ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) is expected to impose a penalty on distribution companies of ex-Wapda for delaying relief in fuel-based tariff to consumers for two months when it takes up the case of Rs2.40 and Rs2.20 per unit cut in tariff next week.

A Nepra official said the Central Power Purchase Agency (CPPA) on behalf of the distribution companies was legally required to file a request for automatic fuel adjustment by middle of every month to pass on the impact of fuel cost to consumers.

Last month, it did not provide timely data to the regulator on account of fuel consumption in February to enable the regulator to hold a public hearing and the consumers were deprived of their entitled refund last month. As a consequence, the refund for another month — March — became due and the regulator had to take up two monthly petitions simultaneously.

This meant the distribution companies secured financial benefit by holding back extra money collected from the consumers for an extended period of time to meet their cash flow requirements.

Under the practice in vogue, the distribution companies are charging significantly higher estimated fuel charge to power consumers that is later adjusted against actual cost in a subsequent month with the approval of the power regulator. Delay in submission of monthly adjustment request attracts fines and penalties under the tariff standards and procedure rules.

In its petition, the CPPA reported to the regulator that it had charged a higher reference tariff of Rs7.26 per unit to consumers in February, but actual fuel cost turned out to be Rs4.86 per unit. Therefore, there was a legal requirement to return Rs2.40 per unit to consumers.

Likewise in its second petition, the CPPA said it had charged Rs8.1 per unit to consumers as fuel charges in March, but actually the fuel cost worked out at Rs5.9 per unit. Therefore, the consumers should be refunded Rs2.20 per unit.

The petitioner said the about 6,382 Gwh (Gigawatt hours) were generated in February and 6,223 Gwh could be delivered to distribution companies due to system losses. In contrast, 7,620 Gwh were generated in March and 7,400 Gwh were delivered to distribution companies.

It said the cheapest source of hydropower production in February stood at 23.4 per cent which dropped to less than 17pc in March. The hydropower has zero fuel cost.

The power generation from furnace oil-based power plants amounted to 26.3pc in February at Rs9.4 per unit and it increased to almost 33pc in March due to decline in hydropower and its cost also went up to Rs9.9 per unit in March.

Likewise, the natural gas-based generation stood at 28pc in February at cost of Rs4.23 per unit while its share slightly increased to 29pc in March with higher generation cost of Rs4.7 per unit.

Similarly, the generation from imported liquefied natural gas (LNG) had a 8.43pc contribution in the overall power supply at a rate of Rs7.6 per unit in February compared 8pc contribution at almost the same rate.

The coal and diesel based power generation had a less than 1pc contribution to power supply in two months and their generation cost amounted to Rs4.5per unit and Rs15 per unit respectively.

The CPPA had sought Rs1.62 per unit cut in fuel cost in January, but the regulator had approved Rs3.23 per unit because of some inadmissible expenditures claimed by the power companies.

The reduction in actual generation cost was mainly because of dip in global oil prices. It was reported that the cheapest source — hydropower — could not optimally contribute to the total generation because of lower water availability and the the gap was met through higher diesel and furnace oil based contribution.

The CPPA said the actual generation cost was lower and hence extra money collected from consumers needs to be refunded through adjustment in the next billing month under automatic fuel pass through mechanism.

Published in Dawn, April 21st, 2017