Due to cuts in fuel prices, our electricity bills may see lower digits for the month of June (those who have already paid will be compensated in the coming month). This will apply for all distributors except K-Electric.
It is common practice in the power sector to charge power users at a surplus amount than the expected price of fuel. This amount is then adjusted in the subsequent month when the actual cost is calculated. This is a useful practice to drive down financial costs for the power generating companies.
In light of this, the Central Power Purchasing Agency-Guarantee (CPPA-G) has filed a petition before the National Electric Power Regulatory Authority (NEPRA) requesting a reduction in tariff for the month of June. Nepra will look into the matter in a public hearing on July 25th.
CPPA-G states in the petition that a tariff of Rs 6.83 per unit was charged from consumers while the actual price based on the cost of fuel came out to be Rs 4.7 per unit. Thus an amount of Rs 2.134, which is roughly 33% of bills, needs to be returned to consumers for each unit consumed.
It should be noted though that the concession in tariff will not be applicable to agricultural consumers and residential consumers who used less than 300 units per month. This was decided by the government based on the fact that these categories are already being provided electricity at subsidised rates.
Breakdown of the Power Generation
The price of the electricity unit is calculated based on the cost of production from various sources like hydro, coal, oil, diesel etc. The percentage of electric power produced from each of these sources is then considered and a weighted average cost is calculated.
The bellows numbers represent the values on which the unit price was calculated for the month of June.
- Hydropower contributed 30.5% with no fuel costs.
- Wind and solar plants had a 2.2% share, again with no fuel used.
- Furnace oil plants produced 22.34% at Rs 9.5/unit.
- Natural gas came at a lower 18.43% at Rs 4.26%/unit.
- Liquefied natural gas (LNG) had a 12.28% share with a cost of Rs 7.45/unit.
- Power produced using coal contributed to 5.7% at Rs 4.3/unit.
- High Speed diesel came contributed 1.36% at the highest rate of Rs 14.36/unit.
- Energy imported from Iran was less than 0.5% at Rs 10.63/unit.
The cost per unit was Rs 4.44 while distributors were supplied 2% lower power, increasing the cost to Rs 4.7 per unit.