• Around 100 plants paid Rs99bn in capacity payments in Oct-Dec despite most of them operating at below 20pc

ISLAMABAD: With almost two-thirds of power plants operating at less than 20 per cent utilisation factor, the National Electric Power Regulatory Authority (Nepra) on Wednesday notified ex-Wapda Distribution Companies (Discos) to charge 47 paise per unit to their consumers to mop up Rs15.5 billion in additional funds under the quarterly tariff adjustment (QTA) mechanism.

Nepra in a notice said it had allowed the positive quarterly adjustments of Rs15.454 billion for the second quarter (October-December) of 2022-23, to be recovered from the consumers in three months i.e. April, May and June.

The Nepra order showed that about Rs99bn was paid to a total of 96 power plants on account of capacity payments during the second quarter (October-December) of the current fiscal year and only about 37pc of them could be operated at more than 20pc capacity utilisation, raising a question mark on the efficiency of the country’s generation capacity and those running them and managing the power sector.

The increase was sought by the Discos on account of capacity charges, market operator fee, the impact of additional sales under incremental sales incentive scheme for the industrial sector, the use of system charges, market operator fee, transmission and distribution losses on account of fuel cost adjustment, variable operation and maintenance charges for the 2nd quarter.

Under the decision, no quarterly adjustments would be passed on to B1, B2, B3 and B4 industrial consumers to the extent of incremental sales till the continuation of the package as per the December 2020 decisions of the government.

The demand for the highest quarterly adjustment of Rs6.7bn came from Gujranwala Electric Power Company (Gepco), followed by Rs6.35bn from Lahore Electric Supply Company, Rs4.6bn from Faisalabad Electric Supply Company and Rs2.39bn from Multan Electric Power Company. Hyderabad Electric Supply Company’s positive QTA stood at Rs1.74bn, followed by Islamabad Electric Supply Company with Rs1.32bn and Tribal Electric Supply Company Rs1.3bn.

On the other hand, three Disco’s namely Sukkur Electric Power Company, Peshawar Electric Supply and Quetta Electric Supply Company had sought a reduction in QTA worth Rs3.5bn, Rs1.96bn and Rs1.6bn.

Based on balance sheets and revenue requirements, all the Discos had sought their separate quarterly tariff adjustments but given the uniform national tariff in place across the country, the regulator besides determination of Disco wise rate of quarterly adjustment, also worked out the uniform rate of 47 paise per unit increase for the quarterly adjustments to be charged to all consumers in the billing months of April, May and June 2023.

The regulator pointed out in its order that the Central Power Purchasing Agency (CPPA) had also sought an amount of Rs92 million on account of capacity charges of Kot Addu Power Company. It noted that Kapco’s power purchase agreement (PPA) was amended by CPPA under which it was agreed that the plant will be operated without payment of capacity charges from July 2021 onward and only energy charges would be paid. It said CPPA said it claimed these charges “on account of trueing up of costs pertaining to previous periods as per the PPA”.

Nepra said the CPPA also provided some detail in this regard but it was decided to provisionally not consider the claimed amount of Kapco and take it up in subsequent quarterly adjustments.

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

Published in Dawn, April 13th, 2023

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