Discos consumers: Govt all set to file motion with Nepra to adjust category-wise SoT

ISLAMABAD: The federal government is all set to file a motion with National Electric Power Regulatory Authority (NEPRA) to adjust category-wise Schedule of Tariff (SoT) of Discos consumers in the light of newly determined base tariff for the fiscal year 2024-25 including relief to the industry.

On Friday, the power regulator, uploaded tariff determinations of Discos on its website after seeking clearance from government, according to which base tariff of Discos and KE increased by 20 per cent or Rs 5.72 per unit to Rs 35.50 per unit for fiscal year 2024-25 from applicable base tariff of Rs 29.78 per unit.

Discos are projecting revenue of Rs 3.76 trillion in FY 2024-25 against Rs 3.28 trillion during the current fiscal year. The new tariff is estimated to generate additional revenue of Rs 485 billion for the Discos.

Nepra gives approval to additional financial burden on consumers

The average increase in consumers tariff will be in the range of Rs 4.50 - 4.70 per unit during the next fiscal year, sans taxes and surcharges.

However, category-wise increase in tariff is yet to be approved by the power sector Regulator, which is already in behind the doors contact negotiations with Central Power Purchasing Agency -Guaranteed (CPPA-G) and Power Division, which dictates it in tariff related matters.

Last month, Power Division obtained Prime Minister’s approval to further enhance electricity tariff, i.e. up to 10 percent of the total cost and reduction of variable charges to ensure tariff remains neutral for end consumers, besides recovery of taxes from relevant segments instead of through electricity bills.

NEPRA is working like a Post Office in overburdening consumers under the garb of tariff adjustments as it follows all instructions of Federal Government.

“NEPRA has not yet received GoP’s Motion through the Power Division to fix new category-wise tariffs of consumers, after adjustment of subsidy and removal of major part of cross subsidy to give relief to the industry,” said one of the officials on condition of anonymity.

What ever Power Division proposes to NEPRA it will be cleared within days as the Regulator cannot alter any such proposals on its own, due to limited powers.

However, an official told this scribe that major relief in tariff will be extended to industries through reduction in cross subsidy being provided to domestic consumers especially lifeline consumers. The financial impact of relief to industry will be around Rs 140-150 billion through reduction in its tariff but it will not affect tariff of lifeline consumers as the government will bear this burden through subsidy from budget.

In federal budget FY 2024-25, the government has earmarked Rs 120 billion in the name of additional subsidy for power sector without sharing any details which probably is part of subsidy to be extended to lifeline consumers and those using up to 200 units monthly.

The middle category of consumers i.e. from 201-700 units per month are likely to be hit badly with adjustment in SoT.

According to sources, base tariff comprises of Discos revenue requirements, FCAs and QTAs, and the projected variation in FCAs and QTAs has already been reflected in the base tariff, which implies their impact in months to come will be zero or very negligible.

The average tariff of consumers is expected to be increased by about Rs 4.70 per unit but the impact of FCA and FCAs projected for next fiscal year, will be nil or very insignificant.

“Subsidy for protected categories of domestic consumers already exists in the budget but federal government will also bear the financial burden through additional subsidy, as cross subsidy is being eliminated. However, industry will continue to cross subsidize to domestic consumers with very minimal impact,” the sources continued.

The Authority has further decided to increase the rate of fixed charges currently applicable to certain categories, keeping in view the quantum of overall fixed charges in the revenue requirement of DISCOs, the cost of service (CoS) of each consumer category and the fact that NE Plan obligates that fixed charges shall account for at least 20% of the fixed cost of the respective categories evaluated through a cost-of-service study.

The rate of fixed charges @ Rs./kW/Month for each consumer category, has been mentioned in the Schedule of Tariff (SoT).

According to NEPRA’s determination, fixed charges for consumer using 301-400 units monthly have been increased to Rs 200 per month from Rs 177 per month, 401-500 unit, from Rs 111 to Rs 400 per month, 501-600 units, from Rs 63 to 600 per month, 601-700 units per month, from Rs 39 to Rs 800 per month, 701 and above from Rs 72 to Rs 1000 per month. Likewise, rates of fixed charges on industrial consumers have also been increased.

Copyright Business Recorder, 2024