Delayed connections pile up as Discos seek 86-paisa tariff hike

Published December 2, 2020
About 750,000 applications for new connections involving 1,500-1,600MW of electricity are pending with various distribution companies of ex-Wapda. — Reuters/File
About 750,000 applications for new connections involving 1,500-1,600MW of electricity are pending with various distribution companies of ex-Wapda. — Reuters/File

ISLAMABAD: About 750,000 applications for new connections involving 1,500-1,600MW of electricity are pending with various distribution companies (Discos) of ex-Wapda as the consumers face about 86-paisa per unit increase in tariff on account of Rs85 billion capacity charges during April-June 2020.

This was the crux of a public hearing conducted by the National Electric Power Regulatory Authority (Nepra) on a petition filed by various Discos for 86-paisa per unit increase in tariff under quarterly adjustments. Nepra reserved its judgment for verification of data presented by the Discos which kept on changing until the conclusion of public hearing.

Nepra’s case officers explained that tariff increase would effectively be around 70-paisa per unit for the fact that an existing 15-paisa per unit capacity charges for an earlier quarter would expire soon and would be replaced by 85 or 86 paisa per unit capacity charge.

Last week, Nepra had suspended the public hearing due to unsatisfactory responses from the Central Power Purchasing Agency (CPPA) and Discos and had rescheduled the hearing for Dec 1 with directives to ensure presence of chief executive officers (CEOs) and chief financial officers (CFOs) of all Discos to justify the increase based on verified data.

Nepra questions distribution companies on backlog despite claims of low demand

On Tuesday, the chief executive officer of CPPA explained that increase in capacity charges was necessitated by some new power projects like Sahiwal and Port Qasim coal projects, a project of Hubco and a few solar and wind projects for which cost estimates had almost doubled from their reference rates to actual rate.

Also, the exchange rate was originally taken at Rs129/dollar which actually deteriorated to Rs167/dollar.

The slowdown in the economy and resultant decline in commercial activities also increased the capacity payment charges, he argued. He said the delta on account of capacity charges could reduce in case of growing economy and higher consumption.

Responding to a question from Nepra Member Punjab Saifullah Chattha, the CPPA chief said the same charges claimed by Sukkur Electric Power and Quetta Electric Power did not match with CPPA’s numbers even though the two Discos had filed their petitions on the billing invoices of CPPA.

The CPPA on Monday asked these Discos to update their numbers but Nepra officers said the discrepancies still exist between the CPPA and Discos. Representatives of Discos said they would update their revised claims after the hearing.

Member Sindh Rafique Ahmad wondered how the continuously changing numbers could be explained to the participants of the public hearing and consumers at large when the session was over and how to justify on which number the tariff increase had been allowed.

On unsatisfactory responses from the power companies, the Nepra members expressed serious displeasure and noted the representatives of the public and regulators expected the CEOs and CFOs to be fully aware of each and every aspect of the company for which they seek tariff increase.

Nepra’s Sindh member said the regulators data based on information provided by Discos showed that about 750,000 application for new connections were pending. He said these applications were enough to consume about 1,500-1,600MW of surplus capacity and reduce the overall tariff instead of higher capacity charges.

On a question, the CEO of Lahore Electric Supply Company (Lesco) said applications for 250 industrial and 2,200 domestic and commercial connections were outstanding in Lesco area which could consume 30-35MW only. He claimed that numbers being quoted by Nepra were unrealistic as it was based on Pakistan Electric Power Company (Pepco) also involved applications even if filed a day earlier.

The Nepra’s case officer reported that as of June 30, 2020 about 350,000 applications for new connections were outstanding. He said the data provided by Lesco itself put total outstanding applications as of June at 92,000 including 42,000 ripe for connection.

The Sindh member Nepra lamented that applicants were running from pillar to post for new connections, but the Discos were causing unnecessary delays on flimsy grounds and pole mounted transformers had been held for more than a year. “This is inefficiency on part of the Discos who are not ready to sell their surplus electricity and causing unnecessary burden on existing consumers” he said.

The CPPA had originally sought about 80-paisa per unit increase in uniform tariff for all Discos to recover about Rs82.7bn 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 numbers were revised to Rs85.2bn on Tuesday.

Published in Dawn, December 2nd, 2020

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