ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday allowed the federal government to increase electricity rates by Rs3.28 per unit for all consumers across the country for six months — October 2023 to March 2024 — with additional revenue impact going beyond Rs200bn.

The increase has been allowed under quarterly tariff adjustment (QTA) mechanism to finance the additional impact of capacity charges due to currency devaluation, interest rate hike and other factors.

The power division of energy ministry had originally sought Rs6.20 per unit adjustment for the fourth quarter of 2022-23 fiscal year for ex-Wapda distribution companies (Discos) to fill a Rs146bn financing gap within three months but later sought its staggered recovery at the rate of Rs3.55 per unit in six months amid public protests against skyrocketing tariff hike.

Subsequently, the power division also asked Nepra to allow application of similar rates on K-Electric consumers to ensure uniformity and reduce subsidy payable against them.

The Nepra after public hearings and examination of data, however, “determined a positive adjustment of Rs135.584bn on account of variation in capacity charges, variable O&M, additional recovery on incremental sales, use of system charges, market operator fee and FCA impact on T&D losses for the fourth quarter of FY 2022-23”. It said its determination sent to the power division for formal notification and application of revised rates of Rs3.2814 per unit with effect from October 1, 2023.

With the application of 18pc GST, the additional impact on Discos’s consumers would thus work out at about Rs160bn at the rate of Rs3.87 per unit. While the government or Nepra did not disclose the financial impact of application of same power rates on KE consumers, an official said that it would be little over Rs40bn, thus taking the total financial impact beyond Rs200bn.

The regulator, however, made it clear that no quarterly adjustments would be passed on to Bl, B2, B3 and B4 industrial consumers to the extent of incremental sales till continuation of the package.

This QTA additional charge is on top of up to Rs7.5 per unit increase in electricity rates that came into force with effect from July 1, 2023 with a financial impact of Rs890bn excluding 18pc GST and subsequent monthly fuel price adjustments.

One of the key factors for the additional quarterly cost, according to distribution companies (Discos) and the power division team, was the 13pc lower electricity drawn by Discos than estimated by relevant authorities while setting the reference rates. It was reported that sale of 37,645 gigawatt hours (GWh) had been estimated for April-June 2023 period but only 32,661 Gwh could be sold.

Published in Dawn, September 23rd, 2023