ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday allowed 90 paisa per unit increase in power tariff of all the distribution companies (Discos) of ex-Wapda under quarterly re-basing of tariff for the period July 2020 to December 2020.

The decision once notified by the federal government would generate over Rs90.013bn to Discos over a period of 12 months at a uniform rate. Nepra had conducted the public hearing on the issue on March 30 and reserved the determination for want of verification of evidence and relevant data.

The regulator said it approved tariff rebasing on the request of Ministry of Energy to allow impact of the quarterly tariff adjustments (QTAs) on uniform basis across each category of consumers (excluding life line consumers), to be reflected in the monthly bills of consumers of all Discos till its final recovery and any excess and less adjustment would be settled between Discos at the level of Central Power Purchasing Agency (CPPA).

Based on Ministry of Energy’s initiative, all the Discos had filed separate petitions for quarterly tariff adjustments for the period July 2020 to December 2020 (two quarters) with additional cumulative financial impact of Rs91bn that worked out to be about 91 paisa per unit increase in base tariff. This includes Rs44.89bn on account of first quarter and Rs46.76bn for second quarter. The tariff adjustments under QTAs would become part of the tariff separately under a schedule to be set jointly by the regulator and the government.

Under the tariff mechanism, changes in fuel cost are passed on to consumers on monthly basis through automatic mechanism while QTAs on account of variation in power purchase price (PPP), capacity charges, variable operation and maintenance costs, use of system charges and impact of transmission and distribution losses are built in the base tariff by the federal government on the basis of Nepra’s determination.

Officials said the government may keep the quarterly adjustments pending for a couple of months given the upcoming impact of recent tariff increases. In all likelihood, the official explained, the government would like to replace the existing QTA with the July-December 2020 QTA in July.

The CPPA and Discos had claimed the major increase in tariff said the projected PPP references included in the notified base tariff, did not include capacity charges for certain power plants like Neelum-Jhelum Hydropower, Sahiwal Coal Power plant, China Hub Power Coal, Engro Power Gen Thar Coal, Port Qasim Coal and various solar and wind based power plants etc, as these plants were not operational at that time. However, subsequently these plants became operational and have accordingly started invoicing their capacity charges to CPPA and hence the upward quarterly adjustment.

On the concerns raised by various people over payment of capacity charges to power plants without fully utilising their available capacities, Nepra observed that as per the ‘Take or Pay’ agreements with the IPPs, the capacity is paid to the IPPs based to the availability of plants, irrespective of their utilisation factor.

The regulator disallowed legal charges or litigation expenses of Rs23.5m and Rs79m respectively for first and second quarter of 2021-21, thus limiting the tariff increase to 90 paisa instead of Rs91 paisa per unit claimed by the power companies.

The regulator said it has “determined Rs0.8966 per kWh for the allowed amount of quarterly adjustments of Rs90.013bn for first and second quarters of 2020-21, across each category of consumers of Ex-Discos (except lifeline consumers), based on projected sales for the 2019-20, after excluding therefrom the sales to life line consumers, to be recovered in 12 months period, starting from the date of its notification”.

It recalled that it had already held on Dec 1, 2020, on the request of the Ministry of Energy, that quarterly adjustments would not be applicable to B1, B2, B3 and B4 consumers who had been given discounts through Support Package for additional consumption and abolishment of Time of Use Tariff Scheme for Industrial consumers of Discos to the extent of incremental sales till continuation of the package.

Tariff cut for March

Separately, Nepra approved a reduction of 64 paisa per unit for one month in fuel cost adjustment (FCA) of electricity for electricity consumed in March, involving a financial impact of Rs5.5bn. The FCA of March shall be charged in the billing month of May to all consumer categories of Disco consumers, except life line consumers ie having consumption up to 50 units, domestic consumers consuming up to 300 units and agriculture consumers.

The regulator clarified that negative adjustment on account of monthly FCA is also applicable to the domestic consumers having Time of Use (ToU) meters irrespective of their consumption level. Also, the industrial consumers availing Industrial Support Package will not get the benefit of negative FCA on incremental sales only. They will however, get the benefit of negative FCA on base tariff billed units. This FCA would remain applicable only for one month. This FCA is not applicable to KE consumers.

Published in Dawn, May 8th, 2021