Power tariff up by Rs2.83 in FCA for May

Move will burden consumers with additional Rs26b

ISLAMABAD:

The price of electricity supplied through ex-Wapda distribution companies (XWDISCOs) has been increased by Rs2.83 per unit as part of the fuel cost adjustment (FCA) charges for the month of March, according to a notification issued by the National Electric Power Regulatory Authority (Nepra) on Wednesday.

The power regulator added that the additional charges would be retrieved from the consumers in their electricity bills for May.

The notification read that the additional charges would be applicable to all categories of consumers except Electric Vehicle Charging Stations (EVCs) and lifeline ones.

Even K-Electric customers will be exempted from this price hike.

This increase will burden the consumers with an additional Rs26 billion.

Last month, the government had sought clearance from Nepra to extract about Rs23 billion additional in FCA from consumers for electricity consumed in March despite 79 per cent of power generation coming from cheaper local fuels.

The Central Power Purchasing Agency (CPPA) — a subsidiary of the Power Division — had demanded Rs2.94 per unit additional fuel cost to recover from consumers through May bills.

The proposed additional FCA was almost 46pc higher than the pre-fixed fuel cost of Rs6.44 per unit, while the cost of the energy delivered to DISCOs was Rs9.3819 per unit. Thus, it requested an increase of Rs2.9402 per unit over the reference charges on account of FCA for the month of March 2024.The increase also includes the previous adjustments of Rs7.615 billion or Re 0.9492 per unit.

NEPRA said that that there was negative growth of 7.5% in generation in March as compared generation assumed in reference tariff.

This raised questions about the power sector bureaucracy’s capabilities to forecast fuel costs even for six to seven months. In recent months, the additional FCAs have ranged between 50 and 115pc higher than the pre-determined fuel costs notified at the start of the current fiscal year.

This FCA was on top of about a 26pc increase in the annual base tariff and another 10pc hike under the quarterly tariff adjustment currently in place and being charged to consumers at Rs2.75 per unit. As a result, consumers continue to pay excessive bills despite lower consumption patterns. Nepra had accepted the request for a public hearing on April 26.

The higher proposed FCA for March is apparently mainly due to higher domestic coal and gas prices, although the use of imported fuels like coal, diesel and furnace oil remained zero. LNG was relatively cheaper, and the exchange rate remained stable.

In a petition, the CPPA, acting as commercial agent of Discos, demanded an additional FCA of Rs2.94 per unit in the May bills for electricity consumed in March. It claimed that the reference fuel cost for March was Rs6.44 per unit, but the actual fuel cost rose to Rs9.38 per unit. The average fuel cost in February also stood at about Rs9.42 per unit. It said about 8,023-gigawatt-hour (GWh) of electricity was generated at an estimated fuel expenditure of Rs66.7bn (Rs8.3 per unit) in March, of which 7,756 GWh energy was delivered to Discos at the cost of Rs72.67bn (at Rs9.38 per unit).

In a related development, K-Electric has filed an application with Nepra seeking an increase of Rs18.86 per unit under the FCA charges for seven months -- July 2023 to March 2024.

In its plea, the port city’s sole power supplier has asked for a reduction in its tariff for two months by Rs0.29 per unit as the FCA charges in them reflected in the negative.

Nepra will hold a hearing on the K-Electric’s application on Thursday.