ISLAMABAD: Rejecting a demand for recovering from consumers Rs19 billion three-year old ‘adjustments’, the National Electric Power Regulatory Authority (Nepra) on Monday ordered ex-Wapda distribution companies to refund Rs2.19 per unit for overcharging them Rs25bn in September.

Presided over by Nepra Chairman Tariq Saddozai, a public hearing was informed that Central Power Purchasing Agency (CPPA) had sought Rs25bn worth of old adjustments, but later reduced it to Rs19bn. On the basis of this, the CPPA requested reducing one-month fuel based tariff by seven paisa per unit.

On Mr Saddozai’s inquiry, the CPPA team reported that it was seeking Rs15.80bn prior year adjustments for Northern Generation Company Limited (NGCL), Rs2.1bn for Bhikki power plant besides other adjustments which could not be passed on to consumers. However, the evidence to justify past adjustments could not be produced.

Relief will not be applicable to KE, agricultural and residential consumers with less than 300 units in monthly consumption

The four-member panel led by Mr Saddozai, however, did not concede to the demand and observed that the regulator could not allow past adjustments without proper evidence and certification. Secondly, the three-year old adjustments could not be passed on to the consumers in one-go even if these were found to be justifiable and should be a gradual process.An official explained that even though the regulator ordered refund of about Rs25bn, the distribution companies would pass on only half of the amount to consumers and retain about Rs12.5bn 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 regulator’s orders.

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

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

The relief in electricity rates would not be applicable to agricultural consumers 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 were already being provided subsidised electricity and hence do not qualify for monthly fuel price cut. The KE consumers would also not benefit from the relief.

The hearing was informed that the hydropower contributed the highest electricity to the overall basket with more than 36pc share, having zero fuel cost.

The CPPA reported that the regulator had previously approved the reference tariff of Rs6.433 per unit for month of September but actual fuel cost turned out to be Rs6.36 per unit. Therefore, there was a legal requirement to return Rs0.072 per unit to consumers.

Nepra, however, worked out actual fuel cost for September at Rs4.24 per unit and ordered adjustment of Rs2.19 per unit in next billing month.

The petitioner said about 11,489 GWh (Gigawatt hours) were generated in September at a fuel cost of Rs46.6bn and 11,233 GWh could be delivered to distribution companies due to about 2.15pc system losses. The CPPA supplied 11,233.60 GWh to the distribution companies at a cost of Rs71.45bn.

It said the cheapest source of hydropower production had a 36.03pc contribution and was about 9pc better than last month. Also, the wind and solar plants together contributed about 1.77pc energy at no fuel cost.

The power generation from furnace oil based power plants amounted to 20pc, about 4pc lower than last month and had a per unit fuel cost of 9.54 per unit in September. Nuclear power plants contributed about 6.77pc energy to the system at a fuel cost of 96 paisa per unit.

Likewise, the natural gas based generation stood at 16.39pc in September at a cost of Rs4.37 per unit while LNG contributed 11.54pc share to generation at a rate of Rs8.034 per unit.

The generation from coal based plants was reported at 4.8pc in overall supply at a cost of Rs4.3 per unit. The most expensive generation came from high speed diesel at Rs14.15 per unit with less than percent share.

According to Nepra, the fuel cost of electricity delivered to distribution companies was calculated at Rs4.05 per unit in September against the reference price of Rs6.36 per unit. However, power purchasing agency had requested to make previous adjustment of Rs 2.17 per unit which the power regulator refused to do.

Published in Dawn, October 24th, 2017