Power overbilling

A new government report confirms what most people have long believed to be true — power distribution companies are robbing us blind. The ‘State of Industry’ report prepared by Nepra, the power regulator, suggests that overbilling is rampantly used as a tool to cover high system losses and inefficiency. It also warned that the only thing this accomplishes is to increase energy costs and eventually cause damage to the economy. The report suggests that distribution companies see inexplicable changes in their losses in certain months. Without any noticeable change in other factors, the only explanation is overbilling. In fact, distributors have not even reduced their transmission and distribution losses by any significant amount, nor have they seen any real improvement in bill recovery. The ‘improvements’ in both categories were less than 1% each. Even the improvements in revenue are tied directly to increased end-user prices, rather than any internal reforms.

As for broader reforms, Nepra hints at political interference hurting financial performance, transparency, quality, and competition. Where there is no political interference, there is political apathy. Nepra says the federal government has still not approved a National Electricity Policy — something that severely limits what Nepra can do in terms of planning, and could also create legal cover problems. Without a proper energy policy, planning becomes a day-to-day business as any regulatory framework needs to be based on a formal policy. Nepra also saved particular scorn for K-Electric, which still cannot meet its own demand needs, despite a flurry of benefits provided by the federal government. It also notes the company’s astounding ability to conduct load-shedding while its plants remain under-utilised. As for the company’s excuses relating to fuel supplies, Nepra notes that this is K-Electric’s responsibility, rather than the government’s.

Nepra is essentially calling out K-Electric for failing to negotiate its own supplies and instead relying on public pressure to get fuel allocations, possibly at lowered prices. At the end of the day, most issues identified in the report are emblematic of the country. Everyone wants money and power, but no one wants to do the work.

Published in The Express Tribune, September 16^th, 2020.

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