Discos to charge Rs3.3/unit extra under FCA

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has allowed ex-Wapda distribution companies (XWDiscos) to collect an additional Rs3.3287 per unit from power consumers in their July 2024 bills.

This adjustment, attributed to the monthly fuel charges adjustment (FCA) for May 2024, compensates for lower payments compared to the actual cost of power generation, influenced by high LNG and oil prices and decreased electricity demand. The Nepra also sanctioned a previous adjustment of Rs 3.24 billion for the China Hub Power Generation Company (CPHGC) as part of the FCA, covering costs from August 2019 to June 2023. Verified invoices and the Fuel Cost Component (FCC) have validated CPHGC’s claim, totaling Rs 3.243 billion, included in the FCA decision.

During a public hearing on June 28, the Nepra reduced the initial requested increase of Rs 3.4133 per unit by XWDiscos to Rs 3.3287/unit. The adjustment applies to all consumer categories except electric vehicle charging stations (EVCS) and lifeline consumers. The CEO of the Central Power Purchasing Agency (CPPA-G) reported lower-than-expected generation from hydro and local coal in May 2024, prompting increased use of RLNG to meet contractual obligations. Despite minimal variations in actual fuel prices compared to reference values, the CEO provided utilization factors for gas and coal-based power plants.

According to a separate decision of the Nepra, the privatized K-Electric is set to refund Rs 1.6716 per unit to clients in their July 2024 bills due to FCA adjustments for April 2024. The Fuel Cost Adjustment (FCA) will apply to all consumer categories except lifeline consumers, domestic consumers using up to 300 units, EV charging stations and agriculture consumers of K-Electric. However, the negative monthly FCA will apply to domestic consumers with Time of Use (ToU) meters, regardless of their consumption level.

On June 12, the Nepra held a public hearing on the petition of the Karachi-based utility. Arif Bilvani, a commentator from the Karachi business community, highlighted during the hearing that K-Electric’s own generation cost was around Rs 23.4/kWh, compared to Rs 8.9/kWh for purchased power, especially from the CPPA. He urged the Nepra to address this with the government to increase K-Electric’s energy supply from the national grid, reducing fuel costs for consumers.

The authority reviewed submissions from K-Electric and commentators, noting that K-Electric currently had a firm commitment of 1,000 MW from the national grid, potentially increasing to over 2,000 MW with the necessary interconnection. However, increasing this supply remains a policy decision.

Notably, K-Electric claimed Rs 13.658 billion for its power plants’ costs in April 2024, based on parameters outlined in the new multi-year tariff (MYT) petitions for FY 2024-30. As the new MYT has not yet been approved, the provisional FCAs are based on the parameters from the MYT for FY2017-23. The authority said that in case the authority approves any revised parameters of KE’s power plants under the new MYT, i.e. FY 2024 to FY 2030, the difference in cost if any may be allowed in future adjustments, as part of previous adjustments, once the new MYT is notified.