ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday said it would reduce electricity rates by 63-68 paisa per unit on account of monthly fuel cost adjustment for electricity consumed in March.

This fuel cost adjustment is likely to provide power consumers a relief of Rs5.4 billion for the month.

At the public hearing presided over by Nepra Chairman Tauseef H. Farooqui on monthly fuel cost adjustments, the Central Power Purchasing Agency (CPPA) and National Power Control Centre (NPCC) remained under criticism for almost 12 months running for utilising expensive power plants despite availability of cheaper and efficient capacity in the system.

The chairman Nepra noted that both companies — CPPA and NPCC — appeared to be defending no prudent decision making, although CPPA being the system operator should have acted as first line of defence against uneconomic capacity utilisation. He said with such a situation, it may become a challenge for the CPPA to become an Independent System and Market Operator (ISMO) in the upcoming whole and retail market operations.

He said the weaknesses being highlighted by Nepra’s team should have been pointed out by CPPA as custodian of the power system on behalf of the consumers. He directed that CPPA should honour its regular past commitments to come up with its economic analysis of the power despatch orders at the time of FCAs.

The Nepra staff pointed out that about Rs677 million additional cost had been claimed for deviation from economic merit order (EMO). This included Rs22m on account of average RLNG allocation during March 2021 was 466m cubic feet per day (mmcfd) against a firm demand of 600mmcfd. Another Rs457m was reported on claimed by NPCC which was not supported by relevant data despite reminders.

It was reported that a 63-paisa reduction in FCA was demanded by the power companies which should actually be 68 paisa per unit reduction when adjusted against EMO violations.

The Nepra chairman said the tariff cut would range between 63 to 68 paisa per unit depending on evidence to be provided by NPCC and CPPA latest by Friday. He said it was perhaps after 15 months fuel based tariff was going down.

The lower fuel cost, on approval by the regulator, would be adjusted in consumer bills in the upcoming billing month of May.

Published in Dawn, April 29th, 2021