NEPRA Approves Yet Another Hike of Rs. 1.55 in Power Tariff

The National Electric Power Regulatory Authority (NEPRA) has approved another increase in the power tariff and allowed the former Pakistan Water & Power Development Authority (WAPDA) Distribution Companies (XWDISCOs) to charge consumers an additional Rs. 1.5547 per unit on account of periodic adjustments for the second quarter of the ongoing fiscal year.

In its decision on the petition filed by the XWDiscos on the matter of periodic adjustments because of variations in capacity charges, variable Operation and Management (O&M), the use of system charges, Market Operator Fee, Fuel Charge Adjustments (FCA), and the impact of Transmission and Distribution (T&D) losses for the second quarter of 2021-22, the NEPRA has allowed the power DISCOs to collect an additional Rs. 39 billion from the consumers in the next three months (1 July to 1 September).

The approved quarterly adjustment has an impact of around Rs. 1.5547/kWh uniformly on all consumers except for lifeline and Increment Industrial Sales that are eligible for the Industrial Support Package.

The NEPRA issued a decision regarding the adjustment in the tariff component for FY 2019- 20 for the XWDISCOs under the Multi-Year Tariff (MYT) regime. The XWDISCOs have filed their adjustment requests in line with the prescribed quarterly adjustment mechanism because of the variations in the Power Purchase Price (PPP), including the impact of T&D losses for the second quarter of FY 202 1–22 (October to December 2021).

The NEPRA conducted a public hearing on the DISCOs’ petition on 28 April 2022. It has decided to work out the quarterly adjustment based on net units (the units purchased for incremental sales have not been included while determining the quarterly adjustments. Accordingly, the cost recovered on incremental units over and above the fuel cost, which is Rs. 12.96 less Reference Fuel Cost for each month, has been adjusted from the quarterly adjustments worked out based on net units.

Similarly, the Prior Year Adjustment (PYA) and the sales mix for the period will be worked out based on net units, excluding the units purchased for incremental sales. Thus, no further adjustment will be allowed for the units purchased for incremental sales.

The Central Power Purchasing Agency, Guarantee Limited (CPPA-G), in the costs billed to the DISCOs for the second quarter of FY 2021-22, included legal charges of Rs. 5.4 million as part of the capacity charges, which was not considered by NEPRA.

The CPPA-G has included an amount of Rs. 1.95 billion in its data for the capacity charges of the Kot Addu Power Company (KAPCO). The authorities noted that the KAPCO’s Power Purchase Agreement (PPA) was amended by the CPPA-G, which entailed an agreement that the plant will be operated without payment of capacity charges from July 2021 onward, and only the energy charges will be paid.

However, the NEPRA has decided to withhold the claimed amount of KAPCO provisionally and will consider the same in the subsequent quarterly adjustments once it is verified.

It has also determined a positive uniform rate of Rs. 1.5547/kWh with an impact of Rs. 39.001 billion pertaining to the second quarter of FY 2021-22 across each category of consumers of the XWDISCOs (except lifeline consumers), based on notified projected sales after excluding the sales to lifeline consumers that are to be recovered in three months with effect from 1 July 2022.

Furthermore, the NEPRA has decided to apply the same with effect from 1 July 2022, to be recovered within three months from the date of notification.