ISLAMABAD: To meet another requirement of the IMF programme, the National Electric Power Regulatory Authority (Nepra) on Friday allowed the federal government to notify Rs1.68 per unit increase in base power tariff for all residential consumers and Rs1.39 per unit for all other consumer categories with effect from November 1.

The higher tariff would be applicable across the country for all power companies, including K-Electric, but all residential consumers under monthly consumption of 200 units would remain protected from price hike through subsidy.

The decision would generate about Rs168 billion to the power companies and reduce subsidy otherwise to be paid out of the budget during current fiscal year. The revision would increase the average base power tariff, excluding various taxes, surcharges and duties etc, from Rs13.97 per unit at present to Rs15.36 per unit.

The power division said the government was now protecting consumers only to the extent of 200 units per month. In doing so, it said, the first 50 units (lifeline consumers) would be charged at Rs3.95 per unit while another category of lifeline consumers — 51 to 100 units per month — had been created to be charged at Rs7.74 per unit. Consumers using 101 to 200 units would be charged at Rs10.06 per unit without any change and excluding taxes. All residential consumers above 200-unit threshold would face Rs1.68 per unit increase. The tariff increase will be effective from November 1 and applicable to all Discos and KE.

Rs1.68 per unit increase for residential consumers and Rs1.39 for others will come into effect from 1st

The power division said about 45 per cent non-time of use consumers would remain protected.

A Nepra official said the increase was necessitated by higher capacity payments and exchange rate losses but some additional factors like the cost of Matiari-Lahore transmission line and Karachi Nuclear Power Plant II would follow in the shape of quarterly tariff adjustments.

Nepra put on record that the government with this approval would enforce consumer end tariff for certain consumer categories higher than the uniform tariff, if consolidated on the basis of Nepra’s national average.

Regarding higher category wise tariff proposed by the government for various categories of consumers, Nepra clarified that it had not levied any surcharges rather it was the government which had the statutory power to do so. “Under Section 31(8) inserted through Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Ordinance, 2021, the Federal Government has the power to levy surcharges and any such surcharge is to be considered as a cost to be included in the tariff determined by Nepra,” it said.

However, Nepra also conceded that revised tariff was also within the overall revenue requirement of Discos approved by it at the rate of Rs3.34 per unit to meet revenue requirements of the distribution companies. It said the government had at the time increased only Rs1.95 per unit while Rs1.39 per unit increase had been kept pending, hence the instant increase.

It explained that for life line consumers and protected consumers using up to 200 units per month, there would be no increase in tariff. However, for the remaining domestic consumers, an increase of Rs1.68 per unit is applicable, which also includes the impact of life line and protected consumers. For other consumer categories, a lower increase of Rs1.39 per unit has been allowed as the government does not want to overburden these consumers, particularly industrial consumers, so that they remain competitive.

Also, the increase in tariff would be applied prospectively and is within the overall revenue requirement determined by Nepra. Keeping in view the national policy of maintaining uniform tariff across the country, same increase would also be applicable to the consumers of K-Electric.

While the tariff increase had been allowed by the entire Nepra, its vice chairman Rafique A. Shaikh in a minor dissent noted that national electricity policy required timely recovery of full cost of service but the cost should be prudent. “The capacity payments to inefficient power plants, extension of agreements with 1994 power policies, inefficient transmission system are all imprudent costs, which can’t be passed on to consumer,” he wrote adding “the true cost of electricity means the prudent cost only”.

Energy Minister Hammad Azhar had already announced in October that the decision to increase base power tariff by an average Rs1.39 per unit was taken during a meeting with the World Bank management.

Published in Dawn, November 6th, 2021