NEPRA approves tariff hike of Rs1.55

Tariff revision comes under quarterly adjustment for Oct-Dec 2021

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) has approved an increase of Rs1.55 per unit in power tariff on account of quarterly adjustment.

Power distribution companies (DISCOs) will recover Rs39 billion from the consumers following the tariff revision.

The regulatory authority, in a decision on Thursday, allowed an increase in power tariff on account of variation in capacity charges, variable operation and maintenance (O&M) cost, use of system charges, market operation fee and fuel cost adjustment (FCA) impact of transmission and distribution losses for the second quarter of financial year 2021-22.

The regulator “approved a positive amount of Rs39 billion on account of quarterly adjustment” for the second quarter of FY22 for the ex-Wapda distribution companies, said the regulator in a statement.

The quarterly adjustment has an impact of around Rs1.5547 per kilowatt-hour (kWh) on a uniform basis on all consumers except for lifeline consumers and incremental industrial sales eligible for the Industrial Support Package.

Nepra said that it had decided to apply the same with effect from July 1, 2022, which would be recovered within three months from the date of notification.

To work out the instant quarterly adjustment for the DISCOs, the regulator obtained details of the actual power purchase cost billed by the Central Power Purchasing Agency-Guarantee (CPPA-G) to the DISCOs for the relevant period.

CPPA-G provided the information for the second quarter of FY22, ie October-December 2021.

As per details, the cost recovered on incremental units over and above the fuel cost, ie Rs12.96 less reference fuel cost for each month, had been adjusted from the quarterly adjustment worked out on the basis of net units.

Similarly, the prior year adjustment (PYA), as well as the sales mix for the period, would be worked out based on the net units, ie excluding the units purchased for incremental sales, it added.

Thus, no further adjustment would be allowed for the units purchased for incremental sales.

Nepra, in the determination of the CPPA-G market operation fee, observed that the CPPA-G reflected the costs incurred on account of litigation charges in the capacity costs billed to the DISCOs.

In that regard, the CPPA-G was directed to include the said cost in its market operation fee and get approval from the authority.

CPPA-G, however, in the costs billed to the DISCOs for the second quarter of FY22 included the legal charges of Rs5.4 million as part of the capacity charges.

The regulatory authority decided not to include the legal charges in the instant quarterly adjustments.

Accordingly, while working out the instant quarterly adjustments, the legal charges of Rs5.4 million had not been considered.

Furthermore, the CPPA-G in its data included an amount of Rs1,946 million on account of capacity charges of Kapco.

Nepra underscored that Kapco’s power purchase agreement (PPA) was amended by the CPPA-G, wherein it had been agreed that the plant would be operated without the payment of capacity charges from July 2021 onwards and only energy charges would be paid.

Upon inquiry from the CPPA-G regarding the inclusion of capacity charges of Rs1,946 million of Kapco, it had been submitted that the claimed cost pertained to the previous period as per the PPA.

Although the CPPA-G provided details in that regard, the regulator decided to provisionally withhold the claimed amount and would consider it in the subsequent quarterly adjustments.

On account of the discussion, information submitted by the CPPA-G and adjustment requests verified by the DISCOs, Nepra allowed the quarterly adjustment for the second quarter of FY22 at Rs39,001 million.

Published in The Express Tribune, June 17^th, 2022.

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