‘Winter package’: Nepra approves Rs26.07 per unit relief for 3 months

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday accorded approvals to ‘Winter Package’ of Rs 26.07 per unit for three months (December 2024 to February 2025) to be applicable to all eligible industrial, commercial, general service consumers and Domestic (ToU and non-ToU consumers exceeding 200 units) and net metering consumers and wheeling industrial consumers of Discos and K-Electric.

The Authority has also approved negative adjustment of Rs 1.14 per unit in FCAs to refund Rs 11.379 billion to Discos consumers for the month of October 2024, which will be reflected the fuel charges adjustment in the billing month of December 2024.

According to Nepra’s decision, tariff of 26.07 Rs/kWh shall be charged to all eligible consumers on the respective incremental consumption, above benchmark consumption in corresponding months.

ECC approves ‘winter package’: Eligible consumers to pay Rs26.07/kWh tariff

The benchmark consumption will be the higher of either the relevant month’s consumption in FY 2024 or the historical consumption over the past 3 years for the relevant months, based on the approved formula.

Other Terms and Conditions of Winter Initiative Demand will be as follows;

(i) if consumption record for a specific consumer is not available, then benchmark consumption criteria for new consumers will be applied for the respective period;

(ii) if the status of consumers was disconnected or status of consumer meter was defective during benchmark consumption calculation period, then benchmark consumption criteria for new consumers will be applied for the respective period;

(iii) detection units shall neither be used for either benchmark consumption calculation nor for incremental units calculation;

(iv) the benchmark consumption for consumers (other than non-ToU residential) who have shifted to a different tariff category during benchmark consumption calculation period, the consumption period in which the consumer was in the same tariff category will be used for benchmark calculation, whereas the formula for new consumers will be used in periods the consumer was in a different tariff category;

(v) if the meter of a specific consumer cannot record MDI, then only Sanctioned Load shall be used for calculation of benchmark consumption, where applicable;

(vi) for cases involving MDI or sanctioned load, benchmark consumption for ToU consumers will be prorated for peak and off-peak hours based on the consumption in respective month;

(vii) ToU consumers will be eligible to avail the package if and only if the sum of peak and off-peak consumption for the relevant month is greater than the aggregate benchmark consumption (Peak + off Peak). Provided further, where applicable, the incremental consumption shall be calculated based on aggregate consumption in both peak and off-peak hours for each month.

Additionally, the incremental consumption shall be distributed among peak and off-peak periods on a pro-rata basis of incremental units;

(viii) for consumers having zero consumption in the benchmark consumption calculation period, or those who have opted for extension of load during benchmark period, their benchmark consumption for such months will be calculated based on the formula of new consumers;

(ix) The package shall not be applicable to consumers having defective/lock meter for the applicable month;

(x) the package shall also be applicable to net metering and wheeling industrial consumers only;

(xi) the incremental package shall be applicable up to only 25% units over the reference benchmark consumption for the respective months. Provided further, all the incremental sales over and above 25% of the benchmark consumption shall be charged normal tariffs as determined by the Authority and notified by the Federal Government.

The Member (Finance and Tariff) Mathar Niaz Rana, in his additional note said that accordance with the Federal Government’s directive, as outlined in paragraph 5 of the decision, the Authority will consider incorporating a tariff adjustment mechanism into K-Electric’s Multi-Year Tariff (MYT) determination for the period of winter package. This mechanism aims to protect KE’s financial stability by ensuring that its distribution costs and profit margins are not adversely affected by the winter demand initiative. The proposed adjustment would facilitate the fair and consistent implementation of the initiative, while respecting KE’s unique regulatory status and obligations under its legal framework.

He is of the view that KE operates under a distinct regulatory and operational framework compared to public sector Distribution Companies (Discos), necessitating a tailored approach to align the initiative with KE’s specific financial, legal structure and operational realities.

He further stated that by adopting a customized approach, the winter demand initiative can be effectively implemented ensuring both regulatory compliance and the achievement of broader policy objectives. This will allow for a fair application of the initiative, safeguarding KE’s sustainability and the interests of its consumers.

In another additional note on Disco’s FCA’s determination for October, Mathar Rana said that his earlier decision of October 22, 2024 is also relevant in this case. He said, regarding previous adjustment claims of baggasse-based power plants, the Authority obtained details of actual payments made by CPPA-G to different baggasse-based power plants.

As per the details submitted by CPPA-G, an amount of Rs. 1,696 million has been verified and paid as of November 19, 2024 out of the claimed amount of Rs.1.784 billion. In view thereof, the Authority has decided to allow the amount of Rs.1.696 billion in the instant FCA.

He maintained that regarding previous adjustments of negative Rs.15.487 million pertaining to Saphire, positive Rs.4.02 million pertaining to Halmore, negative Rs.0.46 million pertaining to Uch-II, positive Rs.156.89 million pertaining to Engro Thar, negative Rs.214 million pertaining to QATPL, negative Rs.265 million pertaining to Haveli Bahadur Shah, negative Rs.248.7 million pertaining to Balloki, negative Rs.383.6 million pertaining to Lucky Electric, positive Rs.228 million pertaining to Punjab Thermal and negative Rs.2.89 million pertaining to Thar Coal Block I, the same are under technical verification of the Authority.

Therefore, the Authority has decided to provisionally account for these adjustments in the instant FCA subject to adjustment, if required, once technical verification is completed.

Member Technical, Rafique Shaikh, in his additional note says “ he has consistently highlighted the long-standing issues plaguing the power sector, including the continued reliance on inefficient GENCOs, the operation of the 747 MW Guddu power plant in open cycle mode, and the ongoing outage of the NJ power plant.

Other critical challenges include the failure to evacuate power from wind energy plants, transmission constraints—especially the inability to transmit cheaper electricity from the south to the north—and poor governance within DISCOs. These persistent inefficiencies have hindered the sector’s performance and contributed to rising costs.

Despite NEPRA’s continuous efforts as a regulator, including initiating proceedings and imposing fines on power sector entities to improve efficiency, there has been little progress, especially with public sector organizations. This stagnation calls for immediate and decisive action to address the sector’s issues comprehensively.

The solution lies in prompt interventions focused on improving efficiency, optimizing resources, and alleviating financial pressures. The recent winter demand initiative presents a positive step, potentially increasing demand and enhancing the utilization of generation and transmission capacities.

Optimizing resource usage can help reduce consumer tariffs and stabilize electricity prices. To maximize its benefits, it is essential to closely monitor the results of the initiative and, where feasible, introduce lower-rate time of- use tariffs.

Additionally, urgent reforms within NTDC are critical to alleviating constraints that are driving up electricity costs. Strengthening project management to minimize cost overruns and improve execution timelines should be a priority. Decommissioning underutilized GENCO plants and expediting repairs at the Guddu 747 MW plant are essential steps to address inefficiencies.

Enhancing governance within DISCOs, supported by advanced technology to manage and reduce AT&C losses, is vital. The adoption of ABC conductors, prepaid meters, and the potential restructuring or privatization of larger DISCOs into smaller entities could further improve operational efficiency.

While reviewing the data for the October 2024 FCA proceedings, several specific issues have been identified, as outlined in the annexure attached to this note. Based on these findings, he is of the opinion that considered opinion that the cost of inefficiencies should not be passed on to consumers.

Copyright Business Recorder, 2024