Discos start filing petitions for increase in tariff

Updated January 28, 2020

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Discos are required to file petitions with clear bifurcation of costs in respect of distribution and supply functions. — Reuters/File
Discos are required to file petitions with clear bifurcation of costs in respect of distribution and supply functions. — Reuters/File

ISLAMABAD: The power distribution companies (Discos) of Wapda have started filing fresh petitions for increase in tariff under the newly introduced two-part tariff mechanism to pass on full electricity costs to consumers in a timely manner.

Under the amended Nepra act (Regulation of Generation, Transmission and Distribution of Electric Power Act), the power companies are required to file separate tariff petitions for power supply and distribution.

Section 23E of the Nepra act now requires that “power supply” licences would perform the function of the sale of electric power and “distribution” licencees under Section 20 would be limited to ownership, operation, management and control of distributing facilities for the movement of delivery to consumers.

Discos are currently deemed to hold a power licence by operation of Section 23(E). As such, all non-sale elements of distribution segment (installation, investment, operation maintenance and controlling of distribution network) now form part of the distribution licence. On the other hand, all sale-related activities earlier being performed by distribution licencees (metering, billing and collection, etc) now form part of supply licence.

Full electricity costs to be passed on to consumers in ‘timely manner’

Therefore, Discos are required to file petitions with clear bifurcation of costs in respect of distribution and supply functions.

However, the government has committed with the International Monetary Fund to eliminate delays in tariff adjustments and re-introduce the government powers to introduce tariff surcharges “over and above the system’s requirement” to finance over Rs110 billion annual financing cost of over Rs1.7 trillion circular debt.

This has given legal powers through further amendments to the Nepra Act to give the regulator power for determining and notifying quarterly tariffs and ensuring timely submissions of quarterly and annual petitions by Discos.

Most of Discos are now filing separate tariff petitions for tariff adjustments for the current fiscal year and the regulator would conduct public hearings for each distribution company starting with second week of next month.

Tariff increases sought by Discos range between 10 to 27 per cent from their existing tariffs. For example, the Sukkur Electric Power Company has sought an increase of about 10pc in its average sale rate while the Quetta Electric Supply Company has sought about 26pc increase.

The Peshawar Electric Supply Company had demanded an increase of 24pc in its average tariff and claims its total system losses are at about 37pc.

The Multan Electric Power Company has sought an increase of almost 54pc in its net average tariff.

The Hyderabad Electric Supply Company, however, is seeking about 20pc reduction in its net average rate.

The Islamabad Electric Supply Company has additional recovery of about Rs29bn through consumer tariff. The tariff petitions from remaining companies (Gujranwala, Faisalabad and Lahore) are pouring in and would be taken up by the regulator on completion of public hearing for six Discos — namely Iesco, Mepco, Pesco, Sepco, Hesco and Qesco.

Published in Dawn, January 28th, 2020