Islamabad - The National Electric Power Regulatory Authority (NEPRA) on Wednesday approved Rs 2.49 per unit reduction in power tariff for the Ex-Wapda Distribution Companies for July under the monthly fuel price adjustment formula.

In a public hearing, presided over by its chairman Brig (r) Tariq Saddozai, the Authority also expressed serious concern over the underutilization of cheaper power plants and warned Central Power Purchase Agency (CPPA), of legal action for using expensive plants for power generation.

The NEPRA Chairman observed that CPPA operated expensive furnace-based SPS power plants, which produced electricity at the cost of Rs10.26 per unit but denied gas supply to other plants which cost just Rs5 per unit.

When a CPPA official replied that the Agency followed merit order, the NEPRA chairman retorted by saying, “Don’t protect the interests of power plants owners because you are supposed to watch the consumers’ interests.

The CPPA had filed a petition for fuel price adjustment (FPA) for July with NEPRA, in which it had proposed Rs2.13 per unit cut in fuel based power tariff for July over the reference fuel charges of Rs6.49 per unit.

The Authority noted that the actual cost of electricity generation for July was Rs4 per unit and decided that Rs2.49 per unit should be returned to the consumers, who were already being charged Rs6.49 per unit. “The decision will help the consumers save Rs 27-29 billion in their July bills,” it added. NEPRA also rejected the request for power tariff over and above its  approved price for the Nandipur Power plant.

Similarly, the Authority also refused to approve the fuel cost for the Kotri Power Generation Unit due to its closure.

It is pertinent to mention here that the federal government had also recommended to the NEPRA Rs2.45 per unit reduction in power tariff for July under monthly fuel price adjustment formula.

Pursuant to Section 31(4) of the NEPRA Act (XL of 1997) and the mechanism for monthly fuel price adjustment prescribed by the Authority in the tariff determinations of Ex-WAPDA Distribution Companies, the Authority has to review and revise the approved tariff on account of any variations in the fuel charges on monthly basis.

CPPA reported that in July, five percent less hydel power had been generated and the gap was filled via gas and LNG power plants. CPPA further reported that the diesel-based power generation cost Rs12.7632 per unit, furnace oil-based Rs7.5032, gas-based Rs5.1186, RLNG-based Rs5.3452, nuclear Rs1.16 per unit and imported energy from Iran Rs10.60 per unit.

It also told that total 10.714 billion units of electricity were supplied to distribution companies in July, while the generation stood at 11.05 billion units.

Giving details, it said the transmission losses were 2.56 percent (or 281.81 million units) and sale to IPPs was of 8.52 million units, and total generation cost stood at Rs46.68 billion.

It said the hydropower generation contributed about 35.87 percent while furnace oil-based plants generated over 28.96 percent energy, Natural gas-based plants generated 18.67 percent electricity while RLNG-based plants contributed 9.09 percent electricity to the national grid followed by 3.95 percent by nuclear, 0.60 percent by diesel and 1.18 percent by wind.

This adjustment/relief will be available to the domestic consumers in entire Pakistan, except Karachi and the lifeline consumers.

The reason for not providing relief to the consumers of the K-Electric is that it is a privatised company and distributes its own generated electricity to the consumers in Karachi, and hence not covered under this determination.

Besides the consumers of K-Electric, the relief will also not be available to the lifeline consumers consuming up to 300 units per month, as they are already being provided subsidised electricity.

This compensation will be available to consumers in their September 2016 electricity bills.