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Discos ordered to refund Rs2.29/unit

Updated March 28, 2018

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ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Tuesday ordered ex-Wapda distribution companies (Discos) to refund Rs2.29 per unit to consumers for overcharging them about Rs20 billion in February.

The decision was taken at a public hearing presided over by Nepra Vice Chairman Saifullah Chattha on the request of Central Power Purchase Agency (CPPA).

On behalf of the ex-Wapda distribution companies, CPPA said the consumers need to be refunded Rs2.20 per unit because they were charged at a higher fuel price of Rs7.26 per unit in February against actual fuel cost Rs5.07 per unit due to lower fuel cost and favourable energy mix.

After examination of evidence, the regulator found a few charges built by the power companies unacceptable and worked out a refund of Rs2.29 per unit instead of Rs2.20.

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 that these categories were already being provided subsidised electricity and hence did not qualify for monthly fuel price cut. K-Electric consumers would also not benefit from the relief.

An official explained that even though Nepra ordered refund of about Rs20bn, Discos would pass only half of the amount to consumers and retain about Rs10bn as windfall saving. 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 actual overcharged amount on regulator’s orders.

The practice helps power companies generate billions of rupees (more than Rs120bn a year) from consumers in advance and have better cash flows without financing costs.

It was reported that the savings in fuel cost accrued due to non-consumption of diesel, lower furnace oil consumption because of better availability domestic gas, coal and liquefied natural gas (LNG) and improvement fuel management.

Based on these factors, Nepra case officers reported that the regulator had previously approved the reference tariff of Rs7.26 per unit for month of February but actual fuel cost turned out to be Rs4.97 per unit. Therefore, there was a legal requirement to return Rs2.29 per unit to consumers.

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

Power generation from furnace oil-based power plants came down to 8.33pc in February. Its generation cost stood at Rs10.16 per unit.

Natural gas-based generation maintained its contribution to overall power mix 24pc.

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

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 from Rs4.3 in December.

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

Published in Dawn, March 28th, 2018