NEPRA adjusts tariff to give relief

Consumers, except for K-Electric, will be given Rs4.5b relief in August and September

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) on Thursday decided electricity tariffs for the eight-month period from November 2019 to June 2020, which would provide an accumulated relief of Rs4.46 billion for the power consumers.

The power regulator decided to increase electricity rates for five months, with accumulated impact of Rs4.86 per unit, and allowed accumulated decrease of Rs3.09 per unit for three months.

However, after making for adjustment in the hike and reduction for the eight-month power tariff, the regulator said that the consumers would get an accumulated relief of Rs4.46 billion.

The relief will be given in August and September 2020. It will not be applicable to the consumers of K-Electric, agricultural tube wells and lifeline consumers.

The accumulated impact of tariff increase has been estimated at Rs31 billion and the impact of relief is calculated at Rs35 billion.

The decision was taken at a public hearing conducted by the regulator on Thursday. The hearing was also conducted on fuel charges adjustment for the period November 2019 to June 2020 for ex-Wapda distribution companies (DISCOs) and quarterly adjustments for DISCOs on account of variation in PPP for the second and third quarters from October 2019 to March 2020.

“Per unit impact would be different for different months and cannot be quoted as per unit, since each month would have different consumption units on an accumulated basis,” said a Nepra official.

Nepra approved the increase in tariff of Rs0.98 per unit for November and Rs1.88 per unit for December 2019. It also allowed increase in tariff of Rs0.93 per unit for January 2020, Rs0.39 per unit for February and Rs0.68 per unit for March.

However, the regulatory authority decided to reduce electricity rate by Rs0.68 per unit for April, Rs1.17 per unit for May and Rs1.24 per unit for June 2020.

Speaking on the occasion, the Nepra chairman questioned as to why furnace oil-based power plants were operated in December and January. He said that deferring the electricity price review would put burden on the consumers.

He said that National Transmission and Despatch Company (NTDC) had revealed faults in the transmission system every month but it had no plan to remove these faults.

The Central Power Purchasing Agency (CPPA) suggested a uniform tariff after working out the projected tariff for the year. CPPA officials said that they had to operate furnace oil-based plants to meet rising demand for electricity.

They asked Nepra to give in writing not to operate furnace oil-based power plants.

They added that CPPA had dues of Rs17 billion and arrears were piling up due to delay in verifying the data on technical grounds. They also said that an amount of Rs31 billion had been deferred due to technical reasons.

Meanwhile, the regulator conducted public hearing regarding petition of K-Electric’s monthly fuel charges adjustment for the period January 2020 to May 2020, quarterly adjustment for the quarters ended December 2019 and March 2020 under multi-year tariff (MYT) 2017-2023.

The power regulator said that it would examine the data provided by K-Electric regarding increase in electricity rates and decision would be issued after verifying data.

K-Electric issued show cause notice

Nepra has issued a show cause notice to K-Electric over failure to meet obligations under license which resulted in prolonged power outages in Karachi.

Nepra observed that the power utility company had failed to ensure availability of stock of 120,000 metric tons fuel at BPQS-I despite storage capacity in breach of terms and conditions of generation license. In the multi-year tariff awarded to the licensee net capacity of BQPS-I at mean site has been set as 1,104MW. Hourly generation data examined at BQPS-I revealed that BQPS-I was underutilised as it could only generate 916MW.

Underutilisation of BQPS-I is an event constituting failure of the licensee to comply with obligations and the licensee's own power plant (BPQS-I) generated less power for the reason that units/machines were on outages due to lack of proper maintenance of machines. This was despite routine maintenance expenses allowed by the authority to the tune of Rs25.07 billion in the multi-year tariff determination dated March 20, 2017 of the licensee. Lack of maintenance of BPQS-I added to the causes of excessive load-shedding in Karachi.

The licensee submitted its revised investment plan at the time of review of its multi-year tariff (2016-2023), which included a new power plant namely; 900MW BPQS-III, which was to come online by December 2019 to meet the Karachi electricity demand. The authority allowed $730.51 million or Rs84,408 million as total cost for BPQS-III and allied projects in multi-year tariff determination. The licensee has failed to complete the said project to fulfil its obligation.

The Fuel Supply Agreement (FSA) between the licensee and Pakistan State Oil Company Limited (PSO) requires the licensee to place month-wise order for estimated quantity of furnace oil on May 1, 2019 for FY2019-20 ie 60 days in advance. The licensee did not adhere to its obligation under fuel supply agreement and such irresponsible attitude of the licensee caused electricity shortfall and increased load-shedding.

The regulator asked the utility company to submit a reply within 15 days of receiving the notice or it would proceed ex-parte on the basis of available record.