Falling prices: Power tariffs to go down by 20% next month
Cut comes on top of a 28% decrease passed on to consumers last month.
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ISLAMABAD:
Electricity tariffs for domestic consumers are expected to decline by Rs2.08 per unit, or 20.2%, from next month on account of lower fuel prices for the month of January 2015, following a dip in global oil prices. The decline in electricity prices comes on top of an earlier Rs3.20 per kilowatt-hour, or 28%, decrease in electricity prices that took place earlier this month on account of lower fuel prices in December 2014.
At a public hearing on Wednesday, the National Electric Power Regulatory Authority (Nepra) chaired by Habibullah Khilji, the Nepra vice-chairman, announced that the tariffs would be lowered by an average of Rs2.08 per unit for the next month. This is expected to translate into a Rs12 billion decrease in monthly electricity bills across the country, except Karachi, where tariffs are determined separately.
The Central Power Purchase Agency (CPPA) had sought Rs2.09 per unit reduction in power rates from Nepra for all state-owned distribution companies because of the cheaper cost of fuel for power generation. K-Electric, the privately owned integrated utility that serves Karachi files separate petitions for tariff modifications.
In its petition on behalf of all state-owned distribution companies, the CPPA explained that the average fuel cost during January 2015 stood at Rs11.36 per unit against the reference fuel cost of Rs9.27 per unit, which was earlier fixed by Nepra. This reduced the generation cost by Rs2.09 per unit.
The CPPA reported to the regulator that 6.85 billion units were sold to the distribution companies during January 2015. The total cost of power generation was Rs55.75 billion. A reduction in the cost of furnace oil and diesel led to the reduction in power generation cost in that month, it said. During January, power generation through furnace oil cost Rs10.26 per unit, high-speed diesel cost Rs14.91 per unit, coal Rs4.49 per unit and gas Rs4.27 per unit.
Fines on IPPs
In addition to reducing the power tariff, the power regulator directed to impose heavy penalties on Independent Power Producers (IPPs) for failing to maintain sufficient stocks of furnace oil in January which led to expensive generation of electricity through high speed diesel (HSD).
According to Nepra officials, IPPs may face fine of up to Rs3.5 billion over their failure to maintain the legally required fuel stock to produce power. According to Nepra Member (Tariff) Khawaja Naeem, some IPPs are bound to maintain 30 days’ worth of oil stock whereas others are required to maintain 15 days’ worth of stocks. In January, power generators produced 9.42% power at a cost of Rs8.69 billion instead of their usual average of a 2.64% share in total generation, which raised overall costs and denied power consumers an even bigger cut in electricity rates.
Published in The Express Tribune, March 19th, 2015.
Electricity tariffs for domestic consumers are expected to decline by Rs2.08 per unit, or 20.2%, from next month on account of lower fuel prices for the month of January 2015, following a dip in global oil prices. The decline in electricity prices comes on top of an earlier Rs3.20 per kilowatt-hour, or 28%, decrease in electricity prices that took place earlier this month on account of lower fuel prices in December 2014.
At a public hearing on Wednesday, the National Electric Power Regulatory Authority (Nepra) chaired by Habibullah Khilji, the Nepra vice-chairman, announced that the tariffs would be lowered by an average of Rs2.08 per unit for the next month. This is expected to translate into a Rs12 billion decrease in monthly electricity bills across the country, except Karachi, where tariffs are determined separately.
The Central Power Purchase Agency (CPPA) had sought Rs2.09 per unit reduction in power rates from Nepra for all state-owned distribution companies because of the cheaper cost of fuel for power generation. K-Electric, the privately owned integrated utility that serves Karachi files separate petitions for tariff modifications.
In its petition on behalf of all state-owned distribution companies, the CPPA explained that the average fuel cost during January 2015 stood at Rs11.36 per unit against the reference fuel cost of Rs9.27 per unit, which was earlier fixed by Nepra. This reduced the generation cost by Rs2.09 per unit.
The CPPA reported to the regulator that 6.85 billion units were sold to the distribution companies during January 2015. The total cost of power generation was Rs55.75 billion. A reduction in the cost of furnace oil and diesel led to the reduction in power generation cost in that month, it said. During January, power generation through furnace oil cost Rs10.26 per unit, high-speed diesel cost Rs14.91 per unit, coal Rs4.49 per unit and gas Rs4.27 per unit.
Fines on IPPs
In addition to reducing the power tariff, the power regulator directed to impose heavy penalties on Independent Power Producers (IPPs) for failing to maintain sufficient stocks of furnace oil in January which led to expensive generation of electricity through high speed diesel (HSD).
According to Nepra officials, IPPs may face fine of up to Rs3.5 billion over their failure to maintain the legally required fuel stock to produce power. According to Nepra Member (Tariff) Khawaja Naeem, some IPPs are bound to maintain 30 days’ worth of oil stock whereas others are required to maintain 15 days’ worth of stocks. In January, power generators produced 9.42% power at a cost of Rs8.69 billion instead of their usual average of a 2.64% share in total generation, which raised overall costs and denied power consumers an even bigger cut in electricity rates.
Naeem directed the National Power Control Centre (NPCC) and the state-owned National Transmission and Dispatch Company (NTDC) to impose fine on IPPs equal to the cost of the additional power through diesel. He also directed them to submit an implementation report to the regulator on this matter.
Published in The Express Tribune, March 19th, 2015.