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Nepra allows Rs1.80 per unit hike

Updated February 21, 2019

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The decision will generate Rs13.5 billion revenue to the Discos.— Photo courtesy of Nepra
The decision will generate Rs13.5 billion revenue to the Discos.— Photo courtesy of Nepra

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday continued to express concern over fuel mix management but allowed an increase of Rs1.80 per unit in consumer tariff for ex-Wapda distribution companies (Discos) for a month on account of fuel cost adjustment.

The decision would generate Rs13.5 billion revenue to the Discos. This is despite the fact that Nepra’s case officers highlighted during a public hearing that prudent utilisation of fuel mix would have resulted in “reduction in total fuel cost by around Rs6.7bn i.e. 91 paisa per unit”.

The decision was made at a regular monthly public hearing presided over by Vice Chairman Nepra Rehmatullah Baloch and attended by Member Punjab Saifullah Chattha and Member Sindh Rafique Shaikh.

The Nepra team deplored that tariff should not have increased with optimum utilisation of cheaper power plants based on LNG instead of running expensive furnace oil based plants.

They sought details of lower gas supplies in writing and warned Discos that the increased tariff could be withdrawn in case of unsatisfactory or non-provision of data. Mr Chattha said the non-availability of coal or liquefied natural gas (LNG) was not a solid reason for higher furnace oil consumption.

Nepra’s technical team reported that coal-based plants (Port Qasim and Sahiwal) and re-gasified liquefied natural gas (RLNG)-based plants (Balloki, Haveli Bahadur Shah, Quaid-e-Azam Thermal Plant and Nandipur) were not fully utilised. Instead, around 1,722 Gwh electricity was produced from furnace oil and 12.262Gwh from high speed diesel (HSD) with per unit cost of 13.022 and Rs18.5per unit respectively — at total cost of Rs25bn.

It noted: “Had these units generated on furnace oil be generated from coal and RLNG-based power plants, the total fuel cost for such units would have been around Rs17.4bn” — a reduction of 91paisa per unit.

The higher rates for electricity consumed in January would be recovered from consumers in the upcoming billing month i.e. March 2019 and would yield about Rs13.5bn in additional revenue to the Discos.

Representatives of the Central Power Purchasing Agency (CPPA) said the power sector was provided significantly lower quantities of natural gas and imported LNG and lower coal supplies because of fewer imports and higher supplies to fertiliser and export-oriented sectors under the government policy.

The Central Power Purchasing Agency-Guarantee (CPPA-G) on behalf of the Discos claimed an additional cost of Rs1.94 per unit under base tariff 2015-16 on grounds that consumers were charged a reference tariff of Rs5.76 per unit in January while the actual fuel cost turned out to be Rs7.70 per unit. The regulator did not allow some past claims and allowed Rs1.80 per unit.

Power generation up slightly

Total energy generation from all sources in January 2018 was recorded at 7,763 GWH against 7,718 Gwh in December. The total cost of energy generated in January amounted to Rs56.73bn, having an average per unit fuel cost of Rs7.31 per unit. About 7,423 Gwh were sold to the Discos for Rs57.13bn with very high transmission losses of 4.27pc, significantly higher than maximum permissible limit of 3pc. The transmission losses have generally remained lower than 2.7pc almost throughout the year so far.

The share of hydel power generation in January was significantly lower at 6.15pc compared to 17.3pc in December owing to lower water availability when compared to hydropower’s 25pc share in October and 34pc in September.

Locally produced gas-based electricity production achieved the 22pc share – second highest – in total power supply.

The share of coal based generation on the other hand slipped to third position as it contributed about 18.7pc in January instead of 20pc in December. The share of RLNG-based power generation slightly improved to 14.7pc in January from 12.44pc in December but still lower than to 22-23pc share in recent months.

There was no fuel cost on hydroelectricity while coal-based fuel cost stood at Rs6.80 per unit. HSD based plants generated the most expensive energy at Rs18.5 per unit but its overall contribution to the energy mix was a negligible 0.16pc. The furnace oil-based plants generated electricity at a cost of Rs13.92 per unit.

Nuclear energy contributed about 11.66pc electricity to the national grid at fuel cost of 95 paisa per unit while power produced by sugar mills accounted for less than 1pc share at a fuel cost of Rs6.2 per unit.

The electricity imported from Iran had a cost of Rs11.57 per unit and its total share in generation was 0.45pc.

Wind produced 2.01pc electricity at zero fuel cost while or 0.56pc contribution came from solar energy again at no cost. The higher tariff adjustment will not be charged to lifeline consumers using up to 50 units per month but all other consumer of all categories including industrial sector and agriculture tube wells would have to bear the additional burden. The revised rates would also not apply to K-Electric consumers.

Published in Dawn, February 21st, 2019