NEPRA raises power tariff by Rs0.52 per unit

Discos to recover Rs52.7 billion to due this increase

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has increased power tariff by Rs0.5272 per unit on account of quarterly adjustments and interim relief to the power distribution companies (Discos). Following increase in the tariff, Discos would be able to recover Rs52.7 billion.

The power regulator on Friday issued two orders with regard to quarterly/ biannual adjustments in the matter of XWDISCOs and interim relief. The first order pertains to the period from January 1, 2019 to June 30, 2019. The total impact of this increase is Rs33 billion that translated into Rs0.3325 per unit.

Nepra determined a uniform rate of Rs.0.3324 per kilowatt hour (kWh) for the allowed amount of quarterly adjustment of Rs.33, 750 million across each category of consumers of XWDISCOs, to be recovered in 12 months, based on projected sales for the FY 2017-18, after excluding lifeline consumers.

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Since the federal government is not empowered to impose surcharges after amendment in NEPRA Act, it while notifying the allowed uniform rate of Rs.0.3324/kWh shall not adjust the same upwards for any consumer category.

Nepra’s second interim decision allowed Discos a provisional increase of Rs19.7 billion. This provisional increase is on the already notified tariff and would be subject to adjustment as per Nepra’s final decision in this regard. The impact of this decision translates into Rs0.1947 per unit.

However, the authority – in view of submissions of Ministry of Energy and the fact that Discos under single year tariff regime may require sometime to file their tariff petitions in line with the amended act –has decided to allow an increase of Rs14 billion, in the already notified tariff.

This increase is strictly on provisional/interim basis subject to its adjustment once the tariff determinations of the XWDISCOs under single year tariff regime is finalized by Nepra.

The authority has also decided to allow the increase of Rs.5.772 billion in the already notified tariff of these Discos on interim/ provisional basis, subject to its adjustment based on the required information, which is not available at this point in time.

Nepra on the request of Ministry of Energy has revised power tariff for XWDISCOs on account of annual adjustment/indexation of distribution margin.  The Ministry of Energy is expected to notify the increased cost of Rs0.52 per unit further in near future. Around Rs1.8 per unit cost was also increased in July 2019.

The government is acting upon suggestions of the International Monetary Fund (IMF) to reform power sector and reduce losses. The recommendations made by the IMF have improved the collection of electricity bills, while reducing the subsidy either by increasing the power tariff or improving the system.

NEPRA defers Rs93b recovery from consumers

However, while the government is phasing out subsidy, power consumers in Karachi continue to enjoy lower tariff as the last two revisions in electricity rates are not applicable on the city.

The power regulator in a public hearing conducted on Wednesday reserved a decision to recover Rs93 billion from electricity consumers on account of quarterly adjustments and interim relief.  Nepra issued its decision on Friday, allowing Discos to recover Rs52 billion from the power consumers.

During the hearing, Nepra said it had also received another application from the power division for additional requirement of Rs30b revenue to recover from consumers on account of inflationary impact on operation and maintenance cost of the operations of the power companies.

However, this impact has not been passed on to the consumers.

Nepra said Discos were previously allowed Rs24 billion recovery from consumers on account of bad debts for one year with the condition that these waivers would have to be approved by their respective board of directors.

However, the Discos had been recovering the amount for 18 months without reporting if their boards had approved the previous waivers. Nepra directed Discos to submit written reports on the subject.