Govt slammed for excluding net-metering from winter package

ISLAMABAD: Business and industry groups on Tuesday criticised the exclusion of solar net-metered consumers from the winter package and demanded that K-Electric be bound to pass its impact on to Karachi’ites.

At a public hearing on the government’s three-month winter package for electricity consumers, the business representatives also raised questions over the application of lower rates on a billing basis that meant about 20 days had already passed without benefiting consumers.

A Power Division official, however, took an interesting stance that the package had been in the newspapers for a couple of weeks and the consumers had the idea what was coming up and must have aligned their consumption patterns accordingly even before the formal approval and notifications.

The Power Division, which had come up with the request for a public hearing before the National Electric Power Regulatory Authority (Nepra), also put on record that the government was seeking special provisions through policy guidelines to ensure that KE passed on the benefit of lower rates to consumers, unlike the past practices.

Businesses urge regulator to ensure K-Electric passes benefits to consumers

Representatives of the Power Division recalled that the government had offered an industrial support package (ISP) last year that was also applicable uniformly across the country, but KE consumers could not benefit. “This time, it should be ensured that the winter package is uniformly applied”.

Karachi Chamber of Commerce and Industry representative Tanveer Bari said KE had not only withheld Rs32bn ISP-based relief but also other amounts worth around Rs100bn, including those due to consumers under a claw-back mechanism meant for industries in Karachi through courts. “It should be made clear that they would not again go to the court to deprive us of the intended benefits”, he demanded.

KE’s Chief Executive Officer Moonis Abdullah Alvi gave a conditional assurance to extend the winter package to consumers “provided its application was on actual (unit) sent out” and not on any other assumption that may be affecting KE’s cashflows as was the case in the past. He, however, said the KE had detailed consultations with the Power Division and hoped the actual sent out of KE and other Discos would remain aligned.

The Power Division said the subsidy-neutral incentive package will come into force on Dec 1 and remain in place until Feb 28, 2025, expecting to boost power consumption by about 16pc.

The reduced electricity rates are offered at marginal cost to residential, commercial, and industrial consumers based on incremental usage, with a 25pc cap.

A Power Division official said incremental consumption beyond 25pc or solar net-metering would have increased the marginal cost and thus added a burden on the government or other consumers, hence restricting it.

The recent surge in electricity tariffs coupled with challenging economic conditions had lreduced demand across various consumer categories, down by 6pc in winter 2023 with an additional 8pc in FY24. Also, the winter demand, on average, was about 11,196MW lower than the summer months.

A similar package in FY20 is reported to have improved consumption by 16pc, while ISPs FY21 and FY22 had helped demand growth by 15 and 14pc but fell by 8pc and 2pc in FY23 and FY24 because of overall economic conditions.

The package would apply to industrial, commercial, general services, and domestic consumers of more than 200 monthly units nationwide, including K-Electric. It was noted that this may also require additional LNG, which was already in oversupply.

The package would be applicable on incremental consumption over the past years and entail 18-50pc discount depending on various consumer categories and consumption slabs.

According to the Power Division, the base rate for domestic consumers is a minimum of Rs37.49 and a maximum of Rs52.07 per unit. However, both categories would charge additional consumption at Rs26.07 per unit. This would be 30pc cheaper (Rs11.42 per unit) compared to a minimum rate of Rs37.49 and 50pc (Rs26/unit) compared to the maximum rate.

Commercial consumers’ base rate currently ranges between Rs39.53 per unit and Rs48.78 per unit. They would also be charged a flat rate of Rs26.07 per unit on incremental consumption. The discount on additional consumption for this category would be Rs13.46 to Rs22.71 per unit or 34 to 47pc cheaper.

Published in Dawn, November 27th, 2024