ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Tuesday ordered ex-Wapda distribution companies (Discos) to refund Rs1.82 per unit to electricity consumers for overcharging them in August with a total financial impact of about Rs23 billion.

At a public hearing presided over by Nepra’s Member Tariff Himayatullah Khan, the regulator also expressed displeasure at the utilisation of four gas-based efficient power plants on the most expensive fuel – high-speed diesel (HSD) – with an average additional cost to consumers of Rs2bn per month and observed that around Rs24bn worth of relief might have been denied to consumers in a year.

An official explained that even though the regulator ordered the refund of about Rs23bn, Discos would pass on only half of the amount to consumers and retain about Rs11.5bn as windfall saving.

This is because of the government policy that allows Discos to charge double the fuel cost of electricity as advance billing to consumers and refund only half of actual overcharged amount on the regulator’s orders. The relief will reach consumers in the coming billing month.

Nepra’s order does not apply to residential users with less than 300 units of monthly consumption

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

The practice helps power companies generate billions of rupees (around Rs120bn a year) from consumers in advance and have better cash flows without financing costs.

The relief in electricity rates will not be applicable to agricultural and residential consumers with less than 300 units of monthly consumption under a decision of the PML-N government on the grounds that these categories are already being provided subsidised electricity and hence do not qualify for the monthly fuel price cut. K-Electric consumers will not benefit from the relief either.

At zero fuel cost, hydropower contributed most electricity to the overall basket with a 33 per cent share.

The Central Power Purchasing Agency-Guarantee (CPPA-G) reported that the regulator had previously approved the reference tariff of Rs6.456 per unit for August. But the actual fuel cost turned out to be Rs4.63 per unit. Therefore, there was a legal requirement to return Rs1.82 per unit to consumers.

The petitioner said about 12,750 gigawatt hours (GWh) were generated in August while 12,410GWh could be delivered to Discos due to about 2.6pc system losses.

It said the cheapest source, hydropower, had a one-third contribution and was about 2.2pc better than last month. Also, wind and solar plants together contributed about 2.3pc energy at no fuel cost.

The share of power generation from furnace oil-based power plants was 24.5pc, about 1.1pc lower than last month and had a per-unit fuel cost of Rs9.39 in August. Nuclear power plants contributed about 5.8pc energy to the system at a fuel cost of 96 paisa per unit.

Likewise, the share of natural gas-based generation stood at 16.8pc in August at a cost of Rs4.37 per unit while LNG had 10.74pc share in power generation at a rate of Rs7.47 per unit.

Published in Dawn, September 27th, 2017