Nepra hikes tariff by Rs2.75/unit for three months

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday allowed power distribution companies and K-Electric to collect an additional Rs2.7492 per unit from power consumers on account of periodic adjustments for three consecutive months starting from April 2024.

The regulatory authority has authorised power companies to collect over Rs85.3 billion from power consumers as an adjustment for the second quarter (Oct-Dec 2023). The tariff increase will not impact lifeline consumers (those using less than 100 units a month).

This Rs2.7492 per unit adjustment will apply to K-Electric as well. Notably, the stated Rs85.275 billion does not encompass the collection from the Karachi-based utility. If incorporated, the total amount may escalate to over Rs90 billion. It’s essential to highlight that consumers were burdened with multiple taxes on these additional charges, adding to their financial strain. Specifically, the 18 percent Goods and Services Tax (GST) on this amount will further impose an additional burden of over Rs16 billion on power consumers. In a nutshell, the consumers will pay over Rs106 billion (or $380 million) in these three months.

It is to be noted on February 14, 2024, Nepra held a public hearing on the petition of these companies who had demanded Rs85 billion upward adjustments for the quarter under review.

This amount is to be collected on account of variation in capacity charges, variable operation and maintenance (O&M), additional recovery on incremental sales, use of system charges (UoSC), Market Operator Fee (MoF) and FCA impact on transmission and distribution (T&D) losses for the quarter.

Currently, two quarterly adjustments are being collected from consumers through their monthly bills. The quarterly adjustment for the 4th quarter of FY2022-23, set at a uniform rate of Rs3.2814/unit, will conclude in March 2024. Similarly, the first quarterly adjustment for FY2023-24, with a uniform rate of Rs1.1502/unit, will also cease by the end of March 2024. These adjustments collectively amount to Rs4.43/unit. The second quarterly adjustment of FY 2023-24 will commence from April 2024 onwards, following the expiration of the existing applicable quarterly adjustments. This recovery had a major chunk of over 75 billion as capacity charges from the power consumers to be paid to the private power generators and state-owned generation companies (Gencos).