Regulator suspends hearing for 86-paisa per unit hike in base power tariff

Published November 25, 2020
The CPPA had sought an increase of 86 paisa per unit on account of quarterly power purchase price adjustment to recover a total of Rs83 billion.
The CPPA had sought an increase of 86 paisa per unit on account of quarterly power purchase price adjustment to recover a total of Rs83 billion.

ISLAMABAD: In a rare move, the National Electric Power Regulatory Authority (Nepra) on Tuesday suspended a public hearing on 86 paisa per unit increase in electricity rates in base tariff for ex-Wapda distribution companies (Discos) over non-serious attitude of the top managements of these entities.

The public hearing — presided over by Nepra chairman Tauseef H. Farooqui and attended by members from Punjab and Sindh — expressed serious displeasure over absence and non-availability of top managements of the Central Power Purchasing Agency (CPPA) and almost all Discos except the chief executive of Islamabad Electric Supply Company (Iesco). However, the Iesco official failed to justify certain expenditures he had demanded in tariff.

The CPPA had originally sought about 80 paisa per unit increase in uniform tariff for all Discos to recover about Rs82.7 billion from consumers on account of variation in power purchase price for the fourth quarter (April-June 2020) of last fiscal year (2019-20). However, the public hearing was informed that the Lahore Electric Supply Company (Lesco) had increased its demand from Rs16bn to Rs19bn, thus requiring the tariff increase of Rs86 paisa per unit to recover about Rs83bn.

Slams absence of top managements of distribution companies

On queries from the Nepra chairman and members as to why the revised estimates for quarterly power purchase price (PPP) had gone up, Lesco representatives reported that it was because of revised invoices received from the National Transmission & Dispatch Company (NTDC). The Lesco team could not properly respond to follow up questions pertaining to Lesco’s own assessment for revised estimates.

A similar situation cropped up when the regulator questioned the reason behind an unusually higher variable Operation and Maintenance (O&M) costs claimed by Sukkur Electric Power Company (Sepco) at Rs826 million compared to a maximum of Rs276m from other Discos. Sepco representatives also failed to explain the reason and reported the claims were based on CPPA/NTDC’s invoices.

The Chief Executive of Iesco Shahid Iqbal who was attending the hearing virtually also could not justify the reasons behind the company’s revised expenditures on account of capacity purchase charged which went up by Rs7bn from original demand of Rs12bn. He reported that increase was based on higher dispatches claimed by the NTDC in August 2020. On a follow up question, Mr Iqbal said the invoice had been objected to by the Iesco.

Surprised, the Nepra chairman and members reminded that petition under review for tariff increase pertained to April-June period of last fiscal year while a chief executive was justifying it with higher consumption in August of current fiscal year. Mr Farooqui said the CPPA would have to justify why capacity charges had gone up by 58pc within a quarter and until then the regulator would not allow tariff increase.

Farooqui and members were flabbergasted over inadequate responses from almost all the Discos. He ordered that someone from CPPA should explain, but none was available. After repeated efforts, a representative of the CPPA was taken on phone to explain the reasons behind re­­vised claims. He explained that revised estimates were based on invoices received from Indepen­dent Power Producers (IPPs) and the data was available with the CPPA which could be subsequently dispatched to the regulator.

The Nepra team desired that CPPA chief Rehan Akhtar should himself come online to explain and respond to ensuing questions, but was told that he had gone to the Power Division for a meeting.

“Then go and claim the tariff increase from the Power Division. We can’t just sign cheques on whatever demands power companies make,” Farooqui said. Vice Chairman Nepra Saifullah Chatta said that since the consumers had to bear the burden of tariff increase, therefore it was necessary that justification must be provided for the hike in tariff. Nepra has directed CPPA to provide justification for the demanded quarterly adjustments.

With consensus, the regulator ordered that hearing should be suspended and rescheduled when the all the justifications are available. They also ordered that all chief executives and chief financial officers of all Discos and CPPA should always attend the hearings for tariff adjustments to satisfy the regulator and the consumers.

The CPPA had sought an increase of 86 paisa per unit on account of quarterly power purchase price adjustment to recover a total of Rs83bn including capacity purchase price of Rs81bn. Nepra would now once again hold the public hearing on December 1, 2020.

Published in Dawn, November 25th, 2020

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