DISCOs’ power tariff raised by Rs4.46 per unit

It will put Rs4.9b burden on consumers, will not apply to K-Electric

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) has approved increase in tariff up to Rs4.46 per unit on account of quarterly adjustment for the first quarter of financial year 2022-23.

It has increased the tariff in the range of Rs1.49 to Rs4.46 per unit for various consumer categories.

The tariff hike will place a burden of Rs4.938 billion on power consumers on account of variation in capacity charges, variable operation and maintenance (O&M) cost, additional recovery on incremental sales, use of system charges, market operator fee and the impact of fuel cost adjustment on transmission and distribution losses for the first quarter (Jul-Sept) of FY23.

The tariff approval came after power distribution companies (DISCOs) applied for increase in tariff under first quarter adjustment for financial year 2022-23, Nepra said, adding that it held a public hearing on November 15, 2022 to consider the request.

It pointed out that in a bid to avoid overburdening the consumers, the Ministry of Power had requested for implementing the quarterly adjustment for two months only, ie February and March, when the previous quarterly adjustment would end.

“Thus, no additional burden will be imposed on consumers with this tariff increase,” Nepra emphasised, adding that it would be applicable to the consumers of all DISCOs, except for lifeline consumers. “It will also not apply to K-Electric consumers.”

The energy ministry had suggested that the tariff adjustment for the first quarter of FY23 might be recovered from December 2022 to February 2023 at Rs2.45 per kilowatt hour (kWh). However, the tariff adjustment for the fourth quarter of FY22 would end in January 2023.

Therefore, the ministry said that Nepra might consider continuing the same for February and March 2023 without changing the consumer tariff rates. “This will help recover the tariff adjustment for the first quarter of FY23 without any increase in end-consumer rates,” it pointed out.

The regulator, while considering the ministry’s request, noted that quarterly adjustments should be recovered over a period of three months in order to ensure timely recovery of costs.

However, since the energy ministry had itself requested for the application of first quarter adjustment for two months without changing the consumer tariff rates, Nepra decided to accept the request.

“This is being done in the interest of consumers as the determined first quarter adjustment will only replace the existing applicable quarterly adjustment rates and there will be no additional burden on the consumers,” Nepra clarified.

It, however, added that it was cognizant of the fact that maintaining the existing quarterly adjustment rates for February and March 2023 may result in less/ excess recovery of the determined amount. “Therefore, any such ‘under/ over-recovery’ will be accounted for in the subsequent tariff decisions.”

According to the regulator, no quarterly adjustments will be passed on to B1, B2, B3 and B4 industrial consumers to the extent of incremental sales till the continuation of industrial package in line with Nepra’s decision.

Published in The Express Tribune, January 18^th, 2023.

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