ISLAMABAD: After almost five years, the fuel cost of electricity has started increasing the monthly bills owing to higher international oil prices and changes in benchmarks to consumers’ disadvantage.

On Wednesday, the National Electric Power Regulatory Authority (Nepra) allowed an increase of Rs1.25 per unit in consumer tariff for ex-Wapda distribution companies (Discos) on account of fuel cost adjustment for electricity consumed in May. The higher electricity rates would be recovered from consumers in the upcoming billing month i.e., July.

The Central Power Purchasing Agency (CPPA) on behalf of the Discos claimed an additional cost of Rs1.32 per unit on the basis of recently notified base tariff 2015-16 instead of previous 2014-15 tariff on the basis of which the regulator used to make monthly fuel cost adjustments in the past and resulted in refunds to consumers.

The new base tariff allowed relaxed benchmarks for power companies and higher indexations on various items. Based on 2015-16 tariff, the power regulator agreed that power generation cost was higher than actually charged to consumers in May 2018.

The regulator reached the conclusion at a public hearing led by member Punjab Saifullah Chatta and member KP Himayatullah Khan. Chairman of the Senate’s Standing Committee on Power Fida Muhammad also attended the proceedings.

The regulator asked the Discos to recover Rs1.25 per unit from consumers in the electricity bills of July. The decision would generate additional revenue of Rs15.7 billion to the power companies.

The higher tariff adjustment will not be charged to lifeline consumers using up to 50 units per month but all other consumer of all categories including industrial sector and agriculture tube wells would have to bear the additional burden. The decision will not be applicable to K-Electric consumers.

While responding to the question of Fida Muhammad, Nepra’s member Himayatullah Khan said that due to the system’s technical and administrative losses, circular debt was ballooning and consumers had to bear maximum burden of systemic inefficiencies, technical and administrative losses while some part of it was parked into circular debt.

He said that cheap gas was being provided to state-run generation companies having very low efficiency. “Had this gas been supplied to efficient Independent Power Producers (IPPs), more low cost electricity could have been produced and the need for higher fuel cost adjustment would have not been more than 30-35 paisa per unit,” he claimed.

Expressing concern over government’s policy, he said on one hand expensive gas was being purchased from Qatar at Rs13 per unit but on other hand, six rupees per unit was not being given to Balochistan for purchasing cheap gas.

The CPPA in its petition said it had charged consumers a reference tariff of Rs5.2908 per unit in May while the actual fuel cost turned out to be Rs6.6123 per unit and hence it be allowed to recover Rs1.32 per unit additional cost from consumers next month.

Total energy generation from all sources in May 2018 was recorded at 12,117.67 Gwh at a total cost of Rs75.872bn while 11,896 Gwh were sold to the Discos at Rs78.665bn with a transmission loss of 1.74pc.

The share of hydel power generation in May stood at 18.30pc, Residual Fuel Oil (RFO)-based electricity at 19.3pc and gas-based generation at 16.27pc. RLNG-based energy had the highest share of 23.85pc in the country’s total power generation while coal based had a 12.12 pc proportion in the total.

There was no fuel cost on hydroelectricity while coal-based fuel cost stood at Rs5.76per unit compared to Rs12.5 per unit on furnace oil-based plants. LNG-based generation cost amounted to Rs9.1022 per while domestic gas-based generation cost stood at Rs4.85 per unit.

Nuclear energy contributed about 5.41pc electricity to the national grid at a fuel cost of Rs1.02 per unit the while power produced by sugar mills accounted for less than 1pc share at a fuel cost of Rs6.85 per unit. The electricity imported from Iran had a cost of Rs11.57 per unit and its total share in generation was 0.44pc.

Wind produced 2.38pc electricity at zero fuel cost while 0.52pc contribution came from solar energy against no cost.

Published in Dawn, June 28th, 2018