ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) reduced on Tuesday electricity tariff by Rs3.24 per unit for all distribution companies, except K-Electric, for one month to pass to consumers the impact of cheaper furnace oil and gas consumed for power generation in December 2014.

The decision was taken after a public hearing on a petition filed by Central Power Purchase Agency (CPPA) on behalf of the distribution companies. Lifeline consumers using less than 50 units a month will not benefit from the price cut because of their subsidised tariff.

Also read: Nepra approves reduction in K-Electric tariff

The public hearing, presided over by newly appointed Nepra chairman Tariq Sadozai, was attended by the four provincial members.

The total impact of lower fuel price adjustment is estimated at Rs21.6 billion for December. This includes Rs16.8 billion on account of reduction in furnace oil price and about Rs4.8 billion on account of better energy mix and lower than forecast gas price after the prime minister blocked a gas tariff increases allowed by the Oil and Gas Regulatory Authority (Ogra).

Originally, the hearing should have been held last month to let the benefit reach consumers in the billing month of Feb 2015, but was cancelled at the last moment, reportedly to facilitate successful completion of talks with the International Monetary Fund. As such, the power sector revenue targets were achieved and February bills were issued without fuel price relief.

While approving Rs3.24 per unit reduction in monthly fuel price adjustment, Nepra ordered its implementation in the billing of March.

The regulator observed at the hearing that the price of electricity purchased from Guddu and Nandipur power plants, currently on a test run, was not being accounted for by the CPPA and ordered a detailed report and the relevant record on the cost of energy delivered to consumers during the test period.

Nepra viewed that withholding such costs, believed to be on the higher side, could cause a sudden shock to consumers at a later stage and hence it was important to take care of it at appropriate level.

The regulator was told that 6.57 billion units were sold to the distribution companies during December 2014.

The CPPA said the diesel-based power generation cost stood at Rs19 per unit, furnace oil-based at Rs12.38, gas-based at Rs3.57, nuclear at Rs1.18 per unit and imported energy from Iran at Rs10.20 per unit, resulting in the saving of Rs21.6 billion during December.

Published in Dawn February 18th , 2015

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