NEPRA unearths another overbilling scam

Consumers overcharged during last quarter of previous fiscal year

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) on Wednesday exposed another overbilling scam by the power distribution companies (DISCOS), in which a number of consumers were charged extra money in the last quarter of the previous fiscal year.

A Nepra report on the inflated bills issues during April-June 2024 period, indicates that all DISCOS, including the K-Electric, were found to be involved in this practices. The power regulator had sought explanations from these companies regarding the issue.

Earlier, the power regulator had exposed overcharging of electricity bill during which multimillion rupees were taken from consumers during July and August 2023. Those consumes had not been reimbursed their excess payments, so far.

Based on the report, Nepra had decided to issue directives to DISCOS to accordingly adjust the customers who were charged on the basis of their readings, lower than the actual units recorded from April to June 2024.

Customers who had been billed on incorrect readings and had not yet paid should not be charged late payment surcharges (LPS), Nepra stated. While those who had already paid the bills along with the LPS, would also be adjusted, accordingly, it added.

To prevent the average billing issues, Nepra had mandated immediate replacement of faulty meters. Additionally, all DISCOS, including K-Electric, were required to adhere to the consumer services manual for meter readings and submit a compliance report within 30 days.

 

Tariff hike

 

Meanwhile, the power regulator conducted a public hearing on permission to charge the electricity consumers an additional Rs2.63 per unit in their August bills on account of fuel charges adjustment (FCA) for June 2024.

Nepra Chairman Waseem Mukhtar presided over the proceedings. Nepra members Engr Maqsood Anwar Khan, Rafique Ahmad Shaikh, Mathar Niaz Rana and Amina Ahmed also attended the proceedings. The Central Power Purchasing Agency (CPPA) pleaded the case of DISCOS.

During the hearing, the CPPA reported that over 13 billion units of electricity were sold in June, adding that the consumption in that month was 10% lower than the reference period consumption, and 2% less than last year.

The CPPA noted a significant increase in power production from imported the liquefied natural gas (LNG) during this period. Mukhtar said that a study on further electricity production had been initiated, and emphasised the need for a logical approach to adding more electricity to the national grid.

The Nepra chairman said that the industry had initiated large-scale solar installations, with some systems reaching up to two megawatts. He highlighted that industries were now generating electricity from solar systems rather than gas.

Nepra member Rafiq Sheikh pointed out a contradiction in the solarisation policies of the federal government and the Punjab governments. He mentioned that two provinces were now offering solar options and that the need for additional capacity was under consideration.

Commercial operating dates for some plants might be postponed, according to the Nepra chairman, who also mentioned during the hearing that a study had got under way to determine which plants could be retired early.

Discussions were previously held with Independent Power Producers (IPPs) in 2020-21. Mukhtar suggested that the Power Division should handle future talks with IPPs if there was any possibility of lessening the burden on the consumers.

Member Amna Ahmed echoed these sentiments, urging a review to see whether the past agreements were appropriate. "If a mistake was made, it should be discussed now," Ahmed said. Highlighting the high cost of electricity in the country, she noted that public trust in institutions had diminished.

However, Sheikh underscored the significance of the conditions under which those agreements were made. "Extending IPP agreements is not important," he said.

The CCPA reported that the LNG supply was disrupted from June 13 to 18, because of rough sea conditions, which prevented the timely arrival of the cargo. And because of the unavailability of LNG, it added, electricity was generated by using furnace oil.

It reported that 35.13% of electricity in June was generated from hydropower, 11.06% through local coal, 1.95% from furnace oil and 8.66% from local gas. Imported LNG was used to produce 18.1% of electricity and nuclear fuel contributed 14.85% to the electricity mix.

The cost of generation from LNG was Rs26.32 per unit, imported coal Rs15.53 per unit, and furnace oil Rs31.61 per unit. Interestingly, it was also informed that the locally-produced coal had also been indexed to the US dollar.

CPPA officials said put the peak hours between 7 to 11pm. However, data indicated that electricity usage increased between 11pm and 1am. Because of solar energy, peak hours started after 3 to 4pm, and before that solar energy use was higher but it production begins to decline after 3pm.

The power regulator also tasked the CPPA with conducting a study on solar energy usage and submitting a report to it. The CPPA officials noted that the use of solar energy was increasing between 9 and 4 pm. Mukhtar noted that cross-subsidies for industrial sector had been reduced in the current fiscal year.

Also during the hearing, Sheikh clarified that the Nepra members did not receive any free electricity. Last year, adjustments were made for overbilling by DISCOs, and this year's overbilling would also be refunded to the consumers, he added.

The government has launched a study to determine if Pakistan requires additional power generation capacity and whether the commissioning dates of some IPPs can be delayed to reduce further burden on the consumers.

Currently, the unused capacity of the IPPs is burdening consumers with substantial capacity payments in their bills. Exorbitant power tariffs are further reducing consumption, especially in the industrial and commercial sectors. The public hearing also discussed continuous decline in demand.