ISLAMABAD: Power tariff for all distribution companies, except K-Electric, is estimated to come down by Rs1.71 per unit for a month due to lower than assumed fuel costs in July.
The Central Power Purchasing Agency-Guarantee (CPPA-G) has filed a petition before the National Electric Power Regulatory Authority (Nepra) for a tariff cut on behalf of ex-Wapda distribution companies. The regulator is expected to hold a public hearing on the matter on Aug 23.
Under the practice in vogue, the distribution companies charge power consumers significantly higher estimated fuel cost, which is later adjusted against actual cost in a subsequent month. The practice helps power companies generate billions of rupees from consumers in advance and have better cash flows without financing costs.
The relief in electricity tariff will not apply to agricultural consumers and residential consumers with less than 300 units of monthly consumption under a decision made by the PML-N government on the grounds that these categories are already being provided subsidised electricity and hence do not qualify for monthly fuel price cut.
In its petition, the CPPA-G reported that it had charged consumers a reference tariff of Rs6.49 per unit in July when actual fuel cost turned out to be Rs4.78. Therefore, there is a legal requirement to return Rs1.71 per unit to consumers.
K-Electric consumers to get no benefit
The reduction in actual generation cost was mainly because of a decline in global oil prices and higher contribution from the cheapest source — hydropower. The CPPA said that the actual generation cost was lower and hence extra money collected from consumers should be refunded through adjustment in the next billing month under automatic fuel pass through mechanism.
The petitioner said that about 11,496 GWh (Gigawatt hours) were generated in July and 12,267 GWh delivered to the distribution companies due to about 1.73 per cent system losses.
It said that the cheapest source, hydropower production, had a healthy contribution to overall energy mix in July as it stood at 30.8pc — slightly 0.3pc higher than the last month.
Hydropower has a zero fuel cost. So are wind and solar plants which contributed about 2.3pc electricity.
Generation from furnace oil-based power plants amounted to 25.6pc, up from the previous month’s 22.34pc. Because of higher production and lower oil prices, the cost of furnace oil-based plants slightly came down to 9.36 per unit in July, compared to Rs9.5 in June.
Likewise, natural gas-based generation was lower at 17.17pc in July at a cost of Rs4.36 per unit.
Generation from imported liquefied natural gas (LNG) also had a healthy 12.12pc contribution to the overall supply at a rate of Rs7.52 per unit.
Generation from coal-based plants was down in July by 2.95pc against 5.7pc in June, owing to technical problems faced by the Sahiwal coal power project. These plants’ contribution was just 368GWh in July, compared to 653GWh a month earlier. Still, its fuel cost stood unchanged at Rs4.3 per unit.
The most expensive generation came from high speed diesel (HSD) at Rs14.04 per unit, with a higher contribution of 2.7pc in July, ironically up from 1.36pc contribution in June. Import from Iran followed HSD-based expensive energy as it stood at Rs10.63 per unit and contributed less than 0.5pc to the energy pool.
The CPPA said that total energy was generated at a total cost of Rs58.65 billion or Rs4.69 per unit and 1.73pc lower supply was delivered to the distribution companies at a cost of Rs58.69bn or Rs4.78 per unit.
Published in Dawn, August 19th, 2017