The National Electric Power Regulatory Authority (Nepra) has permitted K-Electric (KE) to pass on a tariff increase of Rs0.51 per unit to consumers on account of quarterly adjustment for the January-March period of financial year 2021-22. Earlier, the regulator had approved a hike of Rs3.55 per unit under the quarterly tariff adjustment. It was slightly lower than the company’s request for an increase of Rs3.892 per unit. Nepra’s decision had been communicated to the federal government for issuing a notification, but the government was supposed to announce a subsidy to neutralise the impact and avoid passing on the tariff increase to the consumers.
Later, the government filed a review petition, asking the regulator to impose a tariff increase of Rs0.51 per unit on the consumers while the rest would be borne by the state in the form of subsidy. Responding to that, Nepra on Tuesday conducted a public hearing on the review petition. During the hearing, interveners opposed any rise in electricity rates and objected to the expensive power generated by KE’s plants. They asked its administration to take steps to produce cheap electricity. They also suggested that KE’s transmission system should be taken over by the government, but the proposal was challenged by Nepra chairman, who argued that the world was opting for privatisation as it was not the task of the government to run business.
He emphasised that the regulator had introduced a competitive electricity market model to facilitate the consumers. “It is an ideal model that will take the electricity market towards competition, resulting in cheaper electricity for the consumers,” he said. In that model, even investors will be able to set up power plants to produce low-cost energy for their own use and to take benefit of the competitive market. During the hearing, it was brought to the notice of Nepra that the power generation cost of KE plants came in at Rs37.7 per unit last month, which was quite high.
The interveners demanded that KE replace the inefficient and expensive power plants with the most efficient ones to slash production cost. Nepra authorities told the hearing that they were working on a plan to replace the inefficient power plants with the efficient ones and the inefficient plants should be shut down. “You will see a better position in one year following the replacement of inefficient plants with the efficient ones,” a Nepra official remarked. It was announced that the efficient power plants of KE would start operations in December this year.
Raising the question of tripping in Karachi, the interveners asked KE to resolve the issue, which had led to blackouts on many occasions in the city. Separately, Nepra on Tuesday allowed the state-run power distribution companies (DISCOs) to charge consumers an additional Rs0.8219 per unit on account of monthly fuel cost adjustment for September 2022. This amount will be recovered from the consumers in the billing month of November. According to the regulator’s notification, the tariff adjustment will be applicable to all consumer categories except for electric vehicle charging stations and lifeline electricity consumers.
On October 26, Nepra conducted a public hearing on a petition of the Central Power Purchasing Agency-Guarantee (CPPA-G) for a tariff hike of Rs0.20 per unit. In September, 12,877.82 gigawatthours (GWh) of electricity was generated at a cost of Rs127.63 billion. Net electricity delivered to DISCOs came in at 12,520.98 GWh costing Rs126.66 billion, said the petition. Hydel stations generated 4,403.81 GWh, constituting 34.20% of the total production. Coal-fired power plants produced 1,449.20 GWh, 11.25% of the total, at a price of Rs17.9796 per unit as prices of imported coal had increased substantially. There was no high-speed diesel-based power generation in the month while residual fuel oil-powered plants generated 1,080.48 GWh (8.39% of the total) at Rs34.6142 per unit.
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