ISLAMABAD: Showing concern over fuel mix mismanagement, the National Electric Power Regulatory Authority (Nepra) on Wednesday allowed a 57 paisa per unit increase in consumer tariff for ex-Wapda distribution companies (Discos) on account of monthly fuel cost adjustment.

The higher rates for electricity consumed in December would be recovered from consumers in the upcoming billing month and these would yield about Rs4.5 billion in additional revenue to Discos.

The decision was taken at a regular monthly public hearing, presided over by Nepra’s Vice Chairman Rehmatullah Baloch.

Nepra decision will bring Rs4.5bn additional revenue to Discos

Mr Baloch and Nepra’s Member of Punjab Saifullah Chattha deplored that tariff should not have been increased and power rates increase could have been avoided had the power companies run LNG- and natural gas-based power plants instead of running their expensive furnace oil-based power plants.

Representatives of the Central Power Purchasing Agency (CPPA) claimed that the power sector had been provided significantly lower quantities of natural gas and imported liquefied natural gas because of fewer imports and higher supplies to fertiliser and export-oriented sectors under the federal government’s policy.

Nepra high-ups questioned how locally-produced gas or LNG supplies could be curtailed to the power sector and whether the power companies did not have firm agreements with gas companies.

The CPPA officers said the issue was beyond their control and the answer forced Nepra high-ups to seek a written report on the matter.

The ex-Wapda Discos had sought about 64 paisa per unit increase in consumer power tariff on account of monthly fuel price adjustment mainly due to higher dependence on furnace oil consumption.

The furnace oil-based power plants contributed about 12pc to the overall power production but its cost accounted for 32pc (Rs14.2bn) of the total monthly fuel bill of Rs44bn in December last year, causing an additional burden on consumers.

Nepra, however, approved 57 paisa per unit increase by disallowing higher transmission losses. It said that transmission losses stood at 3.43pc during December last year but the regulator could not allow more than 3pc losses in tariff. The higher rates would be recovered from consumers in the upcoming billing month.

The CPPA said it charged consumers a reference tariff of Rs5.86 per unit in December while the actual fuel cost turned out to be Rs6.50 per unit and hence the case for 64 paisa per unit increase.

The total energy generation from all sources in December last year was recorded at 7,718 GWh against 7,545 GWh in November and 12,552 GWh generations in September, showing a reduced power demand in winter months.

The total cost of electricity generated in December last year amounted to Rs44.75 billion, having an average per unit fuel cost of Rs5.80 per unit. About 7,442 GWh were sold to Discos for Rs48.36bn with transmission losses of 3.43 per cent that were much higher than maximum permissible limit of 3pc. The transmission losses have generally remained lower than 2.7pc almost throughout the year so far.

The share of hydropower generation in December was significantly lower at 17.3pc owing to lower water availability when compared to hydropower’s 25pc share in October and 34pc in September. The locally produced gas-based electricity contributed maximum (22pc) to the total power production and supply in the country.

The share of coal-based power generation on the other hand jumped to second position as it contributed slightly over 20pc to power generation compared to its less than 12pc share in recent months. The share of regasified liquefied natural gas-based power generation fell drastically to 12.44pc because of lower imports when compared to 22-23pc share in recent months.

In contrast, Residual Fuel Oil-based electricity generation was reported at 12pc which was the highest level in recent month but the government used furnace oil plants to facilitate uplifting of surplus storage with refineries, diverting some gas quantities to fertiliser and export industries. There was no fuel cost on hydroelectricity while coal-based fuel cost stood at Rs6.80 per unit. The furnace oil-based plants generated electricity at the highest fuel cost of Rs15.24. The LNG-based generation cost stood at Rs10.11 per unit. The domestic gas-based generation cost stood at Rs4.97 per unit.

The nuclear energy contributed about 11.62pc of electricity to the national grid at a fuel cost of 95 paisa per unit while power produced by sugar mills accounted for less than 1pc share at a fuel cost of Rs6.2 per unit. The electricity imported from Iran had a cost of Rs11.57 per unit and its total share in generation was 0.48pc.

Wind produced 2.21pc electricity at zero fuel cost while or 0.69pc power contribution came from solar energy again at no cost. The higher tariff adjustment will not be charged to lifeline consumers using up to 50 units per month. The revised rates would also not apply to K-Electric consumers.

Published in Dawn, January 24th, 2019