ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday ordered ex-Wapda distribution companies to refund Rs3.242 per unit to consumers for overcharging them Rs34 billion in January.

The decision was taken at a public hearing presided over by Nepra Chairman Brig Tariq Sadozai on the request of Central Power Purchase Agency (CPPA).

On behalf of distribution companies of ex-Wapda, the CPPA said the consumers need to be refunded Rs2.98 per unit for the fact that actual fuel cost in January amounted to Rs6.90 per unit because of lower fuel cost and favourable energy mix as against Rs9.87 per unit reference cost set by the regulator.

RLNG-based generation in overall energy-mix surged to 21pc in January

After examination of evidence, the regulator found a few charges built by the power companies unacceptable and worked out a refund of Rs3.242 per unit instead of Rs2.98.

The relief in electricity rates would not be applicable to agricultural consumers and residential consumers with less than 300 units of monthly consumption under a decision of the PML-N government on the grounds that these categories were already being provided subsidised electricity and hence do not qualify for monthly fuel price cut. The KE consumers would also not benefit from the relief.

An official explained that even though the regulator ordered refund of about Rs34bn, the distribution companies would pass only half of the amount to consumers and retain about Rs17bn as windfall saving. This is because of the government policy that allows Discos to charge double the fuel cost of electricity as advance billing to consumers and refund only half of actual overcharged amount on regulator’s orders. The practice helps power companies generate billions of rupees (around Rs120bn a year) from consumers in advance and have better cash flows without financing costs.

The Nepra chairman said the savings in fuel cost accrued due to non-consumption of diesel which was assumed at 2pc as alternative fuel and lower than estimated consumption of furnace oil because of better availability of domestic gas, coal and LNG. Also, the furnace oil was significantly lower than reference prices assumed in 2014-15, he said.

On top of that the regulator had stopped allowing higher tariff on account of Bhikki-LNG project on completion of initial 9-month single cycle period and was now treating lower tariff based on combined cycle. A representative from the CPPA said the LNG projects were behind the schedule.

Based on these factors, Nepra case officers reported that the regulator had previously approved the reference tariff of Rs9.87 per unit for month of January but actual fuel cost turned out to be Rs6.63 per unit. Therefore, there was a legal requirement to return Rs3.24 per unit to consumers.

The petitioner said about 7,982 Gwh (Gigawatt hours) were generated in January and 7,698 Gwh could be delivered to distribution companies due to about 3.41pc losses in the transmission system.

The CPPA said the hydropower generation was too low because of canal closure on top of overall low water availability and therefore maximum electricity was transferred from the south to northern and central parts of the country.

The cheapest energy source (hydropower) had a total contribution of just 7.6pc in overall electricity supply compared to 15.86pc share in December, down from a healthy 31pc share in November.

Also, the wind and solar plants together contributed about 3.1pc energy at no fuel cost.

The power generation from furnace oil-based power plants contributed about 20.4pc electricity to the national grid in January, down from its 29pc share in December 2017 and 9pc in November 2017. Its generation cost increased to R10.42 per unit from Rs9.8 a month ago due to higher oil prices.

The natural gas-based generation maintained its contribution to overall power generation at 23pc supply in January. Its cost was worked out at Rs4.63 per unit, slightly higher than Rs4.49 per unit in December 2017.

On the other hand, the power production from imported regasified liquefied natural gas (RLNG) surged significantly to secure almost 21pc share in total supply as compared to a paltry 5.1pc and 9.3pc share in December and November 2017, respectively. Generation cost surged to Rs9.25 per unit in January, up from Rs6.33 per unit in December 2017.

The share of coal-based generation also reported at 14.34pc in January against 11.7pc in December 2017 and 13.4pc in November. Its fuel cost of generation increased to Rs5.2 per unit in from Rs4.3 per unit in December 2017. The price of electricity import from Iran stood at Rs11.05 per unit and contributed about 0.5pc to the energy pool.

Published in Dawn, February 23rd, 2018

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