Tariff determinations: Discos causing 'tactical' delay, over-charging consumers

Power Distribution Companies (Discos) are reportedly overcharging billions of rupees from consumers due to "tactical" delay in implementation of tariff determinations of 2014-15 and by not notifying tariffs determined by Nepra for 2015-16, well informed sources told Business Recorder.
Sources further told Business Recorder that Nepra had determined average tariff for 2013-14 at Rs 13.81 per unit which is still being charged from consumers despite the fact that tariff for 2014-15 was determined at Rs 12.25 per unit. This implies that Discos are overcharging consumers by Rs 1.56 per unit on 80 billion units per annum by not implementing the tariffs of 2014-15. The total overcharged amount is around Rs 2 billion per annum if compared with determined tariff of 2014-15.
Likewise, Nepra has determined average tariff for 2015-16 at Rs 10.50 per unit which is Rs 3.31 per unit less than the determined tariff of Rs 13.81 per unit for 2013-14 and Rs 1.75 per unit less compared to determined tariff for 2014-15. As the regulator has almost rejected review petitions of Discos, the federal government has now sought a review of the tariff determinations. Nepra was also set to hold a hearing on June 14, 2016 but it was postponed on the request of Water and Power Ministry.
Sources claimed that Water and Power Ministry had committed to the International Monetary Fund (IMF) that the tariff for fiscal year 2015-16 will be notified by April 2016. However, this has not been implemented so far. Ministry of Water and Power has sought a review of four things ie actual T&D losses, actual revenue loss, prior year adjustment and integrated plan.
The sources said the federal government in its review plea has argued that Discos have conducted a third-party audit, according to which losses are around 18-19 per cent whereas Nepra has allowed 15 per cent losses which is unjust. The financial impact of 18-19 per cent loss means Rs 23 billion on the financial health of companies. Nepra, in its determinations also directed Discos to ensure 100 per cent recovery whereas Discos' recovery is around 94 per cent. The financial impact of this decision is Rs 43 billion. Besides, Discos are being asked for prior year adjustment of overcharged Rs 63 billion.
Nepra says that being a quasi judicial body it operates within the premise of a Nepra Act and Rules made thereunder and can only allow those costs which are prudent and incurred to meet the demonstrated needs of the consumers of relevant DISCOs only. NEPRA after following the prescribed legal procedure has determined tariff for the FY 2015-16 for all the Discos.
The regulator while announcing a decision on review petitions filed by of Discos observed that having heard the Discos in support of review petitions, in terms of rule 16(6) of NEPRA Tariff Rules, 1998 read with regulation 3(2) of the NEPRA (Review Procedure) Regulations, 2009, a motion seeking the review of any order of the Authority is competent only upon discovery of new and important matter of evidence or on account of some mistake or error apparent on the face of record. The perusal of a determination sought to be reviewed clearly indicates that all material facts and representation made were examined in detail and there is no occasion to amend the impugned determination. No error inviting indulgence as admissible in law has been pleaded out. Therefore, the Authority was convinced that the review would not result in the withdrawal or modification of its determination. The Authority was of the considered view that the grounds agitated in the motion for leave to review are not sufficient enough justifying the modification of the impugned determination, hence the motions for leave for review was declined.