Discos seek Rs42bn additional despite low usage in December

ISLAMABAD: In yet another blow to electricity consumers, the Central Power Purchasing Agency (CPPA) on Monday sought more than 100pc (Rs5.62 per unit) increase in fuel charges to mop up about Rs42 billion for ex-Wapda Distribution Companies (Discos) through February consumer bills and make up for subdued consumption of the most expensive electricity.

This is apparently the highest-ever increase in fuel cost adjustment (FCA) demanded by the CPPA despite about 75 per cent power supply coming from domestic cheaper fuel sources in December 2023.

This FCA is being sought on top of about 26pc increase in annual base tariff and another 18pc hike under the quarterly tariff adjustment currently in place. As a result, the consumers would be unable to contain their bills despite minimum consumption in peak winter months. The National Electric Power Regulatory Authority (Nepra) has accepted the request for a public hearing on Jan 31.

The higher proposed FCA is mainly because of higher than reference fuel cost and lower hydropower availability in December 2023.

In a petition, the CPPA acting as commercial agent of the Discos claimed that the reference fuel cost for December 2023 was set at Rs5.403 per unit but the actual fuel cost came in at Rs11.022 per unit.

It said about 7,726-gigawatt hours (GWh) of electricity were generated at an estimated fuel expenditure of Rs78.3bn (Rs10.13 per unit) in December 2023, of which 7,418GWh energy was delivered to Discos for Rs81.8bn (Rs11.02 per unit).

This included a hydropower share of just 24pc in December 2023 compared to 36.5pc in November 2023. Hydropower has no fuel cost. The second biggest share came from nuclear power at about 19pc compared to 21pc in the preceding month. The third largest share came from domestic coal at 17pc and with the addition of 5pc share from imported coal, the overall coal generation accounted for 22pc of total power production in December 2023.

It was followed by LNG-based generation that contributed 16.4pc share to the grid in December compared to 10.6pc in November. Then followed the domestic gas-fired electricity with 10.7pc share compared to 9.2pc in November 2023.

The fuel cost of furnace oil-based power generation dropped to Rs38.5 from Rs47 per unit in November but this was mainly for start-up operations as its share stood at just 2.2pc. The diesel-based generation cost Rs42 per unit but its total share was negligible 0.08pc.

The LNG-based power generation cost in December increased to Rs26.22 per unit against Rs23.7 per unit in November while the cost of domestic gas-based generation remained unchanged at Rs14.6 per unit.

The cost of local coal-based generation during December dropped to Rs12.33 per unit against Rs15.3 per unit in November. The imported coal cost on the other hand went up to Rs17.25 per unit against Rs14.53 per unit in November.

Three renewable energy sources — wind, bagasse and solar — together contributed 4pc share in December 2023 compared to less than 3pc in November. Wind and solar have no fuel cost, while that of bagasse-based generation cost remained unchanged at about Rs6 per unit.

After approval by Nepra, the increase in FCA would be adjusted in consumers’ February bills.

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 apply 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).