ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) reduced on Thursday electricity tariff by Rs2.60 per unit for all distribution companies, except K-Electric, for one month because of cheaper furnace oil and higher hydropower generation in August.

The decision will provide a collective relief of Rs22 billion to consumers but will cause cash flow problems for power companies because they charged higher rates in August on the basis of reference price which would now have to be readjusted in consumer tariff next month (November).

The lower rate of tariff will not apply to domestic consumers using less than 300 units per month and agriculture consumers under a government decision which says they are already in subsidised categories.

Also read: Nepra notifies decrease in power tariff for June, July

The decision to reduce tariff was taken at the request of the Central Power Purchase Agency (CPPA) during a public hearing attended by all Nepra members, except Chairman retired Brigadier Tariq Saddozai.

Rate will not apply to K-Electric and consumers using less than 300 units

Member Nepra Khwaja Naeem expressed serious concern over lower capacity utilisation of the Kot Addu thermal power station because it was a much efficient plant that could produce cheap electricity more than many other public sector plants and independent power producers (IPPs) utilised by the CPPA.

The CPPA representatives said the Kapco plant utilisation was 25 per cent lower because of its forced shutdowns.

But Mr Khawaja did not agree with the assertion and said the 1,136MW plant should have been fully utilised if the economic merit order was followed.

He directed the CPPA to submit a complete report explaining how many forced outages were permissible under power supply contracts and asked if the plant had exceeded those limits then how much liquidity damages were imposed.

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 had contributed to a healthy tariff reduction.

Nepra was told that hydropower generation in August stood at about 42pc which obviously had no fuel cost at all. The second largest contribution of 26.3pc came from furnace oil-based plants and their fuel cost was worked out at Rs9.4 per unit.

This was followed by a 25.5pc generation by natural gas-based plants with a fuel cost at Rs4.8 per unit. About 2.65pc generation came from diesel-based plants with a fuel cost of Rs13.83 per unit. Nuclear power plants contributed 1.73pc electricity to the national grid with a fuel cost of Rs1.22 per unit.

The CPPA representatives explained that the regulator had set a reference fuel price of Rs6.456 per unit for August, but the actual cost turned out to be Rs4.05 because of a reduction in oil prices, requiring a reduction of Rs2.40 per unit in tariff.

But Nepra disallowed some cost factors and approved a reduction in tariff of Rs2.60 per unit.

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 said it had received 10,519 gigawatt hours from different sources in August.

Published in Dawn, October 9th, 2015

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