ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) reduced on Tuesday fuel-based power tariff for distribution companies of ex-Wapda by Rs3.32 per unit for one month because of lower than anticipated oil prices in the international market.

Nepra said consumers could not be provided greater relief because of utilisation of costlier re-gasified liquefied natural gas (RLNG) as fuel instead of comparatively cheaper furnace oil.

At a public hearing presided over by its vice chairman Himayatullah Khan, the authority concluded that the companies had charged 49 per cent higher rate of Rs6.77 per unit on account of fuel cost to consumers in May which should be refunded. In doing so, the regulator held that Rs3.32 per unit (about Rs29 billion) should be returned to the consumers in August.

The Central Power Purchase Agency (CPPA), which had filed a request for monthly fuel price adjustment, said furnace oil-based power generation continued to be cheaper than gas-based generation because of RLNG factor.

The reduced rates will not apply to agricultural and domestic consumers using less than 300 units per month under a government decision made on the ground that it was already a subsidised segment of population.

Likewise, consumers of K-Electric will also not benefit from the tariff reduction.

In its request, the CPPA had sought Rs3.27 per unit reduction in fuel-based power tariff for May, saying the actual cost stood at Rs3.50 per unit against reference tariff of Rs6.776 per unit. But the regulator disallowed a couple of items claimed by the CPPA and approved Rs3.32 per unit reduction.

The reduced rates will not apply to K-Electric consumers

On questions from Nepra vice chairman, Mohammad Ilyas, general manager of the National Transmission and Dispatch Company (NTDC), and Mohammad Rehan, general manager of the CPPA, admitted that merit order was not followed last month to accommodate RLNG-based power generation despite availability of cheaper furnace oil-based plants, which were not run to full capacity.

Mr Himayatullah expressed displeasure over denying consumers greater relief in May by not utilising furnace oil-based plants and instead producing electricity from the RLNG.

He said it was ironic that despite repeated warnings in the previous monthly adjustments to follow merit order that entailed utilisation of cheaper plants on preferential basis, the power sector authorities were following merit order of their choice.

He ordered the CPPA and NTDC to submit a written explanation as to under what authority costlier fuel was utilised.

The CPPA reported that the cost of furnace-oil based power generation stood at Rs5.93 per unit compared to gas-based cost of Rs5.34 per unit, Rs11.69 per unit for diesel-based plants, no fuel cost for hydropower plants and Rs1.15 per unit for nuclear plants. The fuel cost of electricity imported from Iran stands at Rs10.6 per unit.

An official explained that domestic gas-based power generation was lower than furnace oil-based generation but costlier RLNG- based generation had pushed up average tariff for gas plants.

The CPPA reported that 9.78bn units of electricity were supplied to distribution companies in May at a cost of Rs34.23bn. It said hydropower generation contributed the biggest share of about 36pc and furnace oil-based plants generated over 27.3pc energy. Gas-based plants generated 29.6pc electricity for the national grid followed by 4.2pc by nuclear plants and 0.23pc by diesel plants.

Published in Dawn, June 22nd, 2016