ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday ordered ex-Wapda distribution companies (Discos) to refund Rs2.99 per unit to consumers for overcharging them Rs21.7 billion in December.

Presided over by Nepra Vice Chairman Saifullah Chattha, a public hearing was informed by the Central Power Purchasing Agency (CPPA) that the actual fuel cost during December stood at Rs5.33 per unit because of a better energy mix and low consumption against the reference cost of Rs8.1 per unit set by the regulator.

Therefore, the CPPA demanded a reduction of Rs2.77 per unit in the fuel cost. Nepra, however, did not allow a previous adjustment of about Rs970 million in the fuel cost. Mr Chattha said it would be advisable to examine documents and data in detail for verification and make adjustments next month if required because the CPPA had not provided evidence earlier and presented it during the hearing.

As such, Nepra worked out the actual fuel cost at Rs5.13 per unit against the reference price of Rs8.1 and ordered a refund of Rs2.99 to consumers.

An official said that even though the regulator ordered the refund of about Rs21.7bn, Discos would pass on only half of the amount to consumers and retain roughly Rs11bn as windfall savings. 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 the actual overcharged amount on the regulator’s orders.

Under the practice in vogue, Discos are charging a significantly higher estimated fuel charge to power consumers that 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 would not be applicable to agricultural consumers and residential consumers with less than 300 units of monthly consumption on the grounds that they already receive subsidised electricity and do not qualify for the monthly fuel price cut. K-Electric consumers would not benefit from the relief either.

Nepra case officers reported that the regulator had previously approved the reference tariff of Rs8.10 per unit for December, but the actual fuel cost turned out to be Rs5.13 per unit. Therefore, there was a legal requirement to return Rs2.99 per unit to consumers.

The petitioner said about 7,763 gigawatt hours were generated in December and 7,519gwh could be delivered to Discos due to about three per cent losses in the transmission system.

The CPPA said hydropower generation was too low because of canal closure on top of the 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.

Wind and solar plants together contributed about 3.1pc energy at no fuel cost.

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 gas-based fuel cost was Rs4.49 per unit. Generation from imported liquefied natural gas (LNG) had a 5.09pc contribution in December against a 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.

Generation from coal-based plants was slightly lower at 11.7pc in December compared to 13.4pc in November. Its fuel cost stood unchanged at Rs4.3 per unit.

The price of electricity import from Iran stood at Rs10.63 per unit and contributed about 0.5pc to the energy pool.

Published in Dawn, January 26th, 2018