NEPRA okays Rs1.25 tariff hike

The National Electric Power Regulatory Authority (Nepra) has approved an increase of Rs1.25 per unit on account of third quarter adjustments of the financial year 2022-23 for power distribution companies (Discos).

The power regulator has burdened the consumers with Rs46.5 billion on account of variation in capacity charges, variable operation and maintenance costs, additional recovery on incremental sales, use of system charges, market operator fees and FCA impact on transmission and distribution losses for the three quarters of the fiscal year 2022-23.

This amount will be recovered from the consumers in a period of three months – July, August and September 2023.

It is also pertinent to mention that no quarterly adjustments would be passed on to B1, B2, B3 and B4 industrial consumers to the extent of incremental sales till continuation of the package – in line with the authority’s decision dated January 1, 2020.

While effecting the quarterly adjustments, the Discos concerned will keep in view and strictly comply with the verdicts of the courts notwithstanding this order.

The power regulator in a statement said that it had approved an increase in tariff after scrutiny of the data provided by the Central Power Purchasing Agency (CPPA-G) submitted on behalf of Discos.

This will apply to bills for July, August, and September this year.

Discos had applied to Nepra for quarterly adjustments.

The authority held a public hearing on May 24 at the request of Discos.

Consumers were being charged an average of 47 paise per unit in quarterly adjustments till June 2023.

This will apply to all Discos customers except lifeline customers. It will also not apply to the consumers of K-Electric, Karachi’s power utility.

The increase in tariff is because of several factors including the rising cost of fuel and depreciation of the Pakistani rupee.

During the public hearing held on May 24, the stakeholders, who had voiced serious concerns over the hike in electricity rates, were invited for their comments.

Nepra in its decision said it had decided to work out the quarterly adjustments based on net units.

Units purchased for industrial incremental sales were not included while working out the quarterly adjustments.

The units netted off on account of incremental sales were provided by the CPPA-G.

Accordingly, the cost recovered on the incremental units, over and above the fuel cost i.e. (Rs12.96 less reference fuel cost for each month) has been adjusted from the quarterly adjustments worked out based on net units.

The CPPA-G in a letter sent to Nepra on May 9, 2023, requested the power regulator to allow Rs704.55 million (Rs139.37 million pertaining to instant quarter) on account of legal charges.

The authority, in consonance with its earlier decision in the matter, has decided not to allow the amount of legal charges requested for the 3rd quarter amounting to Rs139.37 million and a sum of Rs565.18 million, requested for the previous quarters, on the same account, while working out the instant quarterly adjustments.

It is also noted that the CPPA-G in its data had included a negative amount of Rs.528.9 million on account of capacity charges of Kot Addu Power Company (KAPCO).

The authority observed 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 payment of capacity charges from July 2021 onward and only energy charges would be paid.

On inquiry from the CPPA-G on the inclusion of capacity charges of negative Rs528.9 million of KAPCO, it was submitted to the authority that the claimed money was on account of trueing up of costs pertaining to previous periods as per the PPA.

The CPPA-G, although provided some details in this connection, however, the authority decided not to provisionally consider the claimed amount of KAPCO and consider it in the subsequent quarterly adjustments, once it was verified.
Accordingly, the negative amount of Rs.528.9 million was deducted from the claim of XWDISCOs.