ISLAMABAD: On top of ongoing fuel-based monthly price cuts, the long-term power tariff for all distribution companies (Discos) has started to come down significantly under the multi-year tariff regime (MYT) for 2015-16 to 2019-20.

The National Electric Power Regulatory Authority (Nepra) has so far forwarded to the federal government determinations for six out of 10 Discos on MYT regime, recommending reduction in base tariff for all with varying degrees.

These companies include Islamabad Electric Supply Company, Multan Electric Power Company, Sukkur Electric Power Company, Peshawar Electric Supply Company and Gujranwala Electric Power Company.

On average, the base tariff for various Discos has been cut down by Rs1.50 per unit to Rs3 per unit. For some consumer categories, the reduction in base tariff determined by Nepra is Rs4 per unit, a senior Nepra official told Dawn. He said the tariff determinations for the remaining Discos would be issued within a few days.

On completion of tariff determinations for all Discos, the government would be required under the law to decide within 15 days about the quantum of subsidy for various consumer groups and companies under the policy of unified power tariff across the country.

In determining the five-year multi-year tariff as required under the government’s policy of privatisation, the power regulator has also set investment targets along with reduction in transmission and distribution losses. Total investments by all the Discos for system improvement and expansion are estimated to be around Rs350 billion, with an average of about Rs6 billion for each distribution company per year.

Last year, Nepra had also determined lower power tariff for all Discos but the government did not pass on this relief to the consumers and imposed a series of special surcharges under a commitment with the International Monetary Fund (IMF) to reduce power sector subsidies out of federal budget.

These included Rs1.54 per unit of tariff rationalisation surcharge, 43 paisa per unit debt-servicing surcharge to finance special term finance certificates and 10 paisa per unit Neelum-Jhelum surcharge. These surcharges were imposed to fund line losses above benchmarks set by the regulator, non-collection of bills, financing costs of delayed tariff notifications or determinations, reduction in subsidies and cost of equalisation tariff for various Discos and consumer categories.

The official explained that under the government policy the tariff for Islamabad Electric Supply Company (Iesco) was applied as a benchmark tariff for consumers of all Discos across the country, hence the regulator had issued the tariff determination for Iesco on top priority as part of an understanding with the government.

As such, the Iesco tariff for residential consumers using less than 100 units per month has been lowered by Nepra by 21 per cent of Rs1.90 per unit. The tariff for next three categories of domestic consumers (101-700 units) per month has been kept unchanged at the existing level.

The domestic tariff for consumption beyond 700 units per month has been cut by about 5pc to Rs14.30 per unit from Rs15 per unit. The peak charges for time of use meters have been cut by about 5pc while that of off-peak rates reduced by 23pc.

Likewise, the commercial tariff for sanctioned load of less than five kilowatts has also been cut by 5pc to Rs14.25 per unit. The commercial tariff for over 5Kw has been cut by 6.25pc to Rs11.25 per unit. The off-peak rates for these consumers have also been cut by 21pc to Rs7.10 per unit.

The industrial tariff has also been cut by 6.25pc for peak consumption and by 22pc for off-peak charges.

Iesco has been allowed to make a total investment of Rs68 billion in five years, at an average of Rs13.6 billion per year. Of this, about Rs14 billion would be raised from consumers in five years. The company would be required to reduce its system losses from 9.4pc at present to 7.8pc by terminal year of 2019-20.

The companies have also been directed to spend at least 20pc of funds allocated for village electrification for system improvement and strengthening over the next five years and no further village electrification be carried out that may result in overloading of the existing system.

Published in Dawn, March 3rd, 2016