Rs22.92b burden may be passed on to power users

The National Electric Power Regulatory Authority (Nepra) on Tuesday indicated that it would allow the ex-Wapda distribution companies (XWDISCOs) as well as K-Electric (KE) to transfer the burden of Rs22.92 billion to their consumers on account of the adjustment for the first quarter of the fiscal year 2023-24 The regulator conducted a public hearing on the petition of the XWDISCOs to increase the power tariff by Rs1.25 per unit. The petition was filed on account of the quarterly adjustment for the period spanning from July to September 2023. The increase in tariff, if approved, will be charged from the consumers in their utility bills for December 2013 and January-February 2024. Nepra Chairman Waseem Mukhtar headed the proceedings in the presence of the authority’s members including Mathar Niaz Rana from Balochistan, Maqsood Anwar Khan from Khyber-Pakhtunkhwa, Amina Ahmed from Punjab, and Rafique Ahmad Shaikh from Sindh. The regulator did not give its firm decision, but according to Nepra’s calculation of the data submitted by these companies, the increase could be Rs1.25 per unit, an authority’s senior official, who dealt with tariff issues, said during the hearing. The authority will issue its final decision in a few days. This positive adjustment will apply to the customers of all XWDISCOs and KE, except lifeline ones. Read more: NEPRA okays Rs1.71 per unit hike in power tariff Under the federal government’s recent guidelines, the quarterly tariff adjustments (QTA) decided for the XWDISCOs will be automatically applicable to K-Electric too with the same amount and timeframe. So now if the authority finalises the increase of Rs1.25 per unit for the coming three months (December-January), it will be applied to the consumers of KE as well. Representing the XWDISCOs, the Central Power Purchasing Agency (CPPA) cited various factors including the fluctuation in capacity charges, variable operations and maintenance (O&M) costs, additional recovery on incremental sales, use of system charges, market operator fee, and impact of fuel charge adjustments (FCAs) on transmission and distribution (T&D) losses during the first quarter (July to September) of 2023-24. Of the total additional amount of Rs22.56 billion, the distribution companies sought permission to collect Rs12.96 billion from its clients as capacity charges. This will be allocated to independent power producers (IPPs) to cover the cost of electricity that distribution companies did not inject into the national demand because of system constraints or low requirements. Read More: NEPRA ups tariff by Rs1.46/unit In addition, consumers will also pay Rs4.28 billion as variable O&M costs, Rs6.42 billion for T&D losses on monthly FCAs, and Rs10.3 billion for use of system charges as well as market operator fee. It is to be noted that as per the decision of the authority on November 3, 2021 on a motion filed by the federal government in connection with the Winter Incentive Package for electricity users of XWDISCOs and KE, it was decided that no quarterly adjustments would apply to incremental consumption. The impact of incremental units for the quarter has been worked out at a negative Rs11.047 billion. It is the cost of units purchased for the industrial incremental sale. The data shared with Nepra indicates that the Islamabad Electric Supply Company (IESCO) demanded the recovery of Rs5.542 billion, Lahore Electric Supply Company (Lesco) Rs10.305 billion, Faisalabad Electric Supply Company (Fesco) Rs4.754 billion, Peshawar Electric Power Company (Pesco) Rs2.096 billion, Tribal Electric Supply Company (Tesco) Rs 1.195 billion, Hyderabad Electric Supply Company (Hesco) Rs1.056 billion, and Sukkur Electric Power Company (Sepco) Rs926 million. The Multan Electric Power Company (Mepco) and Quetta Electric Supply Company (Qeco) have shown savings of Rs728 million and Rs2.625 billion, respectively. The inefficiencies, power losses, and theft in the systems of XWDISCOs will be recovered from the consumers in the form of recoveries. During the hearing while answering the questions of the interveners and attendees, the authority said high inflation, exchange rate volatility, and hike in petroleum prices played an instrumental role in increasing the base tariff. However, when asked if the base tariff would be reduced if the inflation came down to single-digit, interest rate was reduced and rupee gained strength, the Nepra officials answered in the negative. They added that they could only adjust it through the quarterly and monthly adjustments. To a question about the International Monetary Fund’s (IMF) new demand to the government for a tariff increase, the Nepra officials said they had not received any petition for this purpose yet and that was why they could not comment on the matter.