Sunday, December 10, 2023

Nepra reduces 21 paisa per unit for Discos

Nepra (The National Electric Power Regulatory Authority) on Wednesday finalized a monthly fuel cost adjustment of roughly 21 paisa per unit reduction in power tariffs for ex-Wapda distribution firms Discos (FCA).

At a public hearing led by Nepra chairman Tauseef H. Farooqui, the regulator did not instantly agree to Rs13.4 billion in three-year-old adjustments based on which the Discos had requested a rise in monthly FCA of approximately 80 paisa per unit.

If officially announced by the regulator, the reduced fuel costs will be reflected in customer bills in the forthcoming billing month of August, causing Discos to lose around Rs3 billion in income. These tariffs would not apply to K-Electric customers or agricultural and residential Disco customers who utilize up to 50 units per month.

Because of about Rs7.6 billion in unfavorable fuel price fluctuations as compared to pre-determined reference prices, the CPPA proposed that the regulator allow approximately 80 paisa per unit extra charges to customers for power usage in June 2021 under the FCA mechanism.

Following a reconciliation procedure, Central Power Purchasing Agency (CPPA) CEO Muhammad Rehan told Nepra’s staff that about Rs13.38 billion in claims had been submitted on account of prior adjustments, including those affecting the time since March 2019. He further stated that the analysis uncovered around Rs11.65 billion in operating and maintenance (O&M) costs that were incorrectly incorporated into the price for the same time, resulting in a net extra cost of approximately Rs1.7 billion.

On behalf of Discos, the CPPA has requested an extra fee of about 80 paisa per unit from Discos’ customers due to higher generating costs of energy consumed in June to produce roughly Rs11 billion in additional cash flows to power firms.

According to the CPPA, the Discos charged consumers a reference fuel rate of Rs5.93 per unit in June, but the real fuel cost was Rs6.74 per unit, and hence 80 paisas per unit should be permitted to be recovered from customers. The Nepra, on the other hand, claimed that the real fuel cost was Rs5.72 per unit, resulting in a 21 paisa per unit return to customers via the next bill adjustment.

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