Monday, November 29, 2021

Tariff hike of up to Rs2.97 per unit

According to a notification issued on Monday by the National Electric Power Regulatory Authority (Nepra), electricity rates for the ex-Wapda distribution companies will be increased by up to Rs2.97 per unit for a period of one year, starting on October 1, 2021, under the quarterly tariff adjustment (QTA).

An order, as well as a schedule of tariff (SOT), has been issued by Nepra detailing the tariff hike, which includes a new fee of Rs1.25 per unit for all users, with the exception of domestic consumers, as well as a quarterly adjustment of Rs1.66 per unit for all consumer categories. For residential customers who use up to 300 units each month, the SOT has stated that there will be no pricing increase. Consumers who use more than 300 units, on the other hand, will experience an increase in their bill of Rs1.72 per unit of usage.

In all other categories, the tariff increase has been set at Rs2.97 per unit, with the exception of agricultural tubewells, which will see an Rs2.66 per unit increase. These categories include commercial, general, industrial, single-point supply, temporary supply, residential colonies of industrial units, and agricultural tubewells. As a result, the average increased QTA works out to Rs1.66 per unit of output.

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In addition to the approximately 83 paise per unit for the fourth quarter of 2019-20 and approximately 90 paise per unit for the first and second quarters of 2020-21 determined by Nepra on August 6, there was a lower QTA adjustment of approximately 7 paise per unit for the third quarter of 2020-21, as determined by Nepra on August 6.

Nevertheless, a Nepra official said that a net pricing rise of only four paise per unit would result in additional revenue of Rs4 billion for the distribution companies.

The official explained that because the old QTA of Rs1.62 per unit expired on September 30 and was replaced by a new QTA of Rs1.66 per unit with effect from October 1, the additional burden would be four paise per unit for another year.

Although he acknowledged that the gross rate increased by approximately Rs1.66 paisa per unit, he stated that gross pricing should have gone down by Rs1.62 per unit upon the expiration of the previous QTA and that a higher QTA for another year would place an additional burden on customers. He stated that the new QTA was expected to generate over Rs165 billion in revenue for Discos, in addition to more than Rs25 billion in general sales tax for the government.

According to the official, the new QTA, which would cost more than Rs1.72 per unit, was supposed to take effect in July this year, but the government chose to delay it until October 1 in order to minimize the impact by replacing the current QTA, which expired on September 30.

According to the National Electric Power Regulatory Authority (Nepra), the federal government has “been empowered to apply surcharges for” certain objectives of meeting financial commitments in respect of electric power services as a result of a recent ordinance.

“With regard to the surcharges recommended by the federal government for various categories of consumers, it should be noted that Nepra has not imposed any of the surcharges proposed by the government. “It is the federal government’s statutory authority to impose a similar surcharge,” the regulator’s order stated, adding that any such surcharge would be treated as a cost that would be included in the tariff set by Nepra.

This was done in response to a notification from the federal government to the regulator, which said that Nepra was only needed to show surcharges imposed by the government against their respective columns of Nepra’s tariff schedule, which was only to be used for recovery.

In response, the regulator stated that “category-wise levies requested by the federal government have appropriately been included in the instant decision.”

The increased tariff will be in effect until the end of September 30th, 2022.

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