The National Electric Power Regulatory Authority (Nepra), on Tuesday, reduced the electricity tariff for the domestic consumers by Rs 4.11 per unit, under the monthly fuel price adjustment formula.

The decision will be applicable to the domestic consumers of all the public-run distribution companies of Pakistan, except the lifeline consumers and those of K-Electric.

The reason for not providing relief to the K-Electric consumers is that it is a privatised company, which distributes its own generated electricity to the consumers.

The lifeline consumers, consuming up to 300 units per month, are another exception, as they are already being provided subsidised electricity.

To pass on the benefits of the ‘cheaper cost of fuel’ to the domestic power consumers, NEPRA announced the cut in power tariff for January. The compensation will be available to the consumers in their next month’s electricity bills.

As per details, the Central Power Purchase Agency (CPPA) sought from the Nepra Rs3.385/unit reduction in power rates for January 2016 for all public-run distribution companies.

Admitting the CPPA’s petition, Nepra decided to hold a public hearing, today, on March 1, 2016, before passing on the relief in the upcoming billing month. The decision was taken at the conclusion of the meeting.

CPPA, in its petition, stated that the cost of diesel-based power generation stood at Rs12.42 per unit, furnace oil-based at Rs6.28 per unit, gas-based at Rs6.01 per unit, nuclear at Rs1.12 per unit and imported energy from Iran at Rs10.60 per unit, resulting in the saving of Rs32 billion.

“The fuel reference price for January was fixed at Rs 9.86 per unit, while average fuel cost was calculated at Rs6.48 per unit. Some 50 per cent electricity is generated from gas,” CPPA added in the petition. The officials of CPPA and National Transmission and Dispatch (NTDC) were admonished for not providing information about running power plants at less expensive furnace oil, instead of diesel.

The CPPA official told that all power plants were operated as per merit order, and all the information would be provided to the NEPRA.

Merit order is a way of ranking available sources of power generation, based on the ascending order of prices. Under the order, the power generation units with the lowest marginal costs are the first ones to be brought online to meet demand, and the plants with the highest marginal costs are the last to be brought on line.