July-September QTA: Nepra agrees to let Discos recover Rs43bn from consumers

ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Tuesday agreed to allow power Distribution Companies (Discos) to recover Rs 43.337 billion from consumers for first quarter of (July-September) 2022-23 under QTA mechanism but recovery period is still disputed between the regulator and Power Division.

During a public hearing on QTA adjustment petitions of Discos, Chairman Nepra Tauseef H Farooqi, Member Sindh Rafique Ahmad Shaikh and Maqsood Anwar Khan quizzed representatives of Power Division, CPPA-G and Discos on the reasons for the huge financial impact of QTA on the consumers during the first quarter of the current financial year despite the fact that most of projected reference rates of QTAs and FCAs were already increased at the time of tariff rebasing.

Of the total adjustment of Rs 43.337 billion, Discos have sought positive adjustment of Rs 31 billion as capacity charges, positive adjustment of Rs 2.169 billion under variable O&M, Rs 7.075 billion positive adjustment in Use of System Charges (UoSC) and Market Operator’s Free (MOF), Rs 7.377 billion on account of Impact of T&D losses on monthly FCA and negative adjustment of Rs 4.248 billion of incremental units.

According to Discos petition, Iesco has sought positive adjustment of Rs 2.704 billion, Lesco, Rs 9.101 billion, Gepco, Rs 5.337 billion, Fesco, Rs 6.377 billion, Mepco Rs 10.657 billion, Pesco, Rs 2.129 billion, Hesco, Rs 1.184 billion, Qesco, Rs 3.663 billion, Sepco, Rs 905 million and Tesco, Rs 1.282 billion.

Joint Secretary (Power Finance) Power Division Maqsood Bhatti informed the Authority that this case is being submitted to the ECC for guidance. He proposed that the QTA of Rs 2.18 per unit determined for first quarter be charged in January and February 2023 (two months) when recovery of existing QTA of Rs 3.30 per unit of fourth quarter of FY 2021-22 is over so that no additional financial burden is passed on to the consumers.

Chairman Nepra reminded him that QTA is recovered in three months and if the government intends to recover it in two months, then the regulator has to review its own rules. He asked Joint Secretary to formally write a letter to NEPRA for recovery of QTA of the first quarter of current fiscal year in two months so that an informed decision is taken in this regard.

According to the officials of Nepra, the main reason for the substantial impact of QTA during first quarter of current fiscal year was reduction of up to 10 per cent in sales of Discos for different reasons.

An official of Nepra argued that QTA for first quarter of current fiscal year would have been Rs 100 billion instead of Rs 43 billion if reference rates were not revised upward. Another reason was long-term contracts with power plants and addition of new plants in the system. The impact of “unestablished” 600-W renewable projects, on overall volume of QTA, also came under discussion.

Member Sindh who raised the issue of 600-MW unestablished renewable energy plants, asserted that if decisions are not taken with respect to Discos on demand side, things will further worsen, adding that the volume of QTA will continue to rise.

Chairman Nepra was visibly surprised at the numbers of QTA, saying the amount of Rs 44 billion is too much and it has to be passed on to the consumers, adding that he thought QTA will reduce after rebasing but it is still too high.

“The Authority is also concerned over massive number of QTA for first quarter of current fiscal year as Discos sales have gone down due to floods and other factors,” he added.

To question, the representative of CPPA-G stated that the stock of circular debt stood at Rs 2.473 trillion during the first quarter of current fiscal year as compared to Rs 2.253 trillion as of June 30, 2022.

He further noted that growth in circular debt was recorded at Rs 185 billion during first quarter of current fiscal year as compared to Rs 90 billion in the corresponding period of FY 2021-22.

In response to another question, he said that total volume of QTAs in 2021-22 was Rs 161 billion, of which Rs 16-20 billion has been made part of the circular debt due to non-recovery.

He maintained that the impact of FCA has started coming down, adding that the impact of FCA for October 2022 will be just Paisa 24 per unit as FCA, in August Paisa 19 per unit, and in September Paisa 8 per unit.

Copyright Business Recorder, 2022