ISLAMABAD: The government assured on Tuesday that three months incremental consumption-based Winter Package at Rs 26.07 per unit, designed sans solar (net metering) consumers and capping of 25 per cent increase, will be available to K-Electric (KE) consumers at par with power Distribution Companies (Discos) consumers.
This was the crux of government’s documents, and views of Regulator and officials, expressed during the public hearing, largely attended by the representatives from industry.
The subsidy neutral package effective from billing months December 1, 2024 to February 28, 2025 will be available to industrial, commercial and domestic consumers (above 200 units per month and ToU) and General Services, and will be extended further in different ways in case the first is successful, said a senior official of Power Division.
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According to the package, historical consumption for FY 2024 or for the last three years, whichever is higher, will be for three years on rolling basis, and shall be calculated as follows: (i) 50 per cent for FY 2024; (ii) 30 per cent for FY 2023; and (iii) 20 per cent for FY 2022.
The representative of CPPA-G stated that only positive FCA shall be passed on, incremental sales and QTAs, Power Holding Limited (PHL) Debt Servicing Surcharge (DSS) shall not be applicable on incremental consumption.
The incremental package shall be applicable up to only 25 per cent of units over the reference benchmark consumption for the respective months. For ToU consumers the total consumption of (peak+ off-peak) in the month must be higher than the total benchmark consumption to be eligible for the package.
CPPA-G said that keeping in view the previous packages, it is assumed that all categories of consumers will use more in three months, adding that the package will be cheaper than LPG and RLNG based space hearting.
Arif Bilwani, Tanveer Barry, Rehan Jawed, Engineer Abubakar, Aamir Sheikh and Anil Mumtaz expressed their views on the winter package, pointed out its deficiencies and proposed amendments to extend maximum benefit to the industrial consumers.
During the hearing, it was pointed out that those industrial consumers who have installed solar systems net metering must be included in the package and cap of 25 per cent growth in consumption be removed.
The representative of CPPA-G said that the consumers of net metering are already enjoying some incentives including not paying capacity charges and in case they are included in the package then someone has to bear the financial impact of such a decision. Likewise, if cap of 25 per cent growth in consumption is removed then again someone has to bear the brunt of this decision. Chairman Nepra requested interveners/ consumer representatives to send their views in writing to Registrar Nepra so that their answers are sought from the Power Division.
In reply to a question, the government noted that it finalised the winter package after hectic exercise and using Plexos and dispatch analysis carried out by the National Power Control Centre. The transmission system constraint as provided by NPCC has been utilised for the evaluation of marginal cost.
It was further apprised that financial benefit to industrial consumers will between the range of Rs 5.72 per unit to Rs 15.05 per unit, residential from Rs 11.42 to Rs 26 per unit, commercial Rs 13.46 per unit and General Services, Rs. 20.8 per unit. However, taxes shall be applicable over and above the incremental rate.
Rehan Jawed challenged the savings figures, claiming that savings would not be more than Rs 4 or Rs 4.5 per unit. CPPA-G did not agree saying that overall saving might be Rs 4 or Rs 4.5 per unit but on incremental consumption, its impact will be in the range of Rs 5.72 to Rs 15.05 per unit. Rehan Jawed proposed that the Power Division should arrange meetings between the representatives of business and industry with KE before finalization of such packages.
Tanveer Barry argued that since benefit of previous Industrial Support Package had not been extended to the industry of Karachi, this time it should be ensured that the incentives be extended to industry of Karachi at par with Discos.
Power Division said that historically implementation of similar initiative for consumers of KE faced challenges on account of the applicable tariff structure of KE determined by Nepra and resulted in non-uniform application of the initiative across the country, ultimately hindering the full realisation of the initiative’s intended impact. This is the reason the government has directed Nepra to establish a tariff adjustment mechanism for implementation of initiative for KE without impacting its distribution and profit margin.
Chief Executive Officer (CEO) KE Syed Moonis Abdullah Alvi said that the previous increment was based on units which were already accounted for while ascertaining KE tariff and cash flow; and hence passing on incremental gain to customers would be at the cost of revenues already provided to KE while the insult to injury was that KE never achieved the projected growth due to adverse macroeconomic conditions. KE was not allowed any relief when output declined heavily due to COVID in 2020 and the utility was told that the gain or loss has to be parked at KE.
He said with respect to the current Multi Year Tariff, KE has requested that it be allowed the same as other Discos: any increase and/ or decrease be adjusted in the same manner as has been done by other Discos.
KE’s Director Finance, Ayaz Jaffer said that KE will extend the benefit of winter package on the basis of actual sent-out.
Wrapping up the public hearing, Additional Secretary-II, Power Division, Syed Zakria Ali Shah said “ I just want to say that we, the Ministry, has reviewed the package many times with all the departments within our own ministry and after going through it thoroughly, we have put this package in this form. We did it in this way so that maximum advantage is given to maximum people. Another thing is that if this package is successful, this will also be extended in different ways.“
Copyright Business Recorder, 2024
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