Power consumers to get Rs53b refund

NEPRA will hold public hearing on provision of relief due to lower capacity charges

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ISLAMABAD:

The government is set to pass on Rs53.4 billion worth of refunds to electricity consumers across the country, including those of K-Electric, under quarterly tariff adjustment for the fourth quarter (April-June) of fiscal year 2024-25.

The National Electric Power Regulatory Authority (Nepra) will hold a public hearing on August 4 on a petition filed by the Central Power Purchasing Agency-Guarantee (CPPA-G), which is seeking a downward adjustment mainly because of lower capacity payments following negotiated settlements with independent and government power producers.

According to CPPA-G data, the biggest reductions are proposed for Faisalabad Electric Supply Company (Rs15.579 billion), Lahore Electric Supply Company (Rs12.758 billion) and Multan Electric Power Company (Rs8.467 billion).

Other companies that want to release refunds for their clients are Gujranwala Electric Power Company (Rs6.132 billion), Islamabad Electric Supply Company (Rs1.04 billion), Peshawar Electric Supply Company (Rs2.7 billion), Hyderabad Electric Supply Company (Rs6.818 billion), Sukkur Electric Power Company (Rs504 million) and Tribal Areas Electric Supply Company (Rs2.985 billion).

However, Quetta Electric Supply Company wants to recover Rs3.594 billion from its consumers.

The total requested amount for variable operation and maintenance (O&M) cost is Rs182 million, use of system charges and market operator fee are estimated at Rs804 million and the impact of incremental units is calculated at negative Rs662 million.

Under the federal policy guidelines that ensure the application of uniform power tariffs across the country, Nepra said that the approved relief would also be extended to K-Electric consumers.

Earlier this month, in a bold assertion of its regulatory autonomy, Pakistan's power-sector watchdog notified K-Electric's long-delayed multi-year tariffs for supply, distribution and transmission through 2030, which came despite an unresolved review motion filed by the federal government.

The regulator notified an increase of Rs6.15 per unit in base tariff for K-Electric consumers. The government implements a uniform tariff across the country, for which it provides subsidy for K-Electric consumers.

Nepra moved ahead with the notification after determining that no legal bar existed to halt its implementation. It invoked its enhanced powers under a 2021 legal amendment, which allows the regulator to issue tariff notifications directly – the authority that previously rested with the federal government.

The move reflects pressure from international lenders, notably the International Monetary Fund (IMF) and the World Bank, to depoliticise tariff setting and fast-track power sector reforms.

"This situation could impair K-Electric's financial health and undermine power supply continuity, ultimately affecting consumers and the broader energy market," Nepra said in its statement.

The newly notified average power supply tariff for K-Electric is Rs39.97 per kilowatt-hour (kWh) for 2023-24, comprising Rs31.96/kWh in power purchase cost, Rs2.86 for transmission, Rs3.31 for distribution and Rs2.28 in supply margin. A prior year adjustment of minus Rs0.44/kWh has also been included.

Nepra estimated the company's total revenue requirement for financial year 2023-24 at Rs606.9 billion, with Rs34.7 billion allocated for supply margin and Rs36.2 billion set aside to cover recovery losses.