ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday notified a 99-paisa per unit cut in electricity rates for consumers of ex-Wapda distribution companies (Discos) under quarterly tariff adjustment (QTA).

The tariff cut to become effective from Feb 1 and remain in place until April 30, 2022 and provide about Rs22bn relief to the consumers in these three months. The adjustment was on account of various cost variations for the 4th quarter (March-June) of 2020-21.

The lower tariff will be applicable to the consumers of all Discos. The notification came following a meeting of the Federal Cabinet on Jan 11 that rejected a request of the Power Division to absorb the tariff cut to cover a part of the subsidy

According to Information Minister Fawad Chaudhry, the cabinet approved a 99- paisa per unit reduction in QTA as determined by the regulator and rejected a proposal from the Power Division to increase rates for consumers using less than 300 units per month.

Regulator notifies 99-paisa cut under QTA

The Power Division had requested the cabinet that in order to protect the domestic consumers consuming up to 300 units, the impact of uniform quarterly adjustments for the 4th quarter of 2019-20 and the 1st and 2nd quarters of 2020-21 amounted to Rs1.72/kWh notified by Nepra in August 2021 was not passed on to them. Consequently, these consumers were being cross subsidised from other categories.

The Power Division demanded that the benefit of negative QTA determined for the 4th quarter of 2020-21 should not be passed to non-ToU (time of use) domestic non-protected consumers with less than 300 units usage.

It also demanded that instead of passing on the impact of 99-paisa per unit reduction to all consumers in a quarter, the impact should be phased over 12 months because of liquidity constraints of the power companies. This was rejected by the cabinet.

As a consequence, Nepra on Thursday notified the tariff cut for three months starting Feb 1. Based on the information submitted by power companies, the Nepra worked out the amount of QTA for the 4th quarter of 2020-2 1 as negative Rs22.479bn.

It was on account of variation in capacity charges, variable O&M, use of system charges, market operator fee and FCA impact on system losses.

Any excess or less adjustment would be settled between ex-Wapda Discos at the level of Central Power Purchasing Agency (CPPA). The negative QTA is applicable across each category of consumers of Discos (except lifeline and protected category consumers for being already subsidised), based on notified projected sales, after excluding the sales to the lifeline and protected category consumers.

Nepra further pointed out that the regulator in its decision taken on Dec 1, 2020, in the matter of Industrial Support Package (ISP) for additional consumption and abolishment of Time of Use Tariff Scheme for Industrial consumers of Discos decided that no quarterly adjustments would be passed on to B1, B2, B3 and B4 industrial consumers to the extent of incremental sales till continuation of the ISP.

Published in Dawn, January 21st, 2022