ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday cleared Rs4.34 per unit additional fuel cost adjustment (FCA) for ex-Wapda distribution companies (Discos) and about Rs3.48 per unit reduction in FCA for K-Electric consumers for power consumed in July.

However, the regulator did not decide on KE’s other request for a Rs14.53 per unit increase under quarterly tariff adjustment (QTA) for April-June. Under the uniform tariff policy applicable across the country, these QTA costs are usually not passed to consumer bills and settled against tariff differential subsidy in the budget. However, the final decision is made by the federal government.

The two separate public hearings were conducted by Nepra chairman Tauseef H. Farooqui and members Rafique A. Shaikh and Maqsood Anwar Khan.

The regulator concluded that FCA for KE would be Rs3.63-Rs4.10 per unit against KE’s petition for Rs3.48 per unit cut in fuel cost for electricity consumed in July. A final decision would be notified after detailed verification of fuel cost invoices and related parameters. This will reduce KE’s revenue collection by more than Rs6.5bn in September.

It was explained that the major reason for the reduction in KE’s fuel cost when compared to June was a decline in global fuel prices. The price of power purchased from the Central Power Purchasing Agency (CPPA) in July dropped by 31pc when compared to June while the price of RLNG decreased by 16pc. In the same period, furnace oil prices increased by 4pc.

On the other hand, the regulator worked out an increase of Rs4.34 per unit in FCA for all other Discos instead of Rs4.69 per unit demanded by CPPA. During the hearing, the CPPA officers told the regulator that they would challenge a decision of the Lahore High Court against the collection of FCA because it involved Rs133bn without which the power companies would not be able to provide a smooth power supply.

The CPPA on behalf of ex-Wapda Discos had sought an additional FCA of Rs4.69 per unit to generate about Rs65bn in supplementary revenue on account of a higher cost of electricity consumed in July. The additional FCA for July is almost 53pc lower than that of a record Rs9.90 per unit in June because of a substantial increase in the share of cheaper domestic fuels, particularly priceless hydropower generation and inexpensive nuclear power.

The biggest contribution to the overall power grid came from hydropower. Its share showed a significant increase to 35pc in July compared to 24pc in June and May. Hydropower has no fuel cost. The lower availability of expensive imported RLNG also came as a blessing in disguise to consumers.

The CPPA claimed that the consumers were charged a reference fuel cost of Rs6.29 per unit in July, but the actual cost turned out to be Rs10.98 per unit, hence an additional charge of about Rs4.69 per unit to consumers. The revised electricity rates, once notified, would be charged to all consumers in the next billing month (September) except to those using less than 50 units per month.

Data showed that the 64pc share of domestic fuel sources in overall power generation in July was significantly higher at 51.58pc in June which was slightly lower than 54pc in May. The share of domestic fuel-based power generation had stood at 50pc in April and 45pc in March.

After hydropower, the second highest contribution of about 15pc to the overall power supply came from imported RLNG-based power plants in July, which was significantly lower than 24.43pc in June and 23pc in May. With the revival of 1,100MW K-2 Nuclear Power Plant after a month-long closure for refuelling, the share of nuclear power also increased to 14.2pc in July from 9pc in June. Nuclear power contributed 13pc share in May and 17.37pc in April.

The share of coal-based power plants was slightly lower at 12.74pc in July compared to 13.6pc in June and May. The coal-based generation has come down from 16.74pc in April and 25pc in March because of low coal stocks amid financial limitations of power producers and higher global prices.

The share of domestic gas in power generation stood almost unchanged at 10.36pc in July against 11pc in June and 10pc in May and April. The residual fuel oil-based generation stood at 6.2pc in July, significantly lower than 10.48pc in June because of improved production from nuclear and hydropower.

The cost of power generation from domestic gas increased to Rs9.96 per unit in July when compared to Rs8.9 per unit in June but was still lower than Rs10.12 per unit in May. Gas-based power cost was Rs8.4 per unit in April and Rs7.75 per unit in March.

Three renewable energy sources — wind, bagasse and solar — together contributed about 4.45pc power supply in July compared to 7pc in June and 6.5pc in May. Wind and solar have no fuel cost, while that of bagasse has been calculated at Rs5.98 per unit – unchanged.

Published in Dawn, September 1st, 2022

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