Consumers could face inflated bills as NEPRA mulls petition

NTDC says its net revenue requirement is 86% higher than its earnings

KARACHI: Pakistan’s power consumers may receive inflated bills in the near future, as the regulator is considering a petition filed by the national power transmission company to revise up its “wheeling charges,” according to a notification on Wednesday.

The National Transmission and Dispatch Company (NTDC) has explained to the National Electric Power Regulatory Authority (Nepra) that “the prevailing rate of Use of System Charges (UoSC) is insufficient to meet with the anticipated rise in the revenue requirement in fiscal year 2015-16 and fiscal year 2016-17 due to incremental impact in the operational and financial costs, construction of new grids and expansion of transmission network.”

NTDC has estimated a net revenue requirement at Rs41.41 billion for the fiscal year 2015-16. This is 86% higher than Rs22.31 billion earned (provisional) in the prior fiscal year 2014-15, stated the notification.

For the fiscal year 2016-17, it has estimated revenue at Rs45.35 billion, it added.

The company charges its users for transmission and allied services the two-part tariff: fixed charges at Rs113.05/kW/month and variable charges at Rs0.2263 per kWh X LAL factor. “LAL factor is adjustment of losses and load imposed on the transmission system by a user,” said the Nepra order passed in April 2015 for FY 2014-15.

The petition added that “increase in capital base for FY 2015-16 and 2016-17 (is foreseen) due to more capital investment in ongoing as well as new projects.”

NTDC estimated investment at Rs42.36 billion in the fiscal year 2015-16 against estimated revenue collection at Rs41.41 billion. And it foresaw investment at Rs74.70 billion against expected revenue at Rs45.35 billion, it said.

Additionally the increase in revenue is also considered due to surge in operational and maintenance costs including pay and allowance.

In addition to this, the company has inducted 2,336 employees against vacant posts and system expansion.

“NTDC being the infrastructure based company needs borrowings from foreign/local institutions for expansion/development in transmission network for which financial charges are required to be paid to lenders,” it said.

The reasons behind the request to increase wheeling charges include “[seeking] a minimal of 15.50% return on capital base,” NTDC said in the petition.

“Regulatory revenue gap has arisen due to inadequate revenue requirement based on estimates versus actual results for FY 2014-15, delayed determination, and notification of tariff,” it added.

Published in The Express Tribune, August 11^th, 2016.

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