NEPRA refuses Rs2.97 per unit increase in tariff

Power producers caused additional burden of over Rs7b on power consumers due to generation of expensive electricity

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday refused to pass on Rs2.97 per unit increase to power consumers on account of monthly fuel adjustment following electricity generation produced through expensive furnace oil.

The power producers had caused additional burden of over Rs7 billion on power consumers due to generation of expensive electricity in violation of merit order.

The power regulator has rescheduled public hearing on Tuesday next week and sought explanation for violating merit order.

Nepra in a public hearing conducted on Wednesday took strong notice of violation of merit order by power producers. These power plants produced energy by using furnace oil while ignoring use of Liquefied Natural Gas (LNG) and coal that resulted in putting burden of Rs7 billion on power consumers.

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The power regulator sought an explanation regarding the generation of expensive electricity by using furnace oil in power plants and suspended the hearing till Tuesday next week.

The regulatory body announced not to decide the matter of increasing power tariff on account of monthly fuel adjustment unless Central Power Purchasing Agency (CPPA) gave solid reasons for running power plants on expensive fuel.

Nepra authorities noted that an amount of Rs7.20 billion could be saved by running power plants based on coal and Regasified Liquefied Natural Gas (RLNG) with better efficiency.

Nepra chairman expressed serious concerns over use of expensive fuel in power plants in violation of merit order and asked what the justification of hearing is if the merit order is violated.

He asked CPPA authorities to present reasons for violating the merit order.

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He said the national exchequer had suffered a loss of Rs7 billion by violating merit order and asked CPPA authorities to sit with Nepra officials to determine the reasons for violating the merit order.

Interestingly, CPPA officials claimed that billions of rupees had been saved by running power plants on furnace oil, which Nepra had termed a violation of merit order as cheaper fuel was not consumed in power plants to save money.

They said that furnace oil-based power plants helped reduce power load shedding by one hour.

Power tariff increase

NEPRA held a public hearing on Wednesday to decide Rs2.97 per unit increase in power tariff under the head of monthly fuel price adjustment for the month of September 2019.

The Central Power Purchasing Agency (CPPA) on behalf of the power distributing companies (Discos) had asked Nepra to increase the electricity price by Rs2.97 per unit on account of fuel price adjustment.

The reference price was Rs2.84 per unit against the actual price of Rs5.8 per unit.

The electricity consumers were expected to face an additional Rs25 billion following hike in power tariff to be billed in November. Around 13.62 billion units of electricity were produced at a cost of Rs70 billion during September.

Out of the total power generation, 37.09% electricity was generated from hydel sources, 16.39% coal, 6pc% residual fuel oil (RFO), 5.50% nuclear sources, 1.10% wind sources, 0.45pc% solar, 11.85% gas and 21.06% imported Liquefied Natural Gas (LNG).