NEPRA considers hike of Rs4.66/unit

Attributes rise to FCA; will put additional burden of Rs33b on consumers

ISLAMABAD:

As the calendar flips to 2024, consumers are bracing themselves for yet another blow to their household budgets. The National Electric Power Regulatory Authority (Nepra) has signalled a potential surge in electricity prices, with a proposed increase of up to Rs4.66 per unit in the electricity bills for January 2024. This anticipated hike, attributed to the fuel adjustment for the month of November, could collectively burden power consumers with an additional Rs33 billion.

Nepra held a public hearing on Wednesday. During the proceedings, the power regulator’s decision to hike prices drew sharp criticism. The power regulator faced allegations of succumbing to pressure from the power division, leading to the passing on of the burden of electricity prices to consumers. In response, Nepra defended its stance, stressing its independent decision-making process and asserting that due diligence was conducted in scrutinising the relevant data before arriving at a conclusion on electricity prices.

The Central Power Purchasing Agency-GenCo (CPPA-G) justified the proposed increase by highlighting that consumers were already bearing Rs3.08 per unit due to the existing fuel adjustment. This would result in a net impact of Rs1.58 per unit in consumers’ electricity bills. However, this explanation did little to assuage concerns.

During the public hearing, Nepra raised questions about the CPPA-G’s choice to operate power plants on imported fuel during the period under review. Additionally, the decision to shut down more cost-effective plants for maintenance purposes faced scrutiny, with a Thar coal-based plant’s maintenance-related closure identified as a contributing factor to the escalated electricity prices.

The decline in electricity consumption by 13% also played a role in the heightened prices. Power plants, primarily fuelled by expensive liquefied natural gas (LNG) imports, contributed to the increased electricity costs for consumers during November 2023.

Read Ministry finds hole in NEPRA excessive bills report

The CPPA-G previously requested adjustments amounting to Rs15.9 billion, intended to be passed on to consumers in electricity bills back in January 2014. Nepra addressed concerns about overbilling, asserting that past decisions had been implemented and that they would enforce their recent resolution. Explanation notices were issued to power distribution companies (Discos), signalling the initiation of legal proceedings against them.

The Central Power Purchasing Agency (CPPA), on the request of Discos, submitted an application to Nepra, seeking an increase in the electricity price under the Fuel Cost Adjustment (FCA) for November 2023. The application detailed that the total electricity generated in November amounted to 7,547 GWh, priced at Rs7.1704 per unit, with the total energy cost reaching Rs54,113 million.

Breaking down the power generation by source, hydel power constituted 2,700GWh (gigawatts per hour) or 36.50%, coal-fired power plants contributed 1,473GWh (local + imported: 987GWh + 486GWh) or 13.08%, gas-based power plants accounted for 695GWh or 9.21%, and Re-gasified Liquefied Natural Gas (RLNG) contributed 798GWh or 10.57%. Wind and solar power constituted 148 GWh or 1.96% and 50GWh or 0.66%, respectively. Nuclear power contributed 1,572GWh (at Rs1.2071/unit) or 20.83%, and electricity imported from Iran made up 0.39% (amounting to 30GWh at Rs27.7281/unit) of the total power generation in November 2023.

The data submitted by the CPPA-G with Nepra indicated that net electricity delivered to DISCOs in November 2023 was 7,288GWh (96.57%) at a rate of Rs9.4448 per unit, with the total cost amounting to Rs68,834 million.

Published in The Express Tribune, December 28^th, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.