Fuel Adjustment Surcharge: Nepra approves Rs2.53 per unit hike for Sept

ISLAMABAD: The National Electric Power Regulatory Authority on Tuesday approved an increase of Rs2.53 per unit in the power tariff for the month of September on an account of fuel adjustment surcharge.

The increase will incur Rs34 billion financial burden on consumers of ex-Wapda distribution companies (Discos), which will be reflected in the billing month of November. However, the consumers of K-Electric and lifeline consumers will be exempted from the surcharge.

The cost of the fuel used in power plants is a pass through item and is paid by consumers. However, the move was opposed by Nepra’s Sindh member Rafiq Shaikh. In a dissenting note, he blamed National Power Control Center for violating the Economic Merit Order (EMO) and running the power plants. He added that NPCC had reported 104 instances of plants operation in breach of merit order due to system constraints that resulted in financial impact of Rs714 million during September, 2021. He argued that the failure of the system constraints by the NTDC cannot be passed on to consumers.

He also mentioned that NPCC again failed to comply with the direction of the authority to report the dispatch of generation plants out of merit on daily basis, adding that consistent failure warranted legal processing against NPCC. The Sindh member also took National Power Purchase Agency into task, saying that the agency failed to submit the segregation of financial impact into heads, including impact on account of RLNG, system constraints, and underutilization of efficient power plants.

He added that ministry of energy’s department had reported more than Rs1 billion financial impact on account of shortage of RLNG as fuel in September and the cost of mismanagement could not be passed on to consumers.

He also expressed his reservation on purchase of electricity from all those power plants whose power purchase agreements (PA) were amended or extended without approval of the Authority. Sindh member also opposed the move of including Rs10 billion previous adjustments in the tariff.

CPCC and NTDC told the NEPRA during the hearing that in the month of September, against the demand of 900 mmcfd RLNG in the power sector, only 650 mmcfd RLNG was provided because of the dry docking issue in September and they were obliged to utilize the RFO as fuel.