ISLAMABAD: The power tariff for all distribution companies, except K-Electric, is estimated to come down by about Rs2.78 per unit for a month due to lower than assumed fuel costs in December despite low contribution from cheap hydropower.

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 the distribution companies of ex-Wapda. The regulator is expected to hold a public hearing on the matter on Jan 25.

Under the practice in vogue, the distribution companies are charging significantly higher estimated fuel rate 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 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 less than 300 units of monthly consumption as they are already offered subsidised rates and don’t qualify for a further cut.

In its petition, the CPPA-G reported to the regulator that it had charged a higher reference tariff of Rs8.10 per unit to consumers in the month of December but actual fuel cost turned out to be Rs5.32 per unit. Therefore, there was a legal requirement to return Rs2.78 per unit to consumers.

The petitioner said about 7,763 Gigawatt hours were generated in December of which 7,519Gwh could be delivered to distribution companies due to about 3 per cent losses in the transmission system.

The CPPA-G said the hydropower generation was too low because of canal closure on top of overall low water availability. The cheapest energy source (hydropower) had a total contribution of almost 15.86pc in overall electricity supply compared to a healthy 31pc share in November. Hydropower has zero fuel cost.

Also, the wind and solar plants together contributed about 3.1pc energy at no fuel cost.

The power generation from furnace oil based power plants surged again to 29pc in December compared to just 9pc in November to make up for the fall in hydropower generation. The furnace oil based generation cost stood at Rs9.8 per unit.

On the other hand, natural gas based generation was reported to have contributed about 23pc supply in December, slightly lower than 25pc in November. The domestic gas based fuel cost was worked out at Rs4.49 per unit. The generation from imported liquefied natural gas (LNG) had a 5.09pc contribution in December against 9.3pc share of November mainly because of teething problems at the LNG handling terminals. The RLNG based generation cost was estimated at Rs6.33 per unit.

The generation from coal based plants was also slightly lower at 11.7pc in December compared to 13.4pc in overall supply in November. Its fuel cost of generation stood unchanged at Rs4.3 per unit.

Published in Dawn, January 24th, 2018