ISLAMABAD: After resisting for more than two years, the National Electric Power Regulatory Authority (Nepra) on Tuesday approved Rs1.52 per unit average increase in the base tariff for all consumers of ex-Wapda distribution companies (Discos), involving annual additional revenue of Rs115.2 billion.

With this, the base tariff for Discos would go up by an average Rs2 per unit including a 48-paisa per unit increase already determined by the regulator last month.

The regulator issued 10 separate tariff determinations for respective Discos and forwarded to the government on Tuesday for an advice on increase in tariff for each category depending on the element of subsidy and uniform tariff methodology. The combined impact of two decisions has been worked at about Rs140bn.

The regulator said it was re-determining the government request on the directions of the Islamabad High Court where the regulator’s determinations for 2015-16 to 2019-20 tariff had been challenged. It said the tariff determination had been made “to ensure financial viability of the power sector which otherwise would result in huge prior year adjustments and would not be in the interest of the consumers”.

It said the period for fiscal year 2015-16 for which the tariff was being re-determined had already elapsed, hence it decided to include the impact of over/under recovery on account of power purchase price, distribution margins and prior year adjustments in the consumer tariff.

Moreover, it also put on record that even 2016-17 had already lapsed and variations on account of power purchase price including losses had not been recovered or passed on to the consumers because the government did not notify the tariffs for two years as determined by the regulator.

A major additional impact had become due because of payables to the Khyber Pakhtunkhwa government on account of net hydel profit and its arrears under an agreement between the federal and provincial governments.

An official said the resultant increase in tariff was worked out on the basis of Rs59bn to be paid to KP on account Net Hydel Profit (NHP) during the current year, Rs49bn on account of less recoveries and about Rs54.6bn against prior year adjustments.

Against this, an amount of Rs39bn would be adjusted against over-recoveries from consumers through retention of monthly fuel adjustments, leaving an increase of Rs115bn.

The regulator has been resisting the government desire for Rs225bn additional revenue through tariff increases on legal grounds, saying its prior year determinations had not been notified by the government.

A series of litigation and back-door negotiations between Nepra and the power ministry officials reached the conclusion that the regulator should start suo motu hearings on net hydel profit, prior year adjustments and less recoveries on a fast track basis to avoid a lengthy normal procedure involving tariff petitions by Discos.

After accounting for prior year adjustments etc under various heads, the tariff for various Discos required to be increased ranging from Rs3.38 per unit to 13-paisa per unit or an average of Rs1.52 per unit because of a uniform rate.

Originally, Nepra had determined the average tariff at Rs10.90 per unit for 2015-16 which it allowed to be jacked up to Rs11.38 per unit a few days ago and further enhanced to Rs12.90 per unit, with a cumulative impact of about 18.5pc.

Published in Dawn, October 25th, 2017

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