85 paisa relief in FCA for August okayed

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) on Thursday asked ex-Wapda distribution companies (XWDISCOs) to refund Rs0.8555/unit to power consumers on account of fuel charges adjustments (FCA) for August 2024.

This refund will be made in the power bills of October 2024, the power regulator announced in its latest decision.

On September 26, the regulator held a public hearing on the petition of the Central Power Purchasing Agency (CPPA), where it had sought a reduction of Rs0.5755/unit. However, the regulator has allowed extra release of Rs0.8555 per unit to the consumers.

Earlier in July, the Nepra had ordered refund Rs0.3692 per unit to consumers in their September bills.

The power regulator notified the decision, which shall be applicable to all the consumer categories except lifeline consumers, domestic consumers using up to 300 units, agriculture consumers and Electric Vehicle Charging Stations (EVCS), consumers of all the power distribution companies (Discos) except the consumers of K-Electric. It will also not applicable to pre-paid electricity consumers of all categories who opted for pre-paid tariff.

It also clarified that negative adjustment on account of monthly FCA is also applicable to the domestic consumers having Time of Use (ToU) meters irrespective of their consumption level. XWDISCOs shall reflect the fuel charges adjustment in respect of August 2024 in the billing month of October 2024, however, for consumers whose bills have already been issued, the adjustment shall be reflected in the billing month of November 2024.

In his note, Member Tariff Mathar Niaz Rana expresses concerns over the significant rise in the bagasse-based tariff, which exceeded local coal prices, sparking widespread consumer criticism. He highlights that the bagasse tariff remained steady at Rs.5.982 per kWh in June and July 2024 but sharply increased to Rs.12.48 per kWh in August 2024, surpassing the local coal tariff, which rose more gradually from Rs11.03 per kWh in June to Rs12.27 per kWh in August 2024.

Rana points out that this substantial increase occurred without adequate consumer participation, leading to dissatisfaction. He refers to the Ministry of Energy's earlier request to reconsider the bagasse tariff, which was dismissed on legal grounds, and argues that the ministry's concerns, made in the public interest, should be reconsidered under the legal framework prior to the 2018 amendments to the NEPRA Act.

Rana stresses that consumer involvement, as required by law, was missing in the decision-making process. He recommends excluding the bagasse-based tariff from the negative FCA of Rs1.2628 and calls for immediate corrective action, including a public hearing to transparently reassess the tariff. He warns that failure to address this issue could discourage future investment in bagasse-based generation and result in higher consumer tariffs.

While, Nepra's other members, including the chairman, rebutted the Member (Tariff)'s claims regarding the rise in bagasse-based fuel costs, emphasizing that the increase from Rs5.98/kWh in July to Rs12.48/kWh in August 2024 was a result of long-delayed adjustments and should not be compared to local coal tariffs.

The chairman highlighted that local coal costs fluctuate monthly, while bagasse tariffs are reviewed annually, with a 5 per cent indexation, significantly lower than inflation and exchange rate impacts. Members further noted that comparing outdated provisional rates from 2015 to revised 2024 rates lacked context.

Over FY2023-24, the average local coal tariff stood at Rs13.76/kWh, higher than the revised bagasse tariff. Regarding the Ministry of Energy's reconsideration request, members pointed out that the 2021 Amendment limits such requests to public sector licensees, making Member (Tariff)'s assertion of continuity invalid under current laws.

Meanwhile, K-Electric has also informed Nepa that they will refund Rs0.16 per unit to consumers, which they have overcharged from their consumers on account of fuel charges for the month of September.

In a petition submitted with the regulator, the K-Electric has maintained that it will provide a relief of Rs247 million to the consumers in their next month bills.

Nepra will conduct public hearing on the K-Electric's petition on October 31.