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A consumer-friendly decision

October 25, 2012

ISLAMABAD, Oct 24: The Islamabad High Court (IHC) swamped with petitions on fuel price adjustment (FPA) – 700 in total – on Wednesday directed the distribution companies to refund the consumers.

Justice Shaukat Aziz Siddiqui was hearing the petitions.

With demand for electricity increasing and most of the power generation being done on fuel-based power plants, FPA is a levy directly connected to the fluctuation in oil prices. It can be linked to the international market, where fuel is traded daily and price adjusted on a daily basis.

The distribution companies and National Electric Power Regulatory Authority (Nepra) on the other hand are likely to challenge this order in the coming days.

Nepra last year allowed the distribution companies of the territories of Islamabad, Lahore, Faisalabad, Hyderabad, Gujranwala, Multan, Peshawar, Quetta and Sukkur to charge FPA in electricity bills.

Justice Siddiqui in his order declared the collection of FPA as illegal, observing: “the scope of FPA cannot be expanded and has to remain within the variation in the price of fuel.”

The court observed that the consumers cannot be left to the mercy of the executive bodies and it is the duty of the courts to keep a check on them.

The court order said: “The distributors of electricity are directed to issue amended bills and in case consumers had already paid bills with excessive amount, it shall be adjusted accordingly which has to reflect on the bills of the coming month.”

Barrister Abu Bakar Sehri, one of the petitioners, told Dawn that after the court orders, nine electricity distribution companies have to refund Rs77 billion to the consumers, which they had received as FPA since July 2011 to January 2012.

The Islamabad High Court in January this year restrained the distribution companies from collecting FPA till final adjudication of the case.

Barrister Sehri in his petition contended that FPA was unconstitutional and against articles 4 and 25 of the constitution. Besides it was a violation of Section 31 of the Regulation, Generation, Transmission and Distribution Act 1997 and the Nepra Tariff Standards and Procedure Rules, 1997.

In its written reply submitted to the IHC, Nepra claimed that the monthly adjustment was being made in exercise of its statutory duties; hence it cannot be challenged.

Nepra said it had been collecting monthly fuel adjustment levy since 2009 without any objection raised by the petitioners.

The reply claimed that the adjustment was imposed after fulfilling all the legal requirements. Consumers were charged according to monthly consumption.

Nepra’s counsel Shamshad Cheema told Dawn that power distribution companies generated electricity and raised their invoices in the following month in accordance with the power purchase agreement.

He said: “FPA is determined after receipt of actual date of generation of electricity which is thoroughly reviewed and analysed by Nepra to avoid any error.

“The increase in tariff due to variance in the price of fuel is neither in control of Nepra nor the distribution companies.”

Nepra and power distribution companies would definitely file an appeal against the court order for refunding the FPA to the consumers, he added.

Mohammad Asif counsel for Islamabad Electricity Supply Company (Iesco), when contacted, said the power distribution companies (Discos) will challenge the order because it is not possible for them to refund a huge amount, which they had received as FPA.

“We would file an intra court appeal (ICA) against the order of IHC Justice Siddiqui, soon after Eid holidays,” he added.