NEPRA is considering a record hike of Rs 5.62/unit in electricity rates

Islamabad:

The National Electricity Regulatory Authority (NEPRA) has postponed its decision on the request of distribution power companies (DISCOs) to increase the price of electricity by Rs 5.6194 per unit, citing fuel charge adjustment (FCA) for December 2023.

Earlier, the Central Power Purchase Authority (CPPA), at the behest of the DISCOs, submitted an application to NEPRA seeking increase in electricity rates under the FCA for December 2023. NEPRA conducted a public hearing on 31 January 2023 (Wednesday), mainly focusing on FCA for December.

In its petition, CPPA alleged that the benchmark fuel cost for December 2023 was set at Rs 5,403 per unit, but the actual fuel cost was scaled to Rs 11,022 per unit. The CPPA also reported that the total electricity generated by various fuels in December was recorded at 97,726 GWh, priced at Rs 10.1341 per unit, resulting in a total energy cost of Rs 78,296 million.

During the hearing, NEPRA member Rafiq Sheikh asked about the burden due to the violation of the value order and the existing limitations of the system. He questioned the viability of the current system, plans for its continuation and raised concerns about the persistent issues since the creation of Pakistan. The Sheikh sought solutions from the institutions, stressing the need to solve the long-standing problems. He noted that the power distribution problem was reported three times this month. Either give a solution or clarification if there is none, with a commitment to finalize the issue of overcharging by power companies by March, he urged.

During the hearing, another member of NEPRA, Mothar Niaz Rana, said that nuclear power generation has decreased due to nuclear fuel refueling. At the same time, the CPPA sought retroactive adjustments totaling more than Rs.5 billion. NEPRA officials clarified that the DISCOs will replace the faulty meters by February.

Analyzing the distribution of power generation sources, hydel sources contributed 24.06%, generating 1,859 GWh at zero cost. Coal-fired power plants generated 1,694 GWh (local + imported coal: 1,310+ 384 GWh), constituting 21.92% of the total energy generated at a cost of Rs 29.5832 per unit.

Reading KE given 20 year renewal by NEPRA

Similarly, electricity generation from gas-fired power plants was 826 GWh, accounting for 10.69% of the total generation, at a total cost of Rs 14.6035 per unit. Production from Regasified Liquefied Natural Gas (RLNG) was 1,268 GWh, accounting for 16.41% of total production, priced at Rs 33,250 per unit.

Power generation from bagasse was recorded at 101 GWh, with a calculated price of Rs 5.9822 per unit. The electricity generated from wind power was 150 GWh, making up 1.95% of the total generation and the solar contribution was 62 GWh, representing 0.80% of the total generation in December 2023.

In addition, electricity generation from nuclear sources was 1,464 GWh, priced at Rs 1.3162 per unit, accounting for 18.95% of the total generation. Electricity imported from Iran was 28 GWh, amounting to Rs 33.1274 per unit, contributing 0.37% to total electricity production in December.

Figures submitted by CPPA with NEPRA revealed that the net electricity delivered to DISCOs in December 2023 was 7,418 GWh (96.02%), at a rate of Rs 11,0225 per unit, at a total cost of Rs 81,767 million.

Notably, this marks the highest FCA increase ever sought by the CPPA. The proposed higher FCA is mainly attributed to increased benchmark fuel cost and reduced availability of hydropower in December 2023. If NEPRA approves the Rs 5.62/unit increase in FCA-based power tariff for December, consumers will bear the additional cost on February bills.

For now, NEPRA has postponed the decision to increase electricity price by Rs 5.62 per unit under the FCA to December, promising a thorough review of the data. According to NEPRA, electricity price increase under FCA for December 2023 will not be applicable to lifeline electricity consumers or K-Electric consumers.

Published in The Express Tribune, February 1^St2024.

Like Businesses on Facebook, follow @TribuneBiz on Twitter to stay updated and join the conversation.