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The consumers will have to pay higher electricity bills for this month as the National Electric Power Regulatory Authority (Nepra) approved an increase of Rs3.10 per unit in the power tariff on account of expensive use of fuel in power plants in December last year.

The Central Power Purchasing Agency (CPPA-G) had requested an increase of Rs3.12 per unit on account of fuel cost adjustment (FCA) for the month of December 2021, according to a notification issued by the power regulator.

The increase would only apply to bills for the month of February, it added.

In November last year, consumers were charged Rs4.30 per unit on account of FCA that was for only one month.

December's power tariff on account of FCA will be charged Rs1.20 less in February than in November, according to Nepra.

This would apply to all customers of Discos (distribution companies) except lifeline customers.
Nepra said the FCA would not apply to K-Electric consumers. Nepra had held a public hearing on the petition filed by the CPPA-G to raise the power tariff on February 1, 2022.

It is also interesting that inefficient captive power plants (CPPs) were also receiving subsidised gas from the government.

Read: Power tariff to go up Rs2.8 per unit

However, they were also selling it to state-owned companies.

As per the data submitted by the CPPA-G, XWDISCOs (distribution companies which were formerly affiliated with the Water and Power Development Authority) purchased 7.87 GWh from CPPs in December 2021. The CPPA-G provided actual details of energy purchased from these plants.

According to the details, the actual fuel cost of this energy was Rs35.355 million.

As per the Nepra-approved mechanism, this has been considered while working out the FCA for December 2021.

During the hearing, the power regulator also observed that certain efficient power plants were not fully utilised and instead energy from costlier Residual Furnace Oil- (RFO) and High Speed Diesel- (HSD) based power plants was generated to the tune of over Rs11.388 billion during the month of December 2021.

The authority has been repeatedly directing the NPCC/ NTDC and the CPPA-G to provide complete justification to its satisfaction. It has told them to submit complete details for deviation from the economic merit order (EMO). The details must show hourly generation along with the financial impact for the deviation from EMO, if any, and its reasons.

Nepra in its decision said that it had reviewed the information provided by the CPPA-G seeking monthly FCA and due diligence was done accordingly.

From the perusal of the information so provided by the CPPA-G, the actual pool fuel cost for the month of December 2021 was Rs8.6573 per kWh against the reference fuel cost component of Rs5.5347 per kWh.
The actual fuel charges, as reported by the CPPA-G, for the month of December 2021 increased by Rs3.1226 per kWh against the reference fuel charges.

The Gujranwala Chamber of Commerce and Industry (GCCI) had submitted its written comments regarding the higher monthly FCAs and termed them as “unreasonable” and “unjustified”.

The GCCI has accordingly requested to review these high FCAs and also questioned the subsidies and increase in taxes.

In response, the power regulator observed that the major portion of generation basket was based on imported fuel. It had added that this in turn was dependent on the fuel prices in the international market and exchange rate parity.

The primary reason for the recent higher monthly FCAs was the increase in prices of different fuels in the international market and devaluation of the local currency.

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