FCA for July: NEPRA allows Rs4.34/unit more in Sept bills

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) Monday allowed the ex-Wapda distribution companies (XWDiscos) to make Rs4.34/unit additional collection from power consumers in their Sept 2022 bills.

In July 2022, consumers paid less than what was the cost of power generation, which shot up due to pricey imported RLNG, oil and reduced value of the rupee against the US dollar.

With the implementation of the current increase, the government would collect an additional Rs69 billion in Sept 2022, which included monthly fuel charges adjustment (FCA) plus 17 per cent general sales tax (GST).

The power regulator Monday notified its decision of Rs4.3435/unit additional collection under the FCA head for July 2022. The decision would be applicable to all consumer categories, except for lifeline consumers of all DISCOs and electric vehicle charging stations (EVCS). The said adjustment would be shown separately in bills of September on the basis of units billed in the month of July.

Last month also, the regulator also allowed XWDiscos to collect a whopping Rs9.8972 per unit additional amount in their billing month of August on account of FCA for June 2022. This has a total impact of Rs156 billion (including GST) and is being collected in billing for August.

Nepra held a public hearing on Aug 31, 2022, on the petitions of state-run DISCOs that had sought permission for an additional FCA of Rs4.69/unit.

The authority had expressed displeasure over the violation of the economic merit order (EMO) in power generation from all sources that have put an additional burden of multi-billion on power consumers. The LNG [Liquefied natural gas] shortage also caused a burden.

Total electricity generated from all sources in July was recorded at 14,150.91 GWh, at an average per unit cost of Rs10.7093/unit. The total cost of energy was Rs151.546 billion. Hydel generation was 4,976.93 GWh constituting 35.15pc, coal-fired power plants generation was 1,802.19 GWh (12.74pc) at a price of Rs20.2176/unit, High-speed diesel (HSD) based was at 205.97 GWh (1.46pc) at a cost of Rs27.8886/unit.

Similarly, residual fuel oil (RFO) based power generation was 876.92 GWh (6.2pc) with per unit cost of Rs35.6984, while gas-based power plants generation stood at 1,466.41 GWh (14.603pc) costing Rs9.9585/unit and Re-gassified liquefied natural gas (RLNG) based generation was 2,119.55 GWh (14.98pc) at Rs28.2899/unit. Likewise, power generation from mixed sources was 16.92 GWh at a price of Rs4.7567 per unit, and generation from bagasse was recorded at 40.63 GWh costing Rs5.9822 per unit. The electricity generated from wind was recorded at 518.50 GWh (3.66pc) and solar at 70.77 GWh (0.50pc) in July.

Moreover, electricity generation from nuclear sources was 2,009.54 GWh (14.2pc) at Rs1.0493/unit, and electricity imported from Iran was 46.57GWh which cost Pakistan Rs22.8380 per unit.

Under the tariff mechanism, changes in fuel cost are passed on to consumers only on a monthly basis through an automatic mechanism. In June 2022, Nepra raised the base power tariff by Rs7.9078/unit for the fiscal year 2022-23. Later in July, the regulator approved the federal government’s request to charge the end-consumers of all DISCOs, including the K-Electric, a uniform tariff and collect the increased base power tariff from the consumers in the Financial Year 2022-23. The federal government has also notified an Rs3.50 per unit increase (out of Rs7.9078/unit) in the national base electricity tariff.

Likewise, Nepra also allowed DISCOs in August to collect additional Rs0.5087 per unit on account of quarterly adjustments for the fiscal year 2021-22 to be charged in three consecutive months starting from September 2022. DISCOs will collect an additional Rs12.762 billion as an adjustment for the third quarter (Jan-March 2021-22). The rise in tariff will not affect lifeline consumers (using less than 100 units a month) and incremental industrial sales for the industrial support package.

Earlier, for the first quarter (July-Sept 2021-22), the power regulator allowed Rs0.517/unit with a combined impact of Rs14.3 billion. For the second quarter (Oct-Dec 2021-22), Nepra had allowed Rs1.55/unit increase for three months starting from July 2022. The second quarter adjustment will have a financial impact of Rs39 billion being collected from consumers.

On an additional note, the decision says, “Despite the clear direction of the Authority to prepare the merit order on actually available fuel(s), the merit order is still being prepared on old consideration i.e. with indigenous natural (pipeline quality) gas, while this fuel is not available to plants for the last 2, 3 years. The current merit order list with non-available fuel is nothing but to mislead or confuse the stakeholders.”

The three most efficient RLNG power plants in the Pakistan power sector are the Quaid-e-Azam Thermal Power Plant (QATPL), two power plants of National Power Parks Management Company Limited at Haveli Bahadur Shah (HBS) and Balloki. The efficiency of these power plants is above 61 per cent. The utilisation factors of these three most efficient RLNG power plants were: QATPL around 26pc), HBS around 63pc, and Balloki around 57pc during the month of July 2022.

It is noted that the accumulated claim by these power plants against part load operation is Rs4.086 billion. In the wake of high load demand in the system and ongoing electricity shortfall in the country, the full utilization of these power plants could minimize the load shedding on one hand while on the other hand, it could help avoid part load charges of Rs4.086 billion.

As per the data submitted by NPCC, the average RLNG allocated to power sector during the month of July 2022 was 494 MMCFD against a demand of 900 MMCFD that resulted in an indicative financial impact of Rs6.938 billion during the month. Efforts should have been made to improve the supply chain of RLNG to fully utilise the most efficient RLNG power plants and avoid the part load adjustment charges. Due to system constraints, plants were operated in violation of EMO which resulted in a financial impact of 464.98 million during the month of July 2022. Such constraints in the transmission system is the failure of the relevant entities in performing their core functions.

The utilisation factor of power plants at Central Power Generation Company Limited (CPGCL), including the newly commissioned Guddu 747 machine, remained very low despite the availability of dedicated cheaper gas.

Forced outage of unit 15 (249 Mw), unit 16 (249 MW) of Guddu 747, and Guddu old units 6, 12 & 13 (345 Mw), and units 8 & 10 (180 Mw) resulted in financial losses due to operation of costlier power plants.