ISLAMABAD - NEPRA has allowed the government to regularize the increase of Rs 1.27 per unit in power tariff for the end consumers.

The Authority has considered the tariff proposed by the federal government to be charged from the consumers including the impact of targeted subsidy and inter disco tariff rationalization and the same is approved as final tariff in terms of section 31 (7) of the Act, said NEPRA determination released here. The Authority has determined the Uniform Tariff as required under Section 31(4) of the Act.Here it is pertinent to mention that the Uniform Tariff determined by the Authority includes impact of PYA of Rs.226 billion, to be recovered in a period of twelve months from the date of notification of the instant decision. Therefore, after a period of one year from the date of notification of the instant decision, the Uniform tariff needs be adjusted.

On the request of federal government, NEPRA conducted a public hearing to regularize the increase in power tariff on November 26, but due to lack of quorum it held the decision till the completion of quorum. The federal government has sought approval of National Electric Power Regulatory Authority (Nepra) to regularize increase in power tariff by Rs 1.27 per unit. The representative of Power Division informed during the hearing that government had already increased average power tariff by Rs 1.27 per unit. The power tariff hike notification by NEPRA will enable the government to implement the uniform tariff across the country.

The increase is varied from Disco to Disco with the lowest increase for Gepco Rs 0.71 per unit and Hesco Rs 4.35 per unit, Qesco 1.37, Mepco 2.87 per unit, Sepco 2.84, Pesco 2.84, LESCO 2.24, FESCO 2.64, and IESCO 1.58. The new average price in Discos for the residential consumers using up to 50 units electricity per month will be Rs 4.00 per unit, 01-100 units Rs 13.85, 101-200 Rs 15.86, 201-300 Rs 16.83, 301-700 Rs 18.54 and above 700 units rate will be Rs 20 94. However the government assured NEPRA that they will provide subsidy to the consumers using up to 300 units of electricity. The decision to increase the average power tariff by Rs 1.27 per unit will jack up the existing uniform power tariff of Rs 11.71 per unit to Rs 12.98 per unit.

The decision released by NEPRA said that the Authority has examined the federal government’s request for deferment of Rs.146 billion allowed in the Revenue Requirement of DISCOs on account of arrears of Net Hydel Profit (NHP). It is noted that the amount includes Rs.86 billion allowed in the WAPDA’s tariff determination for the FY 2017-18 and Rs.60 billion pertaining to the FY 2016-17, already billed by WAPDA to CPPA-G. The said cost has already been allowed by the Authority in the tariff determination of WAPDA and the same has/is being billed by WAPDA to CPPA-G. As a consequence, the cost is being reflected in the quarterly adjustment requests of DISCOs. Therefore, exclusion/deferment of this cost from DISCOs tariff only would not only create legal complications but will also be inconsistent with the Authority’s determinations already made in this regard.

Further, a part of the aforementioned amount would also form part of the 650MW energy withdrawn by K-Electric from the national grid, which cannot be deferred through the instant proceedings. The Authority has also noted that in the schedule of tariff, the proposed deferred amount of NHP has been indicated against the residential consumer category slab up-to 300 and agriculture consumer category, which supposedly means that the same will only be recovered from the same categories and not from the other categories.

The Authority also recalled that XWDISCOS have filed their quarterly adjustment request for the 1st quarter of FY 2018-19, the impact of which works out to be around Rs.94 billion and if extrapolated till December 2018, the same goes over Rs.180 billion (tentatively). Thus, once the instant PYA of Rs.226 billion, built in the tariff, is recovered after a period of one year, the federal government would still have a backlog of over Rs180 billion to be included in the tariff. In view thereof, the Authority considers that the federal government instead of proposing NEPRA to defer the NHP amount, may record the same as subsidy payable to DISCOs, and its payment be deferred, keeping in view the financial situation of the government.

While determining the tariff of XWDISCOs for the FY2015-16, an amount of Rs.83.65 billion comprising of Rs.59.31 billion on account of PYA of FY 2015-16 & FY 2016-17 and write-offs of Rs.24.34 billion was included in the tariff. The said tariff was notified by the federal government w.e.f. March 22, 2018, whereby, this amount of Rs.83.65 billion was to be recovered from the consumers during a period of one year i.e. till March 21, 2019.

Accordingly the components of PYA 2015-16 & 2016-17 and write offs were indicated in separate columns, in the SoTs of XWDISCOs determined for the FY 2016-17 & FY 2017-18, which were to remain applicable till March 21, 2019. The Authority, however, has noted that due to higher sales during FY 2018-19 vis a vis FY 2015-16, the amount of Rs.83.65 billion would tentatively be recovered by the XWDISCOs till December 2018, whereas, if the same remains notified till March 2019, it may result in over recovery by the XWDISCOs.

The federal government in its instant motion has also considered this fact and has worked out the national average tariff by excluding the impact of expected over recovery of around Rs.22 billion due to enhanced sales growth. As a result of the recent significant devaluation of PKR vs US$, the actual fuel cost is expected to increase substantially as against the reference generation (fuel) costs on imported fuels built in the instant tariff, consequently monthly FCAs to be allowed would be exorbitant.

This will create volatility and unpredictability in the consumer end tariff, which will be against provision of section 31(3) (i) of the NEPRA Act. In view thereof, and in order to protect the consumers’ interest, the Authority considers it appropriate that the impact of Rs.83.65 billion, be adjusted through revision of reference fuel cost component, to cover the exchange rate variation to the extent of Rs.128/US$. The monthly adjustment on account of fuel cost variation will be made against the revised reference fuel cost component. In view of the above and the fact that PYA of Rs.83.65 billion built in the tariff would tentatively be recovered by December 2018, the Authority has decided to retain the said amount of Rs.83.65 billion in the instant tariff as part of reference fuel cost, instead of PYA / write-offs, in order to minimize the future impact of positive monthly FCAs, if any.