ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Tuesday cut consumer tariff by 82 paisas per unit for all distribution companies of the Water and Power Development Authority (Wapda) for a month, in a bid to pass on a lower average power generation cost for the month of May.

At a public hearing presided over by acting chairman Habibullah Khilji, Nepra expressed resentment over the non-completion of a 125-kilometre transmission line for the Uch-II power project, despite the fact that it was inaugurated by Prime Minister Nawaz Sharif three months ago.

Nepra also sought an update on ongoing power projects from the Central Power Purchasing Agency (CPPA), which are to be completed by the end of the current year, and directed the National Transmission and Dispatch Company (NTDC) to submit the status of transmission lines of power generation plants.

The regulator directed the distribution companies to pass on the impact of reduced fuel cost of power generation to consumers next month. The reduction in tariff was made on account of a monthly fuel price adjustment, which would not affect lifeline consumers using under 50 units per month because they are already subsidised, as well as all consumers of K-Electric, for whom tariff is determined separately.

The reduction was approved on a petition filed by CPPA on behalf of distribution companies on account of lower cost of power purchase and better energy mix as part of monthly fuel price adjustment (FPA).

The CPPA had reported that its average fuel cost during last month was Rs7.56 per unit against an approved reference cost of Rs8.37 per unit for the current financial year. As a consequence, the reduced fuel cost should be shared with end-consumers.

Under the fuel price mechanism approved by parliament, Nepra is required to notify a reference fuel price for distribution companies at the start of every financial year and then pass on any change in average fuel cost, exchange rate variation and energy mix to consumers every month through the FPA.

The CPPA had reported that about 34.5 per cent of total power generation during May was through hydroelectric resources, while 36.6pc of the power supply came from furnace oil-based power plants. Another 22.45pc was contributed by gas-fired power plants, Nepra was told.

The generation cost of coal-based plants stood at Rs4.50 per unit compared to Rs20.60 and Rs14.70 of furnace oil-based power plants. The cost of gas-fired power plants was worked out at Rs4.50 per unit while nuclear power generation cost stood at Rs1.40.

There is no fuel cost of hydropower generation, although its operation, maintenance and other costs are part of fixed charges recovered from consumers through based tariff like all other plants of all fuel sources.

The CPPA said a total of 8,494 gigawatt hour (Gwh) of electricity was generated during May, but 160 Gwh of energy was wasted due to transmission losses of about 1.88pc. Therefore, a net electricity of 8,328 Gwh was delivered to distribution companies during the month at a cost of Rs63 billion.

The reduced fuel cost is expected to provide a relief of about Rs8bn to consumers next month.

Some consumers pointed out that Nepra had not provided enough time to stakeholders, as provided under the law, to comment on the tariff reduction request. They said the law required the regulator to provide at least a week to stakeholders to intervene into a tariff petition, but Nepra had published its tariff notice on June 20 and held public hearing on June 24, including three days of the weekend.

The acting chairman promised to provide reasonable time in future to stakeholders.

Published in Dawn, June 25th, 2014