June 2024: Estimated fuel cost surges by 45pc for power consumers

LAHORE: The estimated monthly Fuel Charges Adjustment (FCA) for June 2024, to be borne by power consumers, has increased by 45.30 per cent, compared to the same month in the previous year.

Central Power Purchasing Agency (CPPA) submitted a revised application to the National Electric Power Regulatory Authority (NEPRA) on behalf of electricity distribution companies (DISCOs) to inflate electricity tariff by Rs2.6307 per kilowatt hour (kWh) under FCA of June 2024. In comparison, the CPPA requested a Rs1.88 per unit hike for consumers of DISCOs for the month of June 2023.

A hearing in this connection has been scheduled for July 31, 2024. If approved, the already burdened power consumers are likely to bear the brunt of rising electricity cost in the form of excess financial liability of Rs2.63 per unit for the month of June 2024.

NEPRA determines the FCA to accommodate changes in fuel prices and generation mix. Any fluctuations in fuel costs are reflected in customers’ monthly bills through the FCA adjustments.

According to NEPRA’s notice for hearing, CPPA-G revised its FCA claim for June 2024, increasing the actual fuel cost component from Rs9.2457/kWh to Rs9.7710/kWh. Consequently, the amended estimated FCA increased by Re. 0.5253 per unit to Rs2.6307 per unit, up from the previous request of Rs2.1054/kWh.

The reference fuel cost component remains at Rs7.1403/kWh, leading to a revised requested FCA of Rs2.6307/kWh.

The total energy generated for June 2024 is 13,459 GWh, with a net delivery to DISCOs of 13,071 GWh at a revised cost of Rs9.7710/kWh. Hence, the net energy cost has been estimated at Rs119,704 million at a rationalised average cost of Rs8.8938/kWh. After adjustments, sale to IPPs, and transmission losses, 13,071 GWh of energy is delivered to DISCOs at a cost of Rs127,712 million at an average cost of Rs9.7710/kWh.

As per official data on different electricity generation sources, the primary sources of electricity generation are hydel with 35.13pc share, RLNG 18.10pc share, and nuclear 14.85pc. The cost per kWh varies significantly across sources, with RFO being the highest at Rs31.6108/kWh and nuclear the lowest at Rs1.5255/kWh. Per unit cost of other sources include, coal (local) Rs11.02, coal (imported) Rs15.5349, gas Rs13.92, RLNG Rs26.32, import from Iran Rs26.65 and bagasse Rs5.9822.

Consumers have already been made to pay whopping capacity charges. The estimate capacity payments for the financial year 2024-25 have been pegged at approximately two trillion rupees.

Separately, a historic increase in the basic electricity tariff has also been witnessed by the hapless power consumers. In the last two years, basic power tariff has been jacked up to Rs25.76 per unit. This surge includes a fixed surcharge of Rs3.23 per unit imposed on consumers.