ISLAMABAD: Continuing with perpetual electricity price shocks suppressing demand, the Central Power Purchasing Agency (CPPA) has sought about Rs5 per unit increase in fuel cost adjustment (FCA) in upcoming bills on account of electricity consumed in February to generate another Rs35 billion for ex-Wapda Distribution Companies (Discos).

The additional FCA demanded by the CPPA, 113pc higher than the pre-fixed fuel cost of Rs9.42 per unit already charged to consumers in February, calls into question the capabilities of the power sector bureaucracy to forecast fuel costs even for 6-7 months. The additional FCAs have remained over 80pc higher in recent months than the pre-determined fuel costs notified at the start of the current fiscal year.

This increase in FCA is on top of about 26pc increase in annual base tariff and another 18pc hike under the quarterly tariff adjustment currently in place. As a result, the consumers would continue to pay excessive bills despite lower consumption while over 77pc share of electricity came from local cheaper resources.

Hearing fixed for 28th to decide Rs5 per unit hike for February

The National Electric Power Regulatory Authority (Nepra) has accepted the request for a public hearing on March 28.

The higher proposed FCA, on the consumption of February, is mainly because of higher domestic coal and gas prices although imported fuel prices, including furnace oil and LNG were cheaper in February and the exchange rate remained stable.

In a petition, the CPPA acting as commercial agent of Discos demanded an additional FCA of Rs4.99 per unit in the billing month of April for electricity consumed in February. It claimed that the reference fuel cost for January was set at Rs4.43 per unit but the actual fuel cost more than doubled to Rs9.425 per unit.

It said about 7,130 gigawatt-hours (GWh) of electricity were generated at an estimated fuel expenditure of Rs62bn (Rs8.7 per unit) in February, of which 6,876 GWh energy was delivered to Discos at a cost of Rs65bn (at Rs9.42 per unit).

The data showed declining consumption trends.

The consumption in February was also 8.5pc lower than the same month (7,516-GWh) of last year while it was about 14pc lower than the corresponding month of January when consumption stood at 7,938 Gwh. The Rs4.99 per unit FCA for this February is almost 5 times greater than 85 paise for the same month last year.

This included the biggest share of hydropower at 25pc in February, almost 127pc higher than its 11pc share in January. The hydropower is always lower in January than in other months because of the canal closure for annual maintenance. Hydropower has no fuel cost.

The second biggest share in the national grid came from nuclear power at about 23.3pc in February compared to 21pc in January. This was followed by 20.33pc contribution from RLNG against 18.22pc in January.

Then came the local coal which contributed 14pc share to the grid in February, down from 16.5pc in January. The imported coal had a minor contribution of just 1.9pc compared to its 7pc share in January. The overall coal generation accounted for 15.8pc in February, down from 23.4pc in January.

There was no power generation from furnace oil and diesel-fired plants against a 10pc share in January. The LNG-based power generation cost in February declined further to Rs22 per unit against Rs24.3 per unit in January and Rs26.22 in December.

Published in Dawn, March 19th, 2024