NEPRA jacks up tariff by Rs4.9 per unit

The National Electric Power Regulatory Authority (Nepra) has raised the power tariff by Rs4.9 per unit on account of fuel adjustment for the month of February 2024, warning that demand was continuously declining which would result in to a further increase in the tariff.

The power regulator has reviewed and assessed a National Average Uniform increase of Rs4.9213 per kilowatt hour (kWh) in the applicable tariff for former Wapda power distribution companies (XWDISCOs) on account of variations in the fuel charges for February.

The actual fuel cost for February 2024, as claimed by the Central Power Purchasing Agency-Guaranteed (CPPA-G) is Rs9.4254/kWh, against the reference fuel cost component of Rs4.4337/kWh. The CPPA-G had sought an increase of Rs4.9917 per unit.

The CPPA-G submitted that there was not much variation in actual fuel prices vis-a-vis reference values. However, certain fuels which were not part of the reference mix like re-gasified liquefied natural gas (RLNG) were operated because of system requirements.

It was further highlighted that a negative growth of -12.2% was observed in actual generation against the reference generation, while the power regulator noted with concern that demand was continuously declining in the country.

Till February 2024, Nepra noted, the overall demand had been reduced by around 12% compared to the reference projections assumed in the tariff. It said that this decrease in sales would consequently result in higher quarterly adjustments, leading to a further increase in the tariff.

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The power regulator directed the CPPA-G and the energy ministry to analyse the impact of lifting commercial-based load-shedding on the demand side and submit an intelligent proposal before it to improve the demand.

It was also highlighted that currently over 60% of the tariff consists of capacity charges, which was much higher compared with the international standards. Accordingly, Nepra asked the CPPA-G to evaluate the possibilities of reducing capacity charges, while remaining within the legal framework.

Nepra further noted that wind-based power plants were being curtailed, and expensive imported fuel-based power plants were being operated. It was also observed that the Guddu power plant was operated at a 45% plant factor on an open cycle, instead of a combined cycle.

“Had this plant been operated on a combined cycle, it would have reduced the cost of generation,” Nepra noted, as various commentators raised their concerns regarding high fuel price adjustments during the Nepra hearing.

Abdullah Umer, a commentator, submitted that recent FCAs had seen generation from RLNG, thus adding financial burden on the consumers. Muhammad Arif, another commentator, highlighted the longstanding issue of evacuation of generation from local coal and wind-based plants in the south.

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The National Transmission and Despatch Company (NTDC), while responding to the concerns raised by the commentators, submitted that the operations of the RLNG-based power plants were necessary to maintain system stability as non-operation of these plants might have led to national blackouts.

It submitted that the constraint in the corridor was due to national generation, coming as low as 7,000MW-8,000MW even though the system had a 27,000MW evacuation capacity. The NTDC explained that high solar induction by consumers had also led to a decrease in demand from the national grid.

The NTDC highlighted that solar was being developed in the central region; however, there would still be a need for base-load plants for the ramping purposes. It requested the regulator to consider allowing Rs42 billion, withheld by it during previous Fuel cost adjustments (FCAs) of XWDISCOs.

The NTDC reported provisional transmission and distribution (T&D) losses of 203.87 Gigawatt hour, or 2.789%, based on energy delivered on the NTDC system during February 2024, which was on the higher side and adjusted on an accumulative yearly basis.

In addition, the NTDC also reported T&D losses of 19.807 GWh, or 2.976%, for the high voltage direct current (HVDC) line of the Matiari-Lahore Transmission Line Company (PMLTC). NTDCL is allowed T&D losses of 2.639% only at the 500KV and 220 KV network; therefore, 203.87 GWh losses are adjusted at 197.38 GWh. For the PMLTC HVDC, it is allowed maximum losses up to 4.3%.