, 2005, Distribution Code, andConsumer Service Manual. Additionally, NEPRA laws explicitly require a
distribution company to provide an uninterrupted, reliable, and safe electric power
supply to its consumers. Section 21 read with Section 23E of the NEPRA Act
imposes a statutory responsibility on the license holder to provide the supply ofelectric power to all of its consumers on non-discriminatory basis.
The Authority further observes that NEPRA laws permit load shedding solely fortechnical reasons, without any allowance for load shedding based on commercial
considerations, such as a regime that differentiates between higher and lower-paying
consumers which is in accordance with NEPRA's laws. Moreover, from the perusal,
it becomes abundantly clear that the Licensee is admitting the allegations and isclaiming that the load-shedding priorities present in NEPRA (PSDR, 2005) aredeliberately not being followed by all concerned the Licensee & that the law isimpractical & ultra vires NEPRA laws. As the admission of guilt is so abundantly
clear there is hardly any aspect which require further analysis. Further arguments
have been raised highlighting the Suo moto proceeding in the Supreme Court against
which APTMA has filed review petition, which is presently pending wherein, it issubmitted the load shedding is happening on the instruction of the Ministry ofEnergy. The aforesaid grounds lend no credence nor offer any investigating
circumstances. Accordingly, appropriate penalties as deemed appropriate by the
Authority may be levied/imposed.
Furthermore, it submitted that the Authority as per Section 47 of the Act, havespecified NEPRA Fines Regulations, wherein a procedure of issuance of Show
Cause Notice has been laid down. If the Licensee reckons that the NEPRA Laws areultra vires then NEPRA is not the proper forum rather they should go and agitate
before the High Court by filing a Constitutional Petition.
ii.

The Licensee has submitted that it has duly filed its reply to the referred"explanation", however, the Licensee never received any order of the Authority
regarding rejection of its response.
The submissions of the Licensee have been examined by the Authority, and it isfound that as per NEPRA's record, the Show Cause Notice and the Order of the
Authority mentioning the reasons for the rejection of the Explanation were issued
on September 22, 2023, and both have also been delivered to the Licensee on
September 25, 2023, and received by Mr. Roshan. Therefore, the claim of theLicensee regarding not receiving the Order is vague.

iii.

The Licensee has also submitted that it had filed its reply in the month of March2023 and the same was required to be examined by the Authority within 7 days as
per the referred 'Regulations" but a hearing into the matter was conducted after twomonths, i.e., in May 2023, however, unfortunately, the subject show cause notice
has been issued after lapse of a period of almost six months from the date of reply
filed by the Licensee which seems to be very unreasonable.
The Authority while considering the submissions of the Licensee is ofthe consideredopinion that it promptly sought an explanation upon discovering the violation within
the stipulated time frame. Moreover, the Licensee has taken the ground that
Page 9 of 12

explanations for violations should only be issued within 15 days of the Authority's
awareness of such infractions. The Authority further observes that while ensuring
the diligent enforcement of regulations and prompt action is paramount, it's essential
to underscore that the 15-day period outlined in Regulation 4(1) is not a mandatory
period but is directory in nature. This flexibility is vital, particularly in cases wherecircumstances overwhelmingly demonstrate a breach of law by the Licensee.
NEPRA is firm in its belief that proceedings under the Fine Regulations must serve
as a deterrent against violations of NEPRA laws. As far as the contention of theLicensee to the extent that explanation is ultra vires in view of the procedure set out
in Chapter III of the NEPRA Act is concerned, it is clarified that it is the prerogativeof the Authority as per Regulation 4 of the Fine Regulations, 2021 that it may either
order an investigation into the matter in terms of 27A of Act OR shall within 15 daysof coming to know of violation issue an explanation. Therefore, the Licensee's
objection lacks merit in this regard.
iv.

The Licensee has further submitted that in the reply of"explanation", the allegations
were duly replied but the same were not appreciated by the Honorable Authority. It
was also explained in the reply to the "explanation" that for carrying out the "loadshedding" in the country, though there were certain standards provided in the
NEPRA Performance Standards Rules but unfortunately those standards were neverfollowed by any of the licensees; rather the load shedding is carried out inaccordance with the policy of the Government of Pakistan conveyed through the
Ministry of Energy (Power Division) Islamabad. It is submitted that NEPRA isalready in the knowledge of the criteria of load sheddiiig being followed by all theDistribution licensees but it took no action and there involves a principle of"estoppel".
In this regard, the Authority has considered the submissions of the licensee andobserves that the Licensee has admitted that it is carrying out load shedding in its
territory contrary to NEPRA laws. As far as the Licensee's claims regarding AT&Cbased load shedding policy being followed by all the Distribution licensees isconcerned, it is clarified that in most of the Distribution Companies like IESCO,FESCO, GEPCO, LESCO, and MEPCO, almost 99% of their feeders come under
CAT-I and CAT-Il, upon which there is no AT&C based load shedding. TheseDISCOs have improved their feeder losses with time by efficiently and effectively
utilization of their investment funds. However, the improvement of feeders in the
Licensee's territory is insignificant as only 25% its of feeders are exempted from
AT&C-based load shedding. The rest of the DISCOs i.e., KE, SEPCO, QESCO, andPESCO are strictly relying on AT&C-based load shedding upon which the
honorable Authority has already taken notice and initiated legal proceedings. TheseDISCOs are trying to hide their inefficiencies on account of the reduction of line
losses by implementing AT&C-based load shedding for consumers instead of taking
corrective measures to improve their feeder losses. The Licensee should focus on
the efficient utilization of its O&M funds and Investments allowed under DOP and
ELR heads in its MYT ill order to address this issue. However, no concrete measures
have been taken by the Licensee to avoid such undue load shedding or to reduce
feeder losses. Moreover, it is purely the matter of governance improvement, which
the Licensee has failed to do.

Page 10 of 12

v.

The Licensee has submitted that it had filed the appropriate reply to the"explanation" which was accepted by the Authority and thereby the opportunity ofhearing was also granted which is an admitted fact as per contents of these paras.
The Authority after considering and reviewing the submissions of the Licensee is of
the considered opinion that the response against the Explanation was considered by
the Authority, and in order to follow due process of law and to provide a fair chance
to the Licensee to present its case, an opportunity for hearing was provided. Thisaligns with the principles of natural justice, ensuring that all parties involved have afair chance to be heard before any final decision is made. Further, consideration of
reply does not mean that the Authority accepted the same. This shows that the
Licensee has serious lack of understanding.

vi.

The Licensee has referred the Supreme Court of Pakistan's decision and concluded
that even the Supreme Court of Pakistan had directed to carry out load-shedding if
needed, the same is to be done on an equitable basis, therefore, the requirement ofobserving Performance Standards Rules is already overruled by the Honorable
Supreme Court, therefore, NEPRA cannot make any allegations against the Licensee
for non-observance of those Standards.
The Authority has considered the submissions of the Licensee and observes that thelegal counsel for the Licensee has claimed that the Performance Standard Rules havebeen rendered obsolete by the Honorable Supreme Court. However, it must be
clarified that at no point has the court declared these rules obsolete, nor has there
been any order to that effect. Such a claim is misleading and incorrect. The court has
directed to devise a mechanism of distribution of electricity on equitable basis. The
honorable SC held that efforts must be made to provide interrupted supply ofelectricity. However, if the load shedding is the only way out, it must be
administered without having any distinction between rural and urban areas as wellas domestic, commercial, and industrial sectors. The Licensee cannot hide behind
the SC judgment based on self-serving interpretations.

vii.

The Licensee has submitted that it has launched the anti-theft campaign, as per the
directions of the Ministry of Energy (Power Division) GoP, Islamabad with thecooperation and assistance of Law enforcing agencies. In this regard, random
checking of the energy meters of sub-divisions under all tariff categories is being
carried out to check the involvement of the consumer using the electricity by illegalmeans (i.e. direct hooking, tampering of meters or else). This drive will definitely
improve the position of recoveries as well as also reduce/cap the losses, resulting inincreases the performance, including the reduction of AT&C-based load shedding.
The Authority has gone through the submissions of the Licensee and observes that
although the steps are being taken by the Licensee to control theft and to reduce
AT&C losses of the feeders, but the results on the ground are not tangible. Neither,
the theft element has been reduced, nor the AT&C losses of the feeders are
decreasing, as the Licensee has not shared any number. In this regard, an exercise
has already been carried out wherein, 20 No. of sample feeders were selected andtheir AT&C losses for the last four years were analyzed. The analysis revealed thatno significant improvement has been made despite spending colossal amounts
under the investment and O&M heads. Therefore, the submissions of the Licensee
in this regard, seem unsatisfactory.
Page 11 of 12

a

t
.'

12.

Decision

Keeping in view the submissions ofthe Licensee, the evidence available on record, andprovisions of relevant NEPRA laws and terms and conditions of distribution license
issued to the Licensee, the Authority hereby rejects the response of the Licensee against
the served Show Cause Notice dated September 11, 2023, and imposed a fine of Rs 50
Million on the Licensee under NEPRA Act, and NEPRA (Fine) Regulations, 2021 forviolation of Rule 4(f) of Performance Standards (Distribution) Rules, 2005, read with
Section 21 (2)(b) & (f) of the NEPRA Act, and Article 11 of the terms & conditions of
its Distribution License. Additionally, the Licensee is non-compliant to the directionsof the Authority.

AUTHORITY
Rafique Ahmed ShaikhMember (Technical)

Engr. Maqsood Anwar Khan
Member (Licensing)Mathar Niaz Rana (nsc)Member (Tariff)

Amina Ahmed
Member (Law)

Waseem Mukhtar
Chairman

Dated

2024

cR

*
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