ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) approved on Thursday a record Rs4.43 per unit reduction in electricity rates of all distribution companies, except the K-Electric, on account of monthly fuel price adjustment to be passed on to consumers in May.

The decision will result in a Rs25 billion relief to the consumers but cause cash flow problems for the companies because they had charged higher rates in February on the basis of reference price that would now have to be readjusted in consumer tariff next month.

Also read: Power tariff raised for Karachi

The lower rates will not apply to domestic consumers using less than 50 units per month and agriculture consumers because they are charged at subsidised rates.

The decision to reduce the tariff was taken on a request of the Central Power Purchase Agency (CPPA) at a public hearing presided over by Nepra Chairman retired Brigadier Tariq Saddozai.

At the outset of the hearing, Nepra member retired Major Haroon Rashid took exception to non-implementation of the regulator’s orders of last month seeking imposition of Rs3bn penalties by the CPPA on independent power producers for failing to maintain mandatory stocks and purchasing electricity from small producers at higher rates despite lower tariff approved by Nepra in October 2013.

The hearing was informed that higher-than-anticipated hydropower supply and lower generation through furnace oil coupled with a stark reduction in furnace oil prices — down to Rs35,000 per ton from Rs75,000 per ton at the time of setting of reference price — had contributed to a healthy tariff reduction.

Nepra was told that hydropower generation was four per cent higher and furnace oil-based generation five to 30pc lower than reference tariff.

The representatives of the CPPA explained that the regulator had set a reference fuel price of Rs9.99 per unit for February but actual fuel cost turned out to be Rs4.57 per unit because of reduction in oil prices, requiring a reduction of Rs4.426 per unit in the tariff.

It was reported that the furnace oil-based plants contributed 33pc to total power supply in February as compared to 45pc in January. The fuel cost of furnace oil-based generation stood at Rs8.4 per unit. Likewise, the share of high speed diesel-based electricity generation stood at 1.8pc in February against 9.42pc in January. The average fuel cost of diesel-based generation stood at Rs15.5 per unit.

The hydropower plants contributed 33.4pc electricity to the national grid at zero fuel cost, followed by 21pc generation through natural gas at a fuel cost of Rs4.5 per unit.

The fuel charges of all distribution companies are subject to adjustment on the basis of information provided by the CPPA about actual fuel charges for each month.

The CPPA reported that in February 2015, it had received 5,859 gigawatt hours from different sources.

Published in Dawn, April 10th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play