Fuel adjustment to reduce July electricity bills

Published June 30, 2021
Only about Rs1.8bn would practically be refunded to consumers for the fact that this reduction is not allowed to consumers using less than 300 units and agriculture consumers. — AFP/File
Only about Rs1.8bn would practically be refunded to consumers for the fact that this reduction is not allowed to consumers using less than 300 units and agriculture consumers. — AFP/File

ISLAMABAD: While clearing a 29 paisa per unit reduction in monthly fuel cost adjustment (FCA) for ex-Wapda distribution companies (Discos), the National Electric Power Regulatory Authority (Nepra) on Tuesday said it was not taken into confidence over the closure of a terminal of Liquefied Natural Gas (LNG).

Presiding over a public hearing on a tariff petition of Central Power Purchasing Agency (CPPA) on behalf of Discos, Nepra chairman Tauseef H. Farooqi said the regulator was not taken into confidence regarding shutting down of LNG terminal and the use of alternative expensive fuel for power generation during the dry docking of Engro Floating Storage Re-Gasified Unit (FSRU).

The CPPA had requested the regulator to allow a refund of about 12 paisa per unit overcharged to consumers in the month of May 2021 under FCA mechanism. However, the Nepra officials pointed out that against the actual fuel charge component of Rs5.6734 per unit, the reference fuel charge component was Rs5.9322 per unit, a difference of 26 paisa.

Nepra clears 29 paisa per unit reduction for ex-Wapda Discos; says it was not informed about LNG terminal closure

Likewise, another deviation from Economic Merit Order was pointed out that caused an extra burden of Rs354.29 million or about 3paisa per unit. As such, Nepra worked out about 29 paisa per unit reduction involving a total financial impact of about Rs3.6bn.

However, only about Rs1.8bn would practically be refunded to consumers for the fact that this reduction is not allowed to consumers using less than 300 units and agriculture consumers on the premise that they enjoyed subsidized rates. The lower fuel cost would be adjusted in consumer bills in the upcoming billing month of July.

These rates would not be applicable to K-Electric consumers.

During hearing, the Nepra officials said the power companies operated inefficient power plants in May and reported gas supplies of just 600mmcfd instead of 800mmcfd for power generation and hence the higher cost caused by the use of inefficient power plants and system weaknesses should not be transferred to power consumers.

The Nepra chief expressed displeasure over repeated faults in transmission system and wondered if the National Transmission and Dispatch Company (NTDC) top brass was sleeping when the government was installing power plants. “Why the NTDC didn’t bring the upgrade of transmission system into government’s notice when they were installing new power plants”? he questioned.

The public hearing was informed that total energy generation from all sources in May was recorded at 13,009 gigawatt hour (Gwh) at a total cost of Rs74bn at an average rate of Rs5.7 per unit. Of this, about 12,678Gwh were delivered to Discos at Rs73.6bn at an average rate of Rs5.8 per unit.

The data showed that hydropower generation contributed 26.6pc of overall energy mix in May. The share of coal generation stood at 20pc, while the share of RLNG-based power generation to national grid stood at 22pc and that of local gas at 11pc. Similarly, the generation from furnace oil-based plants stood at about 6pc when compared to 2.62pc in April, while the share of nuclear power remained generally unchanged at 10.2pc. The share of wind power and baggase stood at 3pc. There was no fuel cost on hydroelectricity while coal-based fuel cost stood at Rs7.8 per unit. Nuclear energy fuel cost stood at slightly over Rs1.14 per unit while power produced from local gas stood at Rs7.85 per unit. The cost of RLNG-based plants was worked out at Rs10 per unit.

Electricity imported from Iran had a cost of Rs11 per unit and its total share in power supply was just 0.36pc. The most expensive generation came at Rs14.34 per unit from furnace oil-based plants and a minor production from diesel at the rate of Rs22 per unit.

Published in Dawn, June 30th, 2021

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