ISLAMABAD: In an unending tariff increase streak, the ex-Wapda distribution companies (Discos) and K-Electric have demanded permission to charge about Rs8.5bn additional fuel cost to their consumers at the rate of about 86 paisa and Rs1.66 per unit, respectively, in April.

The National Electric Power Regulatory Authority (Nepra) has accepted the respective tariff petitions and has called public hearings on March 30 to see if the proposed increase in tariff is justified in line with monthly fuel cost adjustment (FCA) mechanism.

On approval, Discos would charge an additional amount of about Rs6.5bn from their consumers for electricity consumed in February 2023 at an additional FCA of about 86 paisa per unit despite a healthy contribution of more than 65pc contribution from domestic cheaper fuels. On the other hand, the KE would be able to charge Rs1.66 per unit additional cost to consumers to mop up about Rs1.86bn.

The increase in FCA is despite the fact that base average tariff has gone up by more than Rs7 per unit and reduction in the cost of import fuels like furnace oil and liquefied natural gas.

Nepra calls public hearing on tariff petitions on 30th

The biggest contribution in overall national power grid came from hydropower generation at 26.46pc in February followed by 24.28pc from nuclear power plants. Hydropower has no fuel cost. The third largest generation share in the national power grid came from LNG-based electricity at 18.86pc, followed by 14.07pc from coal and about 11pc from domestic natural gas.

Interestingly, the fuel cost of furnace oil based power generation at Rs21.67 per unit was lower than Rs23.36pc fuel cost of LNG-based power generation. However, the authorities produced just 1.39pc share from furnace oil-based generation compared to 18.86pc from LNG.

The central power purchasing agency (CPPA) claimed on behalf of Discos that the consumers were charged a reference fuel cost of Rs7.21 per unit in February, but the actual cost turned out to be Rs8.07 per unit, hence an additional charge of 86 paisa per unit.

The cost of power generation from domestic gas slightly came down to Rs10.07 per unit when compared to Rs10.5 per unit in December. The furnace oil based power generation cost stood at almost Rs21.67 per unit significantly down from Rs34 per unit a few months earlier mainly because of decline in international oil prices. Coal-based power generation cost, on the other hand, increased to Rs12.57 per unit when compared to Rs11.5 per unit in December 2022.

Three renewable energy sources — wind, bagasse and solar — together contributed about 3.54pc, down from about 4.54pc a month earlier. Wind and solar have no fuel cost, while that of bagasse has been calculated at Rs5.35 per unit.

Under the tariff mechanism, changes in fuel cost are passed on to consumers only on monthly basis through automatic mechanism while quarterly tariff adjustments on account of variation in power purchase price, capacity charges, variable operation and maintenance costs, use of system charges and including impact of transmission and distribution losses are built in the base tariff by the federal government.

Published in Dawn, March 21st, 2023