ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday cleared Rs4.87 per unit reduction in the monthly fuel cost adjustment (FCA) for consumers of K-Electric and an increase of 20 paisa per unit for other distribution companies (Discos) for electricity consumed in August.

The decisions were taken at two separate public hearings presided over by Nepra Chairman Tauseef H. Farooqui and members Rafique A. Shaikh and Maqsood Anwar Khan.

The KE had sought Rs4.21 per unit reduction in FCA to refund in next billing month about Rs7.22bn overcharged to consumers in August. However, after examination of data, the regulator worked out about Rs4.87 per unit reduction. On the other hand, the Central Power Purchase Agency (CPPA) had demanded an increase in FCA by 22 paisa to generate about Rs3bn additional funds but the regulator worked out the increase at 20 paisa, with a financial impact of Rs2.7bn.

This is second month in a row that FCA for KE’s consumers was lower than reference tariff. This has partly reduced the burden of record-breaking increase in FCAs over the past many months going beyond Rs11 per unit. The Discos’ FCA is also now on the lower side compared to Rs8-9 per unit in previous months.

Refund of overcharged amount to be adjusted in October’s bills

The reduction in FCA is chiefly because of increase in nationwide uniform base tariff that has gone up by Rs7 per unit last month. According to KE the fuel cost was lower in August compared to July primarily due to decrease in fuel prices.

The reduction in FCA, on notification, would be applicable to all the consumer categories except lifeline consumers, domestic consumers consuming up to 300 units, Agriculture Consumers and EVCS (Electric Vehicle Charging Station) consumers.

The impact of monthly FCA adjustment will be passed on to consumers through October bills both for the KE and Discos.

In case of Discos, the biggest contribution in overall power grid came from hydropower. Its share has been showing gradual increase to over 38pc in August, compared to 35pc in July and 24pc in June and May. Hydropower has no fuel cost. Lower availability of expensive imported RLNG also came as a blessing in disguise to consumers.

The CPPA had claimed that the consumers were charged a reference fuel cost of Rs9.89 per unit in August compared to Rs6.24per unit in July, but the actual cost in August turned out to be Rs10.11 per unit, hence an additional charge of about 22paisa per unit to consumers.

Under the tariff mechanism, changes in fuel cost are passed on to consumers only on a monthly basis through automatic mechanism. The quarterly tariff adjustments on account of variation in power purchase price, capacity charges, variable operation and maintenance costs, use of system charges and including impact of transmission and distribution losses are built in the base tariff by the federal government.

Published in Dawn, September 30th, 2022