ISLAMABAD: The power tariff for all distribution companies, except K-Electric, is estimated to come down by Rs1.47 per unit for a month due to lower than assumed fuel costs in November.

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 distribution companies of ex-Wapda. The regulator is likely to hold a public hearing on the matter on Dec 28.

Under the practice in vogue, the distribution companies are charging significantly higher estimated fuel charge to power consumers which is later adjusted against the actual cost in the subsequent month with the approval of the power regulator. 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 rates would not be applicable to agricultural consumers and residential consumers with a consumption of less than 300 units a month 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 the monthly fuel price cut.

In its petition, the CPPA-G reported to the regulator that it had charged a higher reference tariff of Rs7.30 per unit to consumers in November but the actual fuel cost turned out to be Rs5.83 per unit. Therefore, there was a legal requirement to return Rs1.47 per unit to consumers.

The petitioner said about 7,170 Gwh (Gigawatt hours) were generated in November and 6,994 Gwh could be delivered to distribution companies due to about 2.21 per cent system losses.

Hydropower, the cheapest source of electricity production, had a healthy contribution to the overall energy mix in November and stood at 31 per cent. The hydropower has a zero fuel cost. Besides, wind and solar plants together contributed to about 1.58 per cent to energy production with no fuel cost.

Published in Dawn, December 23rd, 2017