Nepra hints at allowing Discos to collect additional Rs0.20 per unit

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Thursday, after hearing the petitions of sate-run distribution companies (Discos) and K-Electric, hinted at allowing the Discos to charge an additional Rs0.20/unit from consumers while K-Electric is to return Rs4.87/unit to its clients for charging high in August 2022.

On Thursday, the power regulator held public hearings on the petitions of both the public and privately-run distribution companies in which Discos asked for permission to charge an additional Rs0.2192/unit while K-Electric showed its willingness to pay Rs4.21/unit back to its power consumers.

Chairman Nepra Tauseef H. Farooqi chaired the proceedings, while the authority’s members from K.P Engr. Maqsood Anwar Khan and Sindh Rafique Ahmad Shaikh were also present. These proposed calculations were made after hearing the parties and calculating their electricity sale-purchase data for the month of August 2022. The regulator will issue its final decision in a few days to incorporate these decisions in the consumer billings for Oct 2022.

If Nepra finalises this Rs4.87/unit, then the Karachi-based facility would reimburse approximately Rs8.5 billion to consumers. This adjustment/relief would be available to all user categories of KE except lifeline power consumers, domestic consumers consuming up to 300 units, agricultural consumers and electric vehicle charging stations (EVCS).

In its earlier decisions for July’s fuel charges adjustment (FCA), Nepra had asked KE to refund Rs4.117 per unit to consumers in their September 2020 bills and it was being paid back and had a total impact of Rs7.4 billion on the company.

For June 2022’s FCA, Nepra had allowed the K-Electric to collect an additional Rs11.102/ unit in electricity bills for August and September 2022, which has a combined impact of Rs25 billion to be collected.

For May’s FCA, the regulator had allowed the KE to charge an extra Rs9.518/unit in two months, including Rs2.6322/unit in July and Rs6.886/unit in August bills from consumers. During the hearing on CPPA’s petition submitted on behalf of Discos, Nepra preliminarily allowed the Discos to collect an additional Rs0.20/unit (around Rs2 billion) from consumers.

It may be noted that earlier on account of the July fuel charges adjustment (FCA), the authority had allowed Discos an additional collection of Rs4.34/unit (or Rs69 bn including 17% GST) in September bills. For June FCA, it had allowed a whopping Rs9.8972 per unit additional collection in August billings, which had a total impact of Rs156 billion (including GST).

The regulator expressed serious concern over the ambiguous affairs of the power sector, especially the running of power plants under the economic merit order (EMO). Nepra asked the petitioners, “Who decides which plants to run and which not to run? Different institutions are in a state of confusion.”

The Central Power Purchasing Agency (CPPA) and National Power Construction Corporation (NPCC) failed to satisfy Nepra’s queries about who decides regarding merit orders to run the power plants. “It is a tragedy that we do not know who makes the merit order,” Member Sindh Nepra said.

Member Nepra said that NPCC says CPPA makes merit orders whereas CPPA puts the responsibility of merit order on NPCC. “Now the regulator will tell whose job it is (about merit order) and who will do it. If you don’t know about the merit order, then why should the authority decide to increase the price of electricity today,” Member Sindh said. Is the CPPA committee more powerful than Nepra? he questioned.

The power regulator directed the CPPA to submit its response to the Nepra by next Tuesday and warned to teach a lesson this time to those institutions which do not follow the orders of power regulator.

Nepra officials said that violation of merit order had resulted in an additional burden of Rs5.39 billion. The power regulator had also observed that the shortage of LNG had caused an additional burden of over Rs5.10 billion. Nepra had also expressed displeasure over shutting down the power plants based on locally-produced gas in violation of merit order.

Nepra asked the CPPA to remove gas-fired plants from the merit order. Does it feel good to show zero output plants at the top of the list of merit orders, member Nepra Sindh questioned adding why the CPPA wants it to implement the orders forcefully.

During the hearing on the K-Electric petition, the chairman Nepra observed a major variation in figures presented by KE and CPPA regarding the production cost of electricity. He said the government was bearing the burden of about Rs15 per unit. The chairman noted that the government also has to collect this burden from consumers. Due to the violation of merit order in August, the customers had to bear a burden of Rs1.21 billion.

Nepra officials informed that K-Electric is generating very expensive electricity from its own resources at Rs37.68 per unit. Nepra also noted that the facility is also taking electricity from the National Grid at the rate of Rs13.61 per unit.

The K-Electric representative said that consumption of LNG and furnace oil declined in August. The lower fuel prices reduced the cost of power generation. After the KE official said that the company had submitted a plan to Nepra on increasing the production of electricity from alternative sources, the chairman Nepra asked how electricity tariff will be reduced by adding new power plants and sought a detailed plan from K-Electric.

Various interveners grilled the KE for unscheduled power outages and the exorbitant price of electricity from its own resources. They also raised question regarding a delay in the operation of Bin Qasim 3 power plant. They said that KE was supposed to start commercial production from this power plant in December 2019. However, it had been delayed now.

KE officials said that the first unit of Bin Qasim Power plant had faced a technical fault and teams of experts were working on it. He said that the first unit would start production soon. They said the second unit of Bin Qasim Power plant had been operating on a test run and was generating 30-40 MWs of electricity. They said that this unit had been connected to the national grid.