Another jolt awaits power consumers as Discos seek Rs2.07 hike for July

ISLAMABAD: Despite a 26pc increase in base uniform national tariff with effect from July 1, there appears to be no respite in sight for power consumers as ex-Wapda distribution companies (Discos) have sought permission to extract almost Rs30 billion more from their subscribers next month.

Through their commercial agent — the Central Power Purchasing Agency (CPPA) — the discos have filed a joint petition with the National Electric Power Regulatory Authority (Nepra) for an additional fuel cost adjustment (FCA) of Rs2.07 per unit in the billing month of September for electricity consumed in July.

The Nepra has accepted the petition and has called public hearings on Aug 30 to see if the proposed increase in tariff is justified in line with monthly FCA mechanisms and if merit was following in utilising power generating units in July.

Once approved, the Discos would charge an additional amount of about Rs29.8bn from their consumers for electricity consumed in July at an additional FCA of about Rs2.07 per unit despite almost 64pc power generation from domestic cheaper fuel that was higher than 58pc in June, 56pc in May and 54pc in April.

The increase is FCA is despite the fact that base average tariff has gone up by more than Rs7.5 per unit last month. The additional cost is also despite the fact the country’s hydropower plants made the healthiest contribution of over 37pc to overall national power grid in July against 26.96pc in June.

Hydropower has no fuel cost

The LNG-based power generation at 19.67pc slightly improved in July when compared to 18.55pc in June but was down lower that its 24.33pc share in May. LNG based power generation, nevertheless, maintained its second position after hydropower. The third largest share came from coal-based generation at 14.69pc in July, down from its 17.75pc share in June. The nuclear generation slightly improved to 14.2pc in July against 13.54pc in June and 12.6pc in May but was still way behind its 19pc in April and 24.28pc in February.

Power supply from domestic gas continued its downward journey and contributed just 7.61pc to the national grid in July against 8.54pc in June, 10.35pc in May and 12pc in April.

The fuel cost of furnace oil based power generation increased to 28.7 per unit in July against Rs26.1 per unit in June and Rs23.24 per unit in May. The LNG based power generation cost in July slightly increased to Rs24.43 per unit against Rs24.07 in June. Furnace oil-based generation in July was contained at 2pc in the overall basket when compared to 5.4pc in June.

Higher actual cost

The CPPA claimed on behalf of Discos that the consumers were charged a reference fuel cost of Rs6.89 per unit in July, but the actual cost turned out to be Rs8.96 per unit, hence an additional charge of Rs2.07 per unit should be allowed.

The cost of power generation from domestic gas increased to Rs13.7pc unit in July when compared to Rs11.74 per unit in June because of increase in gas prices notified by the government.

Coal-based power generation cost, on the other hand, dropped to Rs11.54 per unit in July against Rs14.05 per unit in June.

Three renewable energy sources — wind, bagasse and solar — together contributed about 4.5pc share to the national grid in July, down from its 5.6pc share in June and 6.6pc May. Wind and solar have no fuel cost, while the cost of bagasse-based generation remained unchanged at about Rs6 per unit.

After approval by the Nepra, the increase in FCAs would be adjusted in consumers’ bills in the upcoming billing month of September. The FCA is reviewed every month as per the tariff regime applicable across the country and is usually applicable to the consumer’s bills for one month only.

The higher FCA, on approval, would be applicable to all consumer categories except lifeline power consumers and protected domestic consumers consuming up to 300 units, and agricultural consumers and electric vehicle charging stations (EVCS). The adjustment on account of monthly FCA is also applicable to the domestic consumers having Time of Use (ToU) meters irrespective of their consumption level.

Under the tariff mechanism, changes in fuel cost are passed on to consumers only on monthly basis through automatic mechanism while quarterly tariff adjustments on account of variation in power purchase price, capacity charges, variable operation and maintenance costs, use of system charges and including impact of transmission and distribution losses are built in the base tariff by the federal government.