ISLAMABAD: Going beyond the Prime Minister’s announcement last week, the Central Power Purchase Agency (CPPA) has sought Rs2.92 per unit reduction in the fuel based power rates for all distribution companies (except K-Electric) for a month owing to combination of cheaper furnace oil and its lower utilisation in power generation.

Admitting the CPPA’s tariff petition, the National Electric Power Regulatory Authority (Nepra) has decided to hold a public hearing on December 19 before passing on to the consumers a relief of about Rs17 billion during the upcoming billing month.

In its tariff petition on behalf of all the distribution companies, except K-Electric, the CPPA explained that its average fuel cost during the month of November 2014 worked out at Rs4.49 per unit — lowest in more than five years — against the reference tariff of Rs7.41 approved by Nepra in advance for November. This resulted in reduced fuel generation cost of Rs2.92 per unit.

The CPPA reported to the regulator that a total of 6.534 billion units were sold to the distribution companies during November against 8.123 billion units sold to Discos in October, showing a reduction of about 20 per cent.

Nepra convenes public hearing on Dec 19 before passing on Rs17bn relief to the consumers

During the same month, the power generation from furnace oil and high speed diesel was 1.626 billion units lower than the previous month of October. The power gen eration from furnace oil and diesel stood at 1.399 billion units in November against 3.250bn units generated from these two expensive fuels in October.

On top of that, the furnace oil based generation cost worked out at Rs13.85 per unit in November when compared with Rs15.64 per unit cost in October. The cost of power generation on furnace oil alone was, therefore, lower by Rs1.79 per unit because of reduction in oil prices in the international market.

Meanwhile, Nepra officials expressed their concern over announcement made by Prime Minister Nawaz Sharif at Peshawar last week for Rs2.32 per unit reduction in electricity tariff. They said the prime minister did not have the powers under the Nepra Act to reduce electricity tariff.

They said that the Nepra was required to scrutinise invoices provided by the CPPA on account of actual fuel cost of all power generation sources under the Nepra Act before increasing or reducing electricity rates and was not bound by orders or announcements of prime minister.

They said inaccurate figures presented to the prime minister for public announcement would not go well with the regulatory process.

The Nepra officials said the regulator had been cutting electricity tariffs under monthly fuel adjustment for the last three months because of reduction in international oil prices on the request of CPAA on behalf of distribution companies.

Under various acts of the parliament, the Nepra is required to pass on actual impact of fuel cost to the consumers every month irrespective of any consideration for increase or decrease, they said.

They said the Nepra public hearing would examine proofs and actual invoices to be provided by the CPPA for reduction in tariff under monthly fuel adjustment mechanism.

Published in Dawn December 18th , 2014