ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday criticised the power companies for inefficiencies and the use of expensive power plants despite the availability of cheaper sources but hinted at allowing them to charge another Rs22.8 billion to consumers in the billing month of May.

At a public hearing presided over by Nepra Chairman Waseem Mukhtar, it was reported that even though hydropower supply with no fuel cost was actually higher than estimated in the reference tariff, non-utilisation of cheaper plants resulted in a higher average fuel cost. Member Nepra Rafique A. Shaikh expressed concerns over such a state of affairs and noted that cheaper plants remained closed while expensive plants were being operated.

The hearing was told that the share of hydropower supply amounted to more than 27pc of the total grid against a target of less than 22.2pc. On the other hand, local coal-based plants supplied only 10.6pc of the national grid supply against a target of almost 15pc. As a result, the cost of coal-based fuel increased to Rs16.78 per unit against a targeted rate of Rs9.39 per unit.

Another major factor was the domestic gas-based power generation. In the reference tariff, the gas-based fuel cost for almost 11pc share was assumed at Rs7.92 per unit, which went up to Rs13.69 per unit because of an increase in gas price while its general share was lower than 10pc. Also, the RLNG-based power supply was initially expected to be less than 3pc at Rs23.84 per unit, but its share went beyond 20pc, although at a lower fuel cost of Rs22.2 per unit. Its larger-than-targeted power supply also aggravated the average basked price.

Hints at allowing charging Rs23bn more for March

Representatives of the Central Power Purchasing Agency (CPPA) and Power Division said expensive plants had to be used because of transmission system constraints and a week-long maintenance plan for the transmission system. Power consumption was also continuously declining because of expensive power and the increasing use of solar power. In March, consumption fell by 8pc.

The CPPA demanded Rs 2.94 per unit in additional fuel costs to recover from consumers through May 2024 bills. The proposed additional FCA is almost 46pc higher than the pre-fixed fuel cost of Rs6.44 per unit already charged to consumers in March. This calls into question the capabilities of the power sector bureaucracy to forecast fuel costs even for 6-7 months. The additional FCAs have ranged between 50 and 115pc in recent months compared to the pre-determined fuel costs notified at the start of the current fiscal year.

This increase in FCA is on top of an about 26pc increase in the annual base tariff and another 10pc hike under the quarterly tariff adjustment currently in place and being charged to consumers at the rate of Rs2.75 per unit. As a result, consumers continue to pay excessive bills despite lower consumption patterns even though more than 79pc of electricity came from local resources. Nepra has accepted the request for a public hearing on April 26.

In a petition, the CPPA, acting as a commercial agent of Discos, demanded an additional FCA of Rs2.94 per unit for electricity consumed in March. It claimed that reference fuel cost for March was set at Rs6.44 per unit but actual fuel cost more than doubled to Rs9.38 per unit. The average fuel cost in February also stood at about Rs9.42 per unit. It said about 8,023-gigawatt hours (GWh) of electricity was generated at an estimated fuel expenditure of Rs66.7bn (Rs8.3 per unit) in March, of which 7,756 GWh energy was delivered to Discos at the cost of Rs72.67bn (at Rs9.38 per unit).

Published in Dawn, April 27th, 2024