Power tariffs to rise by as much as 21%

NEPRA allows global oil price hikes to be passed on to consumers.

ISLAMABAD:

It does not come without warning, but the nearly 21% increase in power tariffs that the National Electric Power Regulatory Authority (Nepra) approved on Tuesday is likely to be unwelcome amongst consumers of electricity who only last month went through another 39% increase in electricity rates.

The increase came after Nepra approved four petitions filed by the state-owned Central Power Purchasing Agency, a subsidiary of the state-owned National Transmission and Dispatch Company. The CPPA claimed that its fuel costs for the month of October 2011 through January 2012 were far higher than those it was allowed to bill and so it must increase the tariffs in order to recover the costs it has already paid to power generation companies.

For the month of October 2011, CPPA says that it faced an average fuel cost of Rs6.95 per kilowatt-hour of electricity purchased but was collecting only Rs4.71 per unit in tariffs, leaving a difference of Rs2.24 per unit. During November 2011, that number came out to Rs1.30 per unit. For December 2011, the differential was Rs0.99 per unit and in January 2012 that number was Rs1.96 per unit.

As with previous decisions, the government is expected to allow no change in power tariffs for ‘lifeline consumers.’

Customers of state-owned Peshawar Electric Supply Company will not undergo the price increase because a case is still pending in the Peshawar High Court against electricity tariff increase. And since the increase only affects customers of state-owned power distribution companies, power users in Karachi – served by the privately owned KESC – will not be affected.

The regulator allowed the increase for the next four months in a decision on Tuesday during a public hearing headed by Nepra Vice Chairman Ghayasuddin, and did so despite vociferous opposition from consumer lobbying groups.

“How will industrialists pay for power tariffs when they have already set prices based on the production costs using the previous electricity rates,” said one of the lawyers representing industrial consumers.

Shaukat Ali Kundi, a member of the Nepra panel that makes decisions on power tariffs, once again wrote a dissenting note, arguing that the state-owned power companies had far too many inefficiencies that needed to be overcome before any tariff hikes for consumers could be justified.

“One of our roles is to protect consumers and therefore the power sector should remove inefficiencies [before requesting tariff hikes],” he said.

Published in The Express Tribune, March 21^st, 2012.