NEPRA ups tariff by Rs1.46/unit

Consumers forced to pay Rs1.5b for system constraints in July FCA

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) has approved an increase in electricity prices by Rs1.46 per unit, citing fuel adjustment for the month of July 2013. This decision comes amidst growing concerns from consumers regarding inflated electricity bills.

In a notification, Nepra explained that this adjustment was made to account for variations in fuel charges, in accordance with Section 31(7) of the Regulation of Generation, Transmission, and Distribution of Electric Power Act, 1997, as amended through the Regulation of Generation, Transmission, and Distribution of Electric Power (Amendment) Act 2011.

According to Nepra’s official notification issued on Friday, the fuel charge adjustment for the Ex-WAPDA Distribution Companies (XWDISCOs) was made considering that the actual price of electricity generated in July stood at Rs8.3565/kWh, as opposed to the Corresponding Reference Fuel Charge Component of Rs6.8935/kWh.

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This increase in electricity prices translates to a hike of Rs1.4630/kWh for consumers of XWDISCOs. However, it’s important to note that this adjustment will not apply to Electric Vehicle Charging Stations (EVCS) and lifeline consumers. The increase will be clearly displayed separately on consumers’ bills, based on their electricity consumption in July 2023. XWDISCOs are required to incorporate this fuel charge adjustment in the billing for September 2023.

The notification also underlines that while implementing the Fuel Adjustment Charges, XWDISCOs must adhere strictly to court orders, ensuring that the adjustment is carried out in accordance with the law.

This increase in electricity prices may have implications for consumers’ monthly bills and reflects the ongoing fluctuations in fuel costs, which play a significant role in determining electricity tariffs.

Earlier, Nepra conducted a public hearing and indicated a potential increase of Rs1.58 per unit related to the fuel charges adjustment for the month of July 2023.

During the public hearing, Nepra and various stakeholders expressed concerns about the inefficiency of electricity companies in the country. Notably, revelations regarding the Sahiwal coal-fired power plant emerged. Initially, Nepra had set the reference tariff for this plant at Rs16 per unit. However, it was disclosed that the plant was claiming a price of Rs27 per unit.

Officials from the Central Power Purchasing Agency-Guarantee (CPPA-G) explained that the Sahiwal plant had imported coal at $400 per tonne but couldn’t utilise it due to concerns about violating the economic merit order. Government officials advocated for allowing a weighted average cost of coal to be used to generate cheaper electricity from the plant.

In response, Nepra officials highlighted that coal prices had since decreased to $100 per tonne, yet the plant was not utilising this more economical option, resulting in higher costs being passed on to consumers. Nepra questioned why consumers should bear the burden of capacity charges when the plant was not operating efficiently. The Sahiwal plant had produced very little electricity in recent months, raising concerns about mismanagement at coal-based power plants where the base tariff is low but the tariff claims are high.

Additionally, it was revealed that two coal-based power plants with a combined generation capacity of 3,900 megawatts were only supplying 2,200MW, leaving 1,700MW of capacity unused. Nepra emphasised that the system could generate cheaper electricity as originally intended, with coal-based electricity at a base tariff of Rs16 per unit.

Consumers were reportedly forced to pay Rs1.5 billion for system constraints in fuel adjustment for the month of July 2023.

The regulator also raised questions about the collapse of 138 towers of the National Transmission and Despatch Company (NTDC) over the past five years. NTDC officials argued that Nepra had stopped the payment of Rs38 billion to the company, causing financial challenges.

Published in The Express Tribune, September 9^th, 2023.

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