NEPRA defers Rs93b recovery from consumers

Power firms seek additional revenue under quarterly tariff adjustment

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday reserved its decision on the recovery of Rs93 billion from electricity consumers on account of quarterly tariff adjustment.

The electricity tariff will go up Rs0.60 per unit if the proposed revenue is recovered in one year whereas the tariff will jump Re1 per unit if the amount is collected in six months.

Nepra – the power sector regulator – took up the issue at a public hearing presided over by its Chairman Taufeeq Farooqi.

The Power Division and Central Power Purchasing Agency (CPPA), on behalf of power distribution companies, gave their viewpoints on passing the impact of billions on to consumers due to prior year tariff adjustment and alignment of distribution margin with the inflation and currency exchange rate.

Nepra officials pointed out that the regulator had also received another application, sent by the Power Division, for additional revenue collection of Rs30 billion from the consumers. It would offset the inflationary impact on the operation and maintenance cost of power distribution companies, they said.

The distribution companies, in their application filed with Nepra, had sought permission for transferring the burden of Rs63.407 billion on to consumers for quarterly tariff adjustments for the fiscal year 2018-19 and annual cost adjustment of the prior period.

Distribution companies of Lahore, Islamabad, and Faisalabad had demanded additional recovery of Rs30 billion under the multi-year tariff (MYT) adjustment mechanism for the fiscal year 2019-20 while other distribution companies sought an adjustment of Rs33 billion.

Nepra authorities said the distribution companies were previously allowed recovery of Rs24 billion from the consumers on account of bad debt for one year with the condition that write-offs would have to be approved by their respective board of directors.

However, the distribution companies had been making collections for 18 months without a report saying whether their boards had approved the previous write-offs. Nepra directed the distribution companies to submit written reports on the subject.

According to the petition filed with Nepra, all the 10 distribution companies had requested an adjustment of Rs30.262 billion on account of variation in the fuel purchase price for the two last quarters (Jan-Mar and Apr-Jun) of 2018-19. Three companies also sought an annual adjustment of the prior period cost of Rs33.145 billion.

A few months ago, Nepra had allowed the distribution companies quarterly adjustment of Rs189.638 billion.

According to the fresh tariff petition, for the second last quarter (Jan-Mar) of 2018-19, the proposed recovery included the capacity purchase price of Rs22.163 billion, variable operation and maintenance cost of Rs123 million and transmission and distribution losses of Rs2.071 billion.