ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday notified about Rs1.54 per unit increase in electricity rates for ex-Wapda Distribution Companies (Discos) to generate about Rs11.6 billion additional revenue to troubled power sector.

The increase was allowed on account of monthly fuel cost adjustment (FCA) for electricity consumed in December 2020. This would be charged to consumers in the billing month of February. The tariff increase will be applicable to all consumers except lifeline consumers ie 50 units per month. This FCA is also not applicable to K-Electric consumers.

The regulator conducted the public hearing on the subject on Jan 27 and had questioned the justification for furnace oil and diesel based expensive power generation besides higher fuel cost for Nandipur project and some previous adjustments. The Discos had demanded Rs1.81 per unit increase with expected revenue of Rs13.6bn.

Decision not applicable to lifeline and KE consumers

In its order, the regulator said the textile sector had expressed concern that the December fuel adjustment charges were being increased from 32 paisa per unit to Rsl.8085 under heads of previous adjustment, supplemental charges and transmission losses on the grounds that previous adjustments did not pertain to December and it was illegal to add them to the units consumed in December.

The textile sector particularly protested over the fact that they converted to using national power grid from gas in December based on the incremental package offered by government and should not be charged any previous adjustments for December consumed units. “To load December units with previous adjustments (especially when government had requested, lobbied and convinced industry to use Wapda system during winter) is immoral and illegal” as this added almost 20pc cost to the Rs8 per unit package offered by government to export industry and had been absolutely nullified by the sanctity and purpose of the scheme.

The regulator, however, said that it had been observed that the previous adjustments claimed by Central Power Purchasing Agency (CPPA) in the FCA of December 2020, mainly include differential in RLNG costs of various power plants pertaining to the months of August, September and October 2020, owing to late notification of RLNG prices by Oil and Gas Regulatory Authority (Ogra).

Also, the fixed fuel cost component of Engro Power Generation Thar was adjusted in October and November 2020, due to non-availability of invoices for these months and hence the differential amount was being allowed in the FCA of December 2020.

Nepra said it also noted, prima facie, that certain efficient power plants were not fully utilised and instead energy from costlier RFO (residual fuel oil) based power plants was generated to the tune of over Rs3.6bn in December.

The regulator said it had been directing National Power Control Centre (NPCC), National Transmission & Despatch Company (NTDC) and CPPA repeatedly to provide complete justification in this regard, to the satisfaction of the regulator and submit complete details for deviation from economic merit order (EMO), showing hourly generation along with the financial impact for deviation from EMO.

The order said although NPCC/NTDC provided details of plants operated on RFO yet the regulator’s own in-house analysis and workings was carried out to work out the financial impact of EMO deviations. This assessment found the net amount deductible from the overall claim due to EMO deviation and underutilization of efficient plants at Rs665 million. Therefore, the regulator decided not to allow the said amount in the fuel cost adjustment until NPCC/NTDC and CPPA provide complete details along with complete justification.

Therefore, after incorporating the said adjustments, the regulator has allowed Rs1.54 per unit fuel cost, including costs arising out due to application of various factors as provided in the respective power purchase agreements (PPAs) of the independent power producers (IPPs) and claimed by CPPA in its monthly FCAs.

However, the amount arising out of application of above PPA factors, for the six RFO based IPPs, incorporated under 2002 Power Policy, has been allowed on provisional basis and shall be subject to adjustment, based on the final outcome of the ongoing suo motu proceedings against the RFO based IPPs.

Published in Dawn, February 11th, 2021

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