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Discos ordered to refund Rs15bn

April 25, 2018

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The RLNG-based power plants contributed 24.3pc, natural gas 21pc and furnace oil 16pc to the country’s overall electricity generation in March.
The RLNG-based power plants contributed 24.3pc, natural gas 21pc and furnace oil 16pc to the country’s overall electricity generation in March.

ISLAMABAD: Rejecting a request for 44 paisa per unit increase, the National Electric Power Regulatory Authority (Nepra) on Tuesday ordered ex-Wapda distribution companies to refund Rs1.86 per unit to consumers for overcharging them about Rs15 billion in March.

The decision was taken at a public hearing presided over by a three-member Nepra panel led by Vice Chairman Syed Masood-ul-Hassan Naqvi on the request of Central Power Purchase Agency (CPPA).

On behalf of distribution companies of ex-Wapda, the CPPA said the consumers should be passed on an increase of 44 paisa per unit on the basis of recently notified base tariff 2015-16 instead of previous 2014-15 tariff on the basis of which the regulator used to make monthly fuel cost adjustments (FCA).

On the basis of fresh goal posts, the CPPA reported to the regulator that it had charged a lower reference tariff of Rs6.643 per unit to consumers in March but actual fuel cost turned out to be Rs7.1 per unit. Therefore, the power companies should be allowed to recover about 44 paisa per unit from consumers to generate Rs6.14 billion to Discos.

The over-crowded hearing considered three different options including partial and full consideration of 2014-15 or 2015-16 base tariff or the mix of two bases. Finally, the regulator concluded to follow 2014-15 tariff as usual and worked out a Rs1.86 per unit reduction in monthly FCA.

In comparison, total calculation on the basis of 2015-16 tariff worked out reduction of 37 paisa per unit against Rs1.35 per unit on the basis of mix of 2014-15 and 2015-16 tariff estimated.

Mr Naqvi said regulator allowed Rs689 million previous adjustments against Rs6.14bn claimed by the power companies.

The relief in electricity rates will 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 do not qualify for monthly fuel price cut. The KE consumers will also not benefit from the relief.

Even though the regulator ordered refund of about Rs15bn, the distribution companies would pass only half of the amount to consumers and retain about Rs7.5 billion 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 it to only consumers above 300 units monthly consumption. The practice helps power companies generate billions of rupees (more than Rs120 billion a year) from consumers in advance and have better cash flows without financing costs.

The petitioner said about 8,740 Gwh (gigawatt hours) were generated in March and 8,469 Gwh could be delivered to distribution companies due to about 3pc losses in the transmission system.

The CPPA said the hydropower generation contributed only 10pc of total electricity generated in March because of adverse hydrological conditions and low irrigation indents by the provinces. The hydropower has a zero fuel cost. Also, the wind and solar plants together contributed about 2.5pc energy at no fuel cost.

The power generation from furnace oil-based power plants increased to 16pc in March compared to 8.33pc in February. Its generation cost stood at Rs1.83 compared to Rs10.16 per unit in the preceding month.

The natural gas-based generation remained within a close band in March and contributed 21pc electricity compared to 24pc in February. Its per unit cost worked out at Rs4.75.

On the other hand, the power production from regasified liquefied natural gas (RLNG) increased to 24.3pc in March compared to 19.2 in February. Its generation cost jumped to Rs8.85 from Rs6.33 per unit in December 2017.

The share of coal-based generation reached 14.46pc and its cost increased to Rs6.9 per unit in March compared to Rs5.8 in February and Rs4.3 in December 2017. The price of electricity import 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 Rs54bn or Rs6.17 per unit while 3pc lower supply was delivered to distribution companies at a cost of Rs60bn or Rs7.1 per unit.

Published in Dawn, April 25th, 2018