By Mushtaq Ghumman

The National Electric Power Regulatory Authority (Nepra) Tuesday approved, in principle, an increase of Rs 4.74 per unit in tariffs of power Distribution Companies (Discos) for October 2021 under monthly Fuel Component Adjustment (FCA).

The move came after the Chairman Nepra termed the establishment of imported fuel-based power plants as a “mistake” of previous authorities and censured Power Division for not accepting 12 renewable power project whose tariffs were already approved by the regulator.

The Authority comprising Nepra Chairman Tauseef H Farooqi, Vice Chairman Rafique Ahmad Shaikh and KP Member Maqsood Anwar Khan questioned the officials of National Power Control Centre (NPCC) and Central Power Purchasing Agency- Guaranteed (CPPA-G) about the claims, use of expensive fuel and availability of RLNG in months to come.

Of the total variance of Rs56.644 billion, Rs 43.745 billion was related to price whereas Rs 4.178 billion was due to deviation in generation mix vis-à-vis reference generation mix.

The increase of Rs 4.74 per unit will not be applicable to lifeline consumers. However, it will have positive impact on the consumers of KE to the extent of over 1100 MW electricity being purchase from the national grid. CPPA-G had sought an increase of Rs 4.75 per unit in FCA.

The Nepra officials stated that since the impact of FCA of Rs 2.53 per unit of September 2021 will be over, actual positive impact will be Rs 2.22 per unit for the month of October 2021, to be recovered in bills of November 2021.

Net electricity delivered to Discos in October 2021 was 10.982.86 GWh at a rate of Rs 9.9261 per unit, total price of which was Rs 109.107 billion. CPPA-G also sought previous adjustment/supplemental charges of Rs 5.171 billion. Nepra official did not challenge the claim of CPPA-G, saying that the claims are related to revision in their FCC.

Monitoring and Enforcement (M&E) Wing of Nepra informed that it has calculated total financial impact of Rs 1.777 billion owing to deviation from Economic Merit Order (EMO). The Authority allowed the CPPA-G to pass on the impact of Rs 1.688 billion to the consumers which was included in the FCA due to shortage of RLNG.

Nepra, however, has deducted Rs 79 million (Rs 69 million + Rs 10 million) due to underutilization of efficient plants and for providing unsatisfactory information provided by the system operator. SNGPL has promised to ensure 200 MMCFD RLNG in winter.

According to Nepra officials, generation from furnace oil could have been less if RLNG would have made available as per requirement. Generation from coal was recorded at 15 per cent instead of 25 per cent due to its higher price. The price of coal has increased to $ 240 per ton from reference price of $ 76 per ton.

It was noted that electricity demand has increased by 15 per cent due to Industrial Support Package (ISP) announced by the federal government. However, Vice Chairman Nepra, Rafique Ahmad Shaikh questioned as to whether domestic and commercial consumers are not overburdened due to increase in demand for industrial support package being met through use of expensive fuel.

CFO CPPA-G agreed to sit with Nepra to find out the impact of expensive generation on domestic and commercial consumers at which point Chairman Nepra said that such issues should not be discussed at public hearings.

During the hearing a heated debate was witnessed on the reasons for the shutdown of China Hub power plant’s one unit as CPPA-G has rejected internal inquiry conducted by the plant management itself, which claimed that its transformer had burnt due to lightening.

However, officials confirmed that the reason for the transformers burning was an internal fault not lightening due to which LDs are now being imposed on the company. The plant is expected to be operational in middle of next month. Nepra decided to summon the plants management.

A proposal was presented before the Authority that as electricity prices are unbearable for the domestic consumers, Nepra should allow partial load shedding to lower the burden passed on to the consumers.

The Chairman Nepra did not support the proposal saying that load shedding will further increase the tariff due to higher capacity payments. He also criticised the Power Division for not accepting 12 renewable energy projects, whose tariff was just 4 or 4.5 cents per unit; and argued that the basket tariff would have been less if those projects were included in the plan.

Chairman Nepra also criticised the previous authorities for setting up power plants based on imported fuels, maintaining that the country has to tolerate the mistakes of the past.

This article was first published in Business Recorder on Dec 1, 2021.