ISLAMABAD: The power tariff for all distribution companies, except K-Electric, is estimated to decrease by about Rs2.20 per unit due to lower fuel costs in February and better energy mix.

The Central Power Purchasing Agency (CPPA) 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 in the matter on March 27.

Under the practice in vogue, distribution companies are charging significantly higher estimated fuel charge to power consumers and later adjusts these against actual cost in the subsequent month with the power regulator’s approval. The practice helps power companies generate billions of rupees as windfall 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.

In its petition, the CPPA reported to the regulator that it had charged a higher reference tariff of Rs7.26 per unit to consumers in February, but actual fuel cost turned out to be Rs5.07 per unit. Therefore, there was a legal requirement to return Rs2.20 per unit to consumers.

The petitioner said that some 6,979 Gwh (Gigawatt hours) were generated in February and 6,808 Gwh could be delivered to distribution companies due to about 2.25pc losses in the transmission system.

The CPPA said hydropower generation had improved to about 19.44pc of total electricity generated in February since the opening of canals after annual closure in January. Hydropower has a zero fuel cost. Also, wind and solar plants together contributed about 2pc energy at no fuel cost.

The power generation from furnace oil-based power plants came down to 8.33pc in February compared to about 20.4pc electricity of furnace oil plants as hydrogenation improved. The furnace oil-based generation cost stood at Rs10.16 per unit.

The natural gas-based generation contribution to the overall power mix was 24pc and its per unit cost was worked out at Rs4.71 per unit.

On the other hand, the power production from imported liquefied natural gas (LNG) stood at 19.2pc in total supply. The RLNG-based generation cost surged to Rs9.02 per unit in February, up from Rs6.33 in December 2017.

The share of coal-based generation increased to 15.79pc in February against 11.7pc in December. Its fuel cost of generation increased to Rs5.8 per unit in February from Rs4.3 per unit in December 2017.

The price of electricity imported from Iran stood at Rs11.05 per unit and contributed about 0.5pc to the energy pool.

The CPPA said total energy was generated at a total cost of Rs34.25bn or Rs4.9 per unit while 2.25pc lower supply was delivered to distribution companies at a cost of Rs34.5bn or Rs5.067 per unit.

The CPPA said the actual generation cost was lower that it had already charged in connivance with the regulator and hence extra money collected from consumers needs to be refunded through adjustment in the next billing month - under automatic fuel pass through mechanism.

Published in Dawn, March 22nd, 2018