NEPRA mulls another hike despite electricity demand drop

Proposal to impose Rs1.45/unit extra burden on consumers amid performance scrutiny

ISLAMABAD:

Responding to a significant decline in electricity demand across sectors, the National Electric Power Regulatory Authority (NEPRA) is contemplating authorising an additional collection of Rs51.86 billion from power consumers under the third quarterly adjustment of FY24. If approved, this adjustment will levy an extra burden of Rs1.45 per unit on consumers and is proposed for implementation in July, August, and September.

NEPRA officials stated that this rate hike would also impact K-Electric consumers. The final approval is pending a thorough review. On Friday, NEPRA conducted a public hearing regarding the petition submitted by the Central Power Purchasing Agency (CPPA) on behalf of all distribution companies.

During the hearing, NEPRA officials revealed that net metering within IESCO (Islamabad Electric Supply Company) has reached 160 megawatts, contributing to a national total of 2,000 megawatts. Concerns were raised about the potential decline in net metering rates and its impact on grid electricity purchases. NEPRA Chairman Waseem Mukhtar assured that these issues would be appropriately addressed.

HESCO (Hyderabad Electric Supply Company)’s performance came under scrutiny, with NEPRA member Rafique Ahmed Shaikh criticising it as the poorest among the companies. The absence of a HESCO representative at the hearing led NEPRA to issue a show-cause notice. “The situation in HESCO is shameful,” stated Shaikh, with the chairman warning of potential extreme measures against HESCO.

The Power Division highlighted the urgency of implementing the quarterly adjustment, noting that the fourth-quarter adjustment would be submitted before July 15. As of May 9, Rs104 billion had been recovered from electricity defaulters, but the government still needs to recover Rs1.3 trillion, according to Power Division officials.

During the quarter (January-March 2024), significant declines in electricity demand were reported across various distribution companies. In IESCO, industrial consumption decreased by 3%, and demand in the cement industry dropped by 18.2%, according to the IESCO CEO.

LESCO (Lahore Electric Supply Company) saw an overall electricity demand fall by 7.2%, with industrial demand down 15% and domestic demand down 3%, reported the LESCO CFO.

PESCO (Peshawar Electric Supply Company)’s demand decreased by 9.1%, with industrial demand falling 17.7% and agricultural sector demand dropping 15.5%, according to the PESCO CEO. SEPCO (Sukkur Electric Supply Company) reported a domestic sector demand decrease of 14.7%, with commercial sector demand falling by 20%, and tube well electricity demand dropping by 16.6%. SEPCO also reported that out of 800,000 consumers, 300,000 are defaulters.

The Korangi Association expressed concerns over the high cost of electricity. Representative Muhammad Rehan warned that “in these conditions, the industry will shut down.”