ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) notified an additional fuel cost adjustment (FCA) of Rs1.81 per unit for power distribution companies (Discos) and Rs2.31 for the Karachi-based utility K-Electric on Wednesday, with a net financial impact of Rs29 billion.

Consumers will see the surcharge separately in their August bills and it will be based on their power consumption in June.

The adjustment of Rs1.81 per unit — equal to one kilowatt-hour, or kWh — would apply to all consumer categories except for electric vehicle charging stations and lifeline consumers, the power regulator said in a notification for Discos.

A similar notification for K-Electric put the FCA at Rs2.31 per unit with a financial impact of Rs4.3bn.

Discos, KE users to pay Rs1.81 and Rs2.31 per unit based on June consumption

In its petition, K-Electric had sought an FCA of Rs2.34 per unit against electricity it sold in June to recover Rs4.4bn in additional funds in the August bill. However, Nepra worked an adjustment of Rs2.31 per unit.

Likewise, the Discos had demanded Rs1.885 per unit FCA for June to tap Rs25bn in August, but the regulator cleared Rs1.81 per unit.

The fuel cost adjustments have accrued despite over 58pc power generation from cheaper domestic fuels compared to 56pc in May and 54pc in April.

The adjustments come even though the base average tariff has gone up by more than Rs7 per unit and the cost of imported fuels, like furnace oil and liquefied natural gas, has dropped.

One key reason behind the FCAs is the relatively lower availability of hydropower generation (30pc of the basket share) than estimated in the pre-determined reference tariff. The contribution of hydropower generation in the overall national power grid in May was 26.96pc against 24pc a month earlier. Hydropower has no fuel cost.

The LNG-based power generation at 18.55pc of the total power supply in June was down from 24.33pc in May, but it maintained its second position after hydropower.

The third-largest share came from coal-based generation at 17.75pc in June compared to 16.78pc in May. The nuclear generation slightly improved to 13.54pc in June from 12.6pc in May but was still way behind 19pc in April and 24.28pc in February.

Power supply from domestic gas also dropped to 8.54pc in June against 10.35pc in May and 12pc in April. The fuel cost of furnace oil-based power generation increased to Rs26.1 per unit in June against Rs23.24 per unit in May.

The LNG-based power generation in June slightly dropped to Rs24.07 per unit in June against Rs24.5 per unit in May. Furnace oil-based generation increased to 5.4pc in June against 1.96pc share in May.

The Central Power Purchasing Agency (CPPA) claimed on behalf of Discos that the consumers were charged a reference fuel cost of Rs7.51 per unit in June, but the actual cost turned out to be Rs9.39 per unit, hence an additional charge of Rs1.885 per unit.

The cost of power generation from domestic gas slightly dropped to Rs11.74 per unit in June against Rs12.45 per unit in May but was higher than Rs10.07 per unit in February because of an increase in gas prices notified by the government.

The cost of coal-based power generation also increased to Rs14.05 per unit in June, significantly higher than Rs10.5 per unit in May.

Three renewable energy sources — wind, bagasse and solar — together contributed about 5.6pc in June against 6.6pc in May. Wind and solar have no fuel cost, while the cost of bagasse-based generation rema­ined unchanged at Rs6 per unit.

The FCA is reviewed every month as per the tariff regime applicable across the country and is usually applicable to the consumer’s bills for one month only.

Published in Dawn, August 10th, 2023