The burden of Rs 22.92 billion can be passed on to the existing users

Islamabad:

The National Electricity Regulatory Authority (Nepra) on Tuesday said it will allow former Wapda distribution companies (XWDISCOs) as well as K-Electric (KE) to pass on the burden of Rs 22.92 billion to their consumers due to adjustment for the first quarter of the financial year 2023-24

The regulator conducted a public hearing on the request of XWDISCOs to increase the power tariff by Rs 1.25 per unit.

The report was submitted due to the quarterly adjustment for the period from July to September 2023.

The tariff increase, if approved, will be charged to consumers on their utility bills for December 2013 and January-February 2024.

Nepra Chairman Waseem Mukhtar presided over the proceedings in the presence of the authority members including Mathar Niaz Rana from Balochistan, Maqsood Anwar Khan from Khyber-Pakhtunkhwa, Amina Ahmed from Punjab and Rafique Ahmad Shaikh from Sindh.

The regulator has not given its firm decision, but as per Nepra’s calculation on the data submitted by these companies, the increase could be Rs 1.25 per unit, said a senior official of an authority, who was involved in tariff issues, during the hearing.

The authority will issue its final decision in a few days. This positive adjustment will apply to all XWDISCO and KE customers except Lifeline.

Read more: NEPRA OKs Rs 1.71 per unit hike in power tariff

As per the recent instructions of the federal government, the Quarterly Tariff Adjustments (QTA) decided for XWDISCOs will automatically apply to K-Electric as well with the same amount and timing.

So now if the authority finalizes the hike of Rs 1.25 per unit for the next three months (Dec-Jan), it will be applied to KE consumers as well.

Representing XWDISCOs, the Central Power Purchase Authority (CPPA) cited various factors such as variation in capacity charges, variable operation and maintenance (O&M) costs, additional recovery on incremental sales, use of system charges, market operator fee and fuel impact charge adjustments (FCA) for transmission and distribution (T&D) losses during the first quarter (July to September) of 2023-24.

Out of the total additional amount of Rs 22.56 billion, distribution companies have sought permission to collect Rs 12.96 billion from their customers as capacity charges.

This will be made available to independent power producers (IPPs) to cover the cost of electricity that distribution companies did not feed into national demand due to system constraints or low demand.

Read more: NEPRA hikes tariff by Rs 1.46/unit

In addition, consumers will also pay Rs 4.28 billion as variable O&M costs, Rs 6.42 billion in T&D losses in monthly FCAs and Rs 10.3 billion in usage of system charges as well as market operator fees.

It is noted that according to the decision of the authority on November 3, 2021 regarding a proposal submitted by the federal government in relation to the Winter Incentive Package for electricity users of XWDISCOs and KE, it has been decided that no quarterly adjustments to incremental consumption will apply.

The impact of the units for the quarter has been estimated at a negative Rs 11.047 billion. It is the cost of the units purchased for the industrial incremental sale.

Data shared with Nepra shows that Islamabad Electric Supply Company (IESCO) has claimed recovery of Rs 5.542 billion, Lahore Electric Supply Company (Lesco) Rs 10.305 billion, Faisalabad Electric Supply Company (Fesco) Rs 4.754 billion, Peshawar Electric Power Company (Pesco) Rs 2.096 billion, Tribal Electric Supply Company (Tesco) Rs 1.195 billion, Hyderabad Electric Supply Company (Hesco) Rs 1.056 billion and Sukkur Electric Power Company (Sepco) Rs 926 million.

Multan Electric Power Company (Mepco) and Quetta Electric Supply Company (Qeco) have saved Rs 728 million and Rs 2.625 billion, respectively.

Inefficiencies, power losses and theft in XWDISCO’s systems will be recovered from consumers in the form of recoveries.

During the hearing, while answering the questions of the intervenors and the audience, the authority said that high inflation, volatility of exchange rates and rise in oil prices played a decisive role in the hike in the basic tariff.

However, when asked if the base tariff would come down if inflation comes down to single digits, interest rates come down and the rupee strengthens, Nepra officials said no.

They added that they could only adjust it through quarterly and monthly adjustments.

Asked about the International Monetary Fund’s (IMF) fresh request to the government to hike tariffs, Nepra officials said they have not yet received any report to that effect and hence could not comment on the matter.