Central Power Purchasing Agency (Market Operator)

COMMERCIAL TRANSACTIONS AND TRANSFER PRICE
6.1.1. The invoices for energy and capacity sold by generation companies, for each billing period,
shall be sent to CPPA-G, pursuant to the terms reflected in the Power Purchase Agreements. The current mechanism for the energy and capacity invoicing for Generation Companies i: detailed in Annexure 1.
6.1.2. For each billing period, CPPA-G shall calculate the capacity transfer rate, in accordance with the Authority approved transfer Mechanism, for the purposes of invoices against each Distribution Company for the energy and capacity purchased during the previous month.

6.1.3. The Transfer Pricing Mechanism is used to derive the formula for Transfer Price, which is
then incorporated into the invoices raised against each Market Participants Representing
Demand. This formula is as below:

TP = TC +110SC GST

Where,
TP = Transfer Price in PKR
TC = Transfer Charges for generation costs of the pool
UoSC = Use of System Charges in PKR
GST = Application of GST on ETC 1 in PKR

6.1.4. Initially, the Use of System Charge (UoSC) in the Transfer Price consists of both, the
transmission charges of NTDC as well as the costs incurred by CPPA for its functions, as
included in Authority determination for NTDC. Once a new N I DC tariff determinatior
after the start of this Commercial Code and CPPA-G becomes operational, the UoSC will
only constitute of the transmission charges of N IDC whereas the costs incurred by CPPAG — to be referred to as the 'Market Operation fee' — shall be charged separately to Markel
Participants Representing Demand. The incorporation of this distinction between
transmission charges and the Market Operation fee will modify the formula for calculation
Transfer Price as found below:
TP = TC UoSC MOF GST
Where,
TP = Transfer Price in PKR
TC = Transfer Charges for generation costs of the pool
UoSC = Use of System Charges of N IDC in PKR
MOF = Market Operation Fee of CPPA-G in PKR
GST = Application of GST on ETC 1 in PKR

Each of the above terms in the formula has the meaning and is calculated as follows.
(i) Transfer Charges (TC)
Total transfer charges are calculated by adding Capacity Transfer Charge and Energy
Transfer Charge from generation in accordance with generator validated invoices and PPAs.
TC = CTC + ETC

Where,
TC = Transfer Charges in PKR
CTC = Capacity Transfer Charge in PKR
ETC = Energy Transfer Charge in PKR
The Transfer Charge is applied on Market Participants Representing Demand for recovery of
cost for procuring power from Generation Companies in accordance with PPAs. A Transfer
Rate (TR), applicable to Monthly Maximum Demand (MDI) and consumption of energy,
applies to the above charges as follows:

• ETR = Energy Transfer Rate to Market Participants Representing Demand in PKR
per kWh per Month
• CTR = Capacity Transfer Rate to Market Participants Representing Demand in PKR
per kW (MDI) per Month
CPPA-G shall use the Authority-approved mechanism for calculating monthly values of TR
The Transfer Rates shall be used to calculate CTC and ETC as follows:
(a) Capacity Transfer Charge (CTC)
The Capacity Transfer Charge (CTC) is calculated as CTR and multiplied by the month13
MDI of each respective Market Participant Representing Demands below:
CTC = CTR X MDI Market Participant Representing Demand

Capacity Transfer Rate (CTR) is applied to Market Participants Representing Demand to recover payments to Generation Companies for capacity *missing text* CIR is calculated by adding capacity generation costs (as invoiced by operation companies and verified by CPPA G) of all generation companies for each *missing text*.

Liquidated Damages payable by generation companies for the same billing month. The result
of which is further divided by the sum of Maximum Demand (MDI) recorded at all CDPs
for each billing month.

Formula**

Where,
CpGenCap = Generation companies cost for Capacity component of electrical power
generation for a billing month in PKR
LD = Liquidated Damages payment by Generation companies in PKR
MD = Maximum Demand of DISCOs in a billing month in kW

Energy Transfer Charge (ETC)
The Energy Transfer Charge (ETC) consists of two components:
ETC = ETC 1 + ETC 2

Where,
ETC 1 = Energy Transfer Charge that is chargeable to GST
ETC 2 = Energy Transfer Charge that is not chargeable to GST
ETC 1 and ETC 2 are calculated by multiplying the Energy Transfer Rate (ETR) with energ3
units of each Market Participant Representing Demand(in kWh) as follows:

ETC 1 = ETR 1 x Market Participant Representing Demand Eu
ETC 2 = ETR 2 x Market Participant Representing Demand Eu

The ETR is applied on DISCOs for recovery of energy costs of the Generation Companies and is calculated by taking sum of Energy Generation costs (as invoiced by the Generator Company and verified by CPPA-G) of all Generation Companies for each billing month and dividing it by the sum of energy units recorded at CDPs of each DISCO for the respective billing month as below:

Where,
CpGenEn = Generation companies cost for Energy component of electrical power generation for a billing month in PKR(subject to deduction of Total Export Energy Payments' payable by the generation companies for the energy imported)

EUs = Energy Units recorded at CDPs of Market Participant Representing Demand
during each billing month in kWh

CPPA-G shall be provided with all the Metering Data collected from CDPs of respective Market Participants Representing Demand by NTDC and shall calculate Net Energy Units transferred/delivered to each Market Participant Representing Demand. Each energy unit is measured in kWh. Net Energy Delivered to a Market Participant Representing Demand is calculated by taking the difference of total Energy imported from Market Participant Representing Demand and total Energy exported to Market Participant Representing Demand.

Monthly Maximum Demand (MDI) or Peak Demand of each Market Participant Representing Demand is also recorded at CDPs, and net MDI is reflected in the bills generated by CPPA-G to DISCOs. It is measured in kW. With reference to Market Participant Representing Demand, Net MDI is calculated by taking the difference of total Market Participant Representing Demand Imported MDI and total Market Participant Representing Demand Exported MDI.

Use of System Charge (UoSC)

NTDC levies two types of wheeling/use of system charge (UoSC) to Market Participants

Representing Demand in accordance with Authority determination;

• Fixed Charge (USCF) and;

• Variable Charge (USCV).

The charges resulting from the latest Authority determination apply to all Market Participant

Representing Demand. UoSC is calculated as follows:

UoSC = USCF + USCV

Where,

USCF = Fixed Use of System Charges

USCV = Variable Use of System Charges

Fixed charges are applicable on the Maximum Demand Indicator (MDI) value (in kW) and Variable charges are applicable on energy transferred to Market Participant Representing Demand (in kWh) during a billing period. Variable Charges are not applied to Markel Participant Representing Demand as per latest Authority determination, but should this be modified in later determinations, the formula will include USCV.

Market Operation Fee of CPPA-G (MOF)
The formula for calculation of the Market Operation Fee for CPPA-G is as established in
clause 11.1.4 of this Commercial Code.
(iii) General Sales Tax (GST)
GST is applied on the Energy Payments that are chargeable to GST (ETC 1) whereas, there no GST is applied to ETC 2 (it includes payments items excluded from GST application in accordance with order issued by FBR from time to time, e.g. mark ups, supplemental tariffs etc.).