Nepra grills CPPA, Discos over multibillion recovery claims

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) took the Central Power Purchasing Agency (CPPA) to task on Wednesday for seeking multibillion rupees in recovery from power consumers without substantiating their claims.

It also criticised the casual attitude of distribution companies (Discos) and highlighted thousands of backlogged power connections, citing inefficiencies within the system.

The petitioner had asked for over Rs85-billion recoveries from power consumers of the state-run power Discos on account of the second quarterly tariff adjustments (QTA) of the fiscal year 2023-24, covering the period from October to December. This recovery had a major chunk of over 88 per cent or Rs75.7 billion as capacity charges from the power consumers to be paid to the private power generators and state-owned generation company (Gencos).

On Wednesday, Nepra conducted a public hearing to address the petition. Nepra Chairman Waseem Mukhtar presided over the proceedings with the authority’s members, including Engineer Maqsood Anwar Khan and Rafique Ahmad Shaikh. However, Mathar Niaz Rana and Amina Ahmed were not in attendance.

During the hearing, Nepra scrutinised the CPPA’s request for a staggering amount of recovery from power consumers on account of quarterly adjustment (QTA) from October to December 2023. In its initial petition, the CPPA pegged it at Rs81.45 billion, which was later revised to Rs84 billion. Interestingly, during the hearing, the petitioner verbally claimed it at Rs85.2 billion without adequate justification.

The Nepra chief expressed disappointment, stating, “The Authority has felt disappointment. This is our concern that the situation is not improving.” He remarked on ineffectiveness of allowing the chief executive officers (CEOs) of Discos to attend the QTA hearings remotely, indicating plans to require them in-person attendance at future meetings, emphasising the necessity for thorough preparation.

Highlighting the burden on consumers, Nepra Member Rafiq Sheikh questioned the petitioner about substantial backlog of over 170,000 pending power connections in Discos, which, if addressed, could alleviate the strain on consumers, caused by capacity payments.

Sheikh criticised the casual attitude of Discos towards addressing pending connection and load-shedding complaints, which contribute to low consumption and subsequently increase capacity payments. He said: “It [the Nepra decision process] is being taken for granted. Casual behaviour is not good.” Additionally, Sheikh pointed out, that Discos failed to control their losses yet pursued billions in claims, seemingly assuming that the authority would permit recovery from consumers regardless of circumstances.

Notably, multiple taxes are being paid by power consumers in their utility bills. Only the 18 per cent general sales tax (GST) on this amount (if approved) will add up to another burden of Rs15.34 billion on power consumers. The total burden on power consumers (claims plus GST) will be over Rs100 billion.

Regarding Nepra’s report on overbilling and actions against Discos, a member stated that show-cause notices would be issued promptly, with the investigation expected to conclude within a month.

Once Nepra determines the per unit additional charges for Discos, the same will apply to the K-Electric too. In the light of the policy guidelines, issued by the federal government for application of uniform quarterly adjustments, this second quarterly tariff adjustment (QTA) for FY2023-24 to be determined by Nepra, would also apply to the K-Electric consumers.

As per the petition, Islamabad Electric Company (Iesco) had sought additional adjustment of Rs7.374 billion, Lahore Electric Supply Company (Lesco) Rs14.955 billion, Gujranwala Electric Power Company (Gepco) Rs2.9 billion, Faisalabad Electric Supply Company (Fesco) Rs10.682 billion, Multan Electric Company (Mepco) Rs14.97 billion, Peshawar Electric Supply Company (Pesco) Rs11.583 billion, Hyderabad Electric Supply Company (Hesco) Rs4.06 billion, Quetta Electric Supply Company (Qesco) Rs10.955 billion, Sukkur Electric Power Company (Sepco) Rs2.91 billion and Tribal Electric Supply Company (Tesco) Rs3.51 billion.

Of the total claims of over Rs85 billion, it sought Rs6.496 billion on account of the ‘Use of system charge (UoSC)’ and market operator fee (MOF), Rs10.243 billion on account of T&D losses in monthly FCA and negative adjustment of Rs2.336 billion of incremental units. Another negative adjustment is of variable O&M charges, which are Rs6.1 billion. Discos’ inefficiencies, power losses, and theft in systems would be recovered from loyal consumers in the form of these recoveries.