Nepra hikes power tariff by Rs1.8 per unit

Power distribution companies will recover Rs24b from consumers in December bills

Zafar Bhutta November 05, 2019

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Tuesday allowed power distribution companies to hike power tariff by Rs1.826 per unit on account of monthly fuel adjustment. The decision came in the wake of companies using expensive furnace oil for power generation for the month of September.

Following increase in electricity rates, the power distribution companies would recover Rs24 billion from the power consumers in the monthly bills of December.

The power regulator increased electricity rates by Rs1.826 per unit but deducted Rs0.5463 on account of overuse of Residual Fuel Oil (RFO), the impact of which is Rs7.2 billion. Upon provision of satisfactory data and justification to the power regulator within 15 days, it would be decided accordingly.

The power regulator said that the interim increase of Rs1.826 was being made at present and announced to take strict action against power producers in case violation of merit order is proved after examination of data. During the hearing, Nepra authorities raised questions as to why expensive fuel-based power plants were operated in September in violation of the merit order.

The reference price was Rs2.84 per unit against the actual price of Rs5.8 per unit. 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% from coal, 6% from RFO, 5.50% from nuclear sources, 1.10% from wind sources, 0.45% from solar, 11.85% from gas and 21.06% was imported Liquefied Natural Gas (LNG).

Last week, the Central Power Purchasing Agency (CPPA) on behalf of the power distributing companies asked Nepra to increase the electricity price by Rs2.97 per unit on account of fuel price adjustment. However, the regulator had refused to pass on the increase to power consumers due to electricity generated through expensive furnace oil.

The power producers had caused an additional burden of over Rs7 billion on power consumers due to generation of expensive electricity. The power regulator had rescheduled public hearing for Tuesday and sought explanation for violating the merit order.

During public hearing conducted on Wednesday last week, Nepra had taken strong notice of the violation 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.

The Nepra chairman had 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. He had said the national exchequer had suffered a loss of Rs7 billion due to this and asked the CPPA authorities to sit with Nepra officials to determine the reasons.

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.


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