NEPRA mulls record Rs5.62/unit hike in electricity prices

Attributed to elevated reference fuel cost, reduced hydropower availability in Dec 2023

ISLAMABAD:

The National Electric Power Regulatory Authority (NEPRA) has deferred its decision regarding the request from power distribution companies (DISCOs) to raise the electricity price by Rs5.6194 per unit, citing fuel charges adjustment (FCA) for December 2023.

Earlier, the Central Power Purchasing Agency (CPPA), at the behest of DISCOs, submitted an application to NEPRA seeking an increase in electricity prices under the FCA for December 2023. NEPRA conducted a public hearing on January 31, 2023 (Wednesday), primarily focusing on the FCA for December.

In its application, the CPPA claimed that the reference fuel cost for December 2023 was set at Rs5.403 per unit, but the actual fuel cost escalated to Rs11.022 per unit. The CPPA also submitted that the total electricity generated with various fuels in December was recorded at 97,726 GWh, priced at Rs10.1341 per unit, resulting in a total energy cost of Rs78,296 million.

During the hearing, NEPRA member, Rafiq Sheikh, inquired about the burden due to the violation of the merit order and the existing system constraints. He questioned the sustainability of the current system, the plans for its continuation, and expressed concerns about persisting issues since the creation of Pakistan. Sheikh sought solutions from institutions, stressing the need for a resolution to the longstanding problems. He noted that the electricity distribution problem had been reported three times in the current month. Either provide a solution or clarify if there is none, with a commitment to finalise the issue of overbilling by electricity companies by March, he urged.

During the hearing, another NEPRA member, Mothar Niaz Rana, said that nuclear power generation had decreased due to the refuelling of nuclear fuel. Simultaneously, the CPPA sought retroactive adjustments totalling over Rs5 billion. NEPRA officials clarified that DISCOs would replace faulty meters by February.

Analysing the breakdown of power generation sources, hydel sources contributed 24.06%, generating 1,859 GWh at zero cost. Coal-fired power plants produced 1,694 GWh (local + imported coal: 1,310+ 384 GWh), constituting 21.92% of the total power generated at a cost of Rs29.5832 per unit.

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Similarly, power generation from gas-based power plants was 826 GWh, representing 10.69% of the total generation, with a total cost of Rs14.6035 per unit. The generation from Re-gasified Liquefied Natural Gas (RLNG) was 1,268 GWh, accounting for 16.41% of the total generation, priced at Rs33.250 per unit.

Power production from bagasse recorded at 101 GWh, with a calculated price of Rs5.9822 per unit. Electricity generated from wind was 150 GWh, constituting 1.95% of total generation, and solar contributed 62 GWh, accounting for 0.80% of the total generation in December 2023.

Moreover, electricity generation from nuclear sources was 1,464 GWh, priced at Rs1.3162 per unit, representing 18.95% of the total generation. Electricity imported from Iran was 28 GWh, amounting to Rs33.1274 per unit, contributing 0.37% to the total power generation in December.

Data submitted by CPPA with NEPRA revealed that the net electricity delivered to DISCOs in December 2023 was 7,418 GWh (96.02%), at a rate of Rs11.0225 per unit, with a total cost of Rs81,767 million.

It is noteworthy that this marks the highest-ever increase in FCA demanded by CPPA. The proposed higher FCA is mainly attributed to the elevated reference fuel cost and reduced hydropower availability in December 2023. If NEPRA approves the Rs5.62/unit hike in power tariff under FCA for December, consumers will bear the additional cost in their February bills.

As of now, NEPRA has deferred the decision to increase the price of electricity by Rs5.62 per unit under FCA for December, promising a thorough examination of the data. According to NEPRA, the increase in electricity price under FCA for December 2023 will not apply to lifeline electricity consumers or consumers of K-Electric.

Published in The Express Tribune, February 1^st, 2024.

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