Nepra approves Rs2.83 per unit hike in FCA for May power bills

The National Electric Power Regulatory Authority (Nepra) on Wednesday authorised ex-Wapda distribution companies (XWDiscos) to levy a Rs2.83 per unit charge in consumers’ electricity bills for May as part of fuel cost adjustment (FCA) charges.

Nepra said the FCA pertains to the month of March.

According to a notification issued by Nepra, a copy of which is available with Dawn.com, the new adjustment “shall be applicable to all the consumer categories except Electric Vehicle Charging Stations (EVCS) and lifeline consumers”.

The notification added that this adjustment would be shown in consumers’ bills based on units billed in March.

Last month, the government had sought clearance from Nepra to extract about Rs23 billion additional in FCA from consumers for electricity consumed in March despite 79 per cent of power generation coming from cheaper local fuels.

The Central Power Purchasing Agency (CPPA) — a subsidiary of the Power Division — had demanded Rs2.94 per unit additional fuel cost to recover from consumers through May bills.

The proposed additional FCA was almost 46pc higher than the pre-fixed fuel cost of Rs6.44 per unit already charged to consumers in March. This raised questions about the power sector bureaucracy’s capabilities to forecast fuel costs even for six to seven months. In recent months, the additional FCAs have ranged between 50 and 115pc higher than the pre-determined fuel costs notified at the start of the current fiscal year.

This FCA was on top of about a 26pc increase in the annual base tariff and another 10pc hike under the quarterly tariff adjustment currently in place and being charged to consumers at Rs2.75 per unit. As a result, consumers continue to pay excessive bills despite lower consumption patterns. Nepra had accepted the request for a public hearing on April 26.

The higher proposed FCA for March is apparently mainly due to higher domestic coal and gas prices, although the use of imported fuels like coal, diesel and furnace oil remained zero. LNG was relatively cheaper, and the exchange rate remained stable.

In a petition, the CPPA, acting as commercial agent of Discos, demanded an additional FCA of Rs2.94 per unit in the May bills for electricity consumed in March. It claimed that the reference fuel cost for March was Rs6.44 per unit, but the actual fuel cost rose to Rs9.38 per unit. The average fuel cost in February also stood at about Rs9.42 per unit. It said about 8,023-gigawatt-hour (GWh) of electricity was generated at an estimated fuel expenditure of Rs66.7bn (Rs8.3 per unit) in March, of which 7,756 GWh energy was delivered to Discos at the cost of Rs72.67bn (at Rs9.38 per unit).

The data showed declining consumption trends. The consumption in March was also 8.3pc lower than the same month (8,459Gwh) last year. The Rs2.94 per unit FCA for March sought this year was more than double the Rs1.17 per unit FCA of the same month last year.

In the April 26 hearing, Nepra had criticised the power companies for inefficiencies and the use of expensive power plants despite the availability of cheaper sources but had hinted at allowing them to charge another Rs22.8bn to consumers in the billing month of May.