Nepra allows Rs1.743 per unit hike for Sept to November

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has approved an additional charge of Rs1.743 per unit for the next three months starting in September 2024, allowing distribution companies and K-Electric to recover Rs43.23 billion through quarterly adjustments for the fourth quarter (April-June) of fiscal year 2023-24.

This will affect customers of both state-owned distribution companies and K-Electric, adding to the financial burden on households already grappling with rising energy costs.

At the heart of this recovery lies a hefty Rs21.253 billion, or nearly half of the total amount, earmarked for capacity charges—payments that go to independent power producers (IPPs) to ensure generation capacity is maintained, regardless of how much electricity is consumed. An additional Rs7.368 billion is being recouped in system usage charges and market operator fees, Rs11.23 billion as impact of transmission and distribution (T&D) losses, and Rs3.5 billion for variable operation and maintenance charges.

Notably, the imposition of an 18 per cent GST on the total recovery amount would further inflate the burden by Rs7.78 billion, raising the total to Rs51 billion to be collected from consumers.

On Aug 26, Nepra held a public hearing, led by Nepra Chairman Waseem Mukhtar. DISCOs in its petition had submitted that adjustments were largely result of lack of sales as compared to the projections during the instant quarter.

However, Nepra observed that certain DISCOs, such as PESCO, failed to draw energy as per its demand, and opted to carry out load shedding in its service area. While this reduced their share of capacity charges from overall pool, it also contributed to lower sales. These companies had sought for Rs1.9/unit additional collection.

The CPPA, as an agent of the DISCOs, engaged in Local & International legal proceedings had requested to allow Rs51 million on account of legal charges in the instant quarterly adjustment, but the authority turned it down. The authority noted that since such costs are included in Market Operation Fee (MOF), and for it the authority had already approve Rs500 million on account of legal charges as part of CPPA MOF for the FY 2023-24.

The CPPA, in its plant-wise data, also included an amount of Rs72.23 million on account of KAPCO charges on account of tax differential for the period from July 1 to October 24, 2022. But the authority did not consider the amount claimed for KAPCO. The Authority also adjusted an amount of Rs73.18 million charged by the CPPA-G to DISCOs on account of PPIB fee as part of PMLTC invoice for January 2024. The matter of PPIB is under consideration of the Authority through separate proceedings; therefore, the matter would be decided once those proceedings were concluded.

The authority determined a positive adjustment of Rs43.23 billion on account of variation in capacity charges, variable O&M, additional recovery on incremental sales, use of system charges, market operator fee and FCA impact on T&D losses for the 4th quarter of FY2023-24.

The Authority has decided to allow positive quarterly adjustments of Rs43.23 billion pertaining to the 4th quarter of the FY2023-24, in a period of three months i.e. September to November 2024, at a uniform rate of Rs1.7432/unit, to be applicable to all consumer categories, except for lifeline consumers.