ISLAMABAD: The electricity tariff for all distribution companies, except K-Electric, is expected to come down by Rs3.60 per unit for a month due to higher than justified billing to consumers in November despite cheaper generation cost.

According to a petition filed by the Central Power Purchasing Agency (CPPA) before the National Electric Power Regulatory Authority (Nepra), the distribution companies had overcharged consumers to the extent of 49 per cent in November under a presumptive reference tariff.

The reduction in actual generation cost was mainly because of better energy mix, significantly greater contribution from domestic sources of energy – hydropower and natural gas – when compared with expensive imported fuels in October.

The CPPA said the actual generation cost was lower and hence extra money collected needs to be refunded to the consumers through adjustment in the next billing month under automatic fuel pass through mechanism.

Nepra, which was placed under administrative control of the water and power ministry early this weak instead of the cabinet division through an executive order of the prime minister, has set public hearing on Dec 27 to take up the request for tariff reduction.

Under the practice in vogue, the distribution companies are charging higher estimated fuel charge to their consumers that is later adjusted against actual cost in a subsequent month with the approval of the power regulator.

The CPPA claimed that it sold about 6.84 billion electricity units (kilowatt hours) to consumers in November at a total cost of Rs25.33 billion. It said the power companies had charged reference fuel charges of Rs7.30 per unit to consumers while the actual fuel cost came out at Rs3.70 per unit. Therefore, a refund of Rs3.60 per unit was required to be passed on to the consumers.

The CPPA reported highest contribution ie almost 41pc (2.84 billion units) power generation came from hydropower plants having no fuel cost at all. The second largest power generation of about 28pc (1.925 billion units) was based on domestic natural gas at the rate of Rs5.51 per unit. As a consequence, these two domestic sources together contributed almost 69pc or 4.76 billion units of energy at an average cost of Rs2.2 per unit.

Another cheaper source of power generation was nuclear fuel at Rs1.18 per unit and its contribution was about 5pc or 338 million units.

On the other hand, furnace oil based power generation cost stood at Rs8.2 per unit, which contributed about 19.4pc (1.345 billion units) of the total electricity generation in November.

Likewise, power production from regasified-liquefied natural gas (RLNG) contributed about 4.1pc share or 286 million units at an average cost of Rs6.9 per unit. Another saving was on account of no power generation from high speed based that generally costs more than Rs12 per unit.

The proposed reduction in power tariff would not be applicable to all agricultural and domestic consumers using less than 300 units per month under a decision of the PML-N government that this was already a subsidized segment of population. The consumers of K-Electric and adjoining areas would also not enjoy the relief.

Published in Dawn, December 22nd, 2016