NEPRA notifies Rs 3.76 per unit increase in electricity rates

Islamabad:

The National Electricity Regulatory Authority (NEPRA) has notified an increase in electricity prices by up to Rs 3.76 per unit due to quarterly adjustment.

The increase enables power companies to recover over Rs 46 billion from consumers for the third quarter of FY 2023-24. Of this total, Rs 28.515 billion will be charged as capacity charges, which will go to independent power plants (IPPs) that have not generated electricity and have remained idle.

As a result, diligent consumers who pay their bills regularly will bear the brunt of this significant amount.

Read more: NEPRA highlights Rs32b burden on consumers

The significant cost is a consequence of previous government agreements to install power plants in large quantities, with guarantees to buy the electricity produced.

These guarantees also included payments to the PSOs, even if their electricity had not been removed.

Consequently, although capacity is available, it is not added to the national grid, yet consumers are still required to pay for this inactivity.

These botched deals with IPPs have resulted in consumers effectively subsidizing these idle plants at the rate of around Rs 17 per unit – significantly higher than the average electricity price of around Rs 9 per unit.

Also Read: NEPRA mulls another hike despite decline in electricity demand

Pursuant to proviso (ii) to Sub-section 7 of Section 31 of the Electricity Generation, Transmission and Distribution Act, 1997 (XL of 1997), NEPRA said it is notifying the authority’s full decision on the matter of the requests made by XWDISCOs for periodic adjustment of tariffs for the 3rd quarter of the financial year 2023-24 already notified to the ministry of power (Department of Power) on 31st May 2024.

Accordingly, the Authority has decided to allow the immediate positive quarterly adjustments of Rs 46.613 billion pertaining to the 3rd quarter of the financial year 2023 24 over a period of three months i.e. from June 2024 to August 2024.

Out of the total charge of Rs 46.613 billion, Rs 28.515 billion will be charged due to capacity charges, while Rs 10.284 billion will be recovered due to lesser FCA effect of T&D losses, Rs 5.309 billion O&M and Rs 2.541 billion usage of system charges.

According to the NEPRA notification, consumers will be charged Rs 1.90/unit, Rs 0.9262/unit and Rs 0.9262/unit for June, July and August 2024 respectively, to be applicable for all categories of consumers, except lifeline consumers XWDISCO and K-Electric.

While implementing the Decision, the concerned entities including Central Power Purchasing Agency Guarantee Limited (CPPAGL), XWDISCOs and K-Electric will keep in mind and strictly comply with the orders of the courts, notwithstanding this decision.