Consumers brace for surge in tariff as Discos pursue Rs967bn revenue requirement

ISLAMABAD: Power consumers brace themselves for a notable surge in electricity tariffs as six former Wapda power distribution companies (Discos) jointly pursue Rs967 billion in revenue requirements for the fiscal year 2024-25.

This substantial increase is attributed to the Discos’ submission of requests for annual indexation and adjustments, indicating potential financial strain on the consumers in the coming year.

Under the Multi-Year Tariff (MYT) regime for the upcoming fiscal year, these companies have submitted requests to the Nepra for annual indexation and adjustments regarding the determination of distribution margin (DM) along with prior years’ adjustments (PYA) and other associated costs.

Under the MYT regime, annual indexation and adjustments of various revenue components are a standard practice. Notably, Nepra has previously determined the tariff rates for these Discos under the MYT regime for a duration of five years, spanning from 2020-21 to 2024-25. Furthermore, Nepra has also determined the indexation/adjustment for Discos up to the fiscal year 2023-24, a decision subsequently ratified by the federal government. Now, as per the adjustment mechanism outlined in the consumer end tariff methodology (guidelines), 2015, and the amended Nepra Act, the Discos have submitted requests for adjustments/indexation for the fiscal year 2024-25.

In its petition, the Gujranwala Electric Power Company (Gepco) sought a total revenue requirement of Rs376.2 billion, including allocations of Rs15.5 billion for salaries, Rs13.1 billion for post-retirement benefits, Rs47.8 billion for gross margins, Rs43 billion for net margins and Rs19 billion for prior-year adjustments.

Similarly, the Multan Electric Power Company (Mepco) requested a revenue requirement of Rs160 billion, with allocations of Rs20.9 billion for pay and allowances, Rs24 billion for post-retirement benefits, Rs78.3 billion for gross margins and Rs72 billion for net margins for the fiscal year 2023-24.

The Quetta Electric Supply Company (Qesco) sought Rs236 billion in revenue requirements, including allocations for pay and allowances, post-retirement benefits, gross margins, net margins, and prior-year adjustments.

The Tribal Electric Supply Company (Tesco) aimed for a regulator-approved revenue requirement of Rs92 billion, encompassing pay and allowances, post-retirement benefits, gross margins, net margins, wheeling charges, and prior-year adjustments.

The Peshawar Electric Supply Company (Pesco) requested Rs67.2 billion in revenue requirements, covering pay and allowances, post-retirement benefits, gross margins, net margins, and prior-year adjustments.

The Sukkur Electric Power Company (Sepco) sought a revenue requirement of Rs35.7 billion, including costs for operation and maintenance, depreciation, gross margins, net margins, and prior-year adjustments.

The power companies have approached the regulatory authority to green-light an increase in electricity rates to recoup billions from consumers. Nepra is set to conduct a public hearing on April 2 to deliberate on the matter and decide.