Three power Distribution Companies (Discos) have approached National Electric Power Regulatory Authority (Nepra), the power regulator, for upward revision of their tariffs for 2016-17 and 2017-18. Nepra had determined Multi- Year Tariff (MYT) of Islamabad Electric Supply Company (Iesco), Faisalabad Electric Supply Company (Fesco) and Lahore Electric Supply Company (Lesco) for the FY 2015-16 to FY 2019-20 which was notified by the federal government after prolonged litigation and bringing the regulator under the administrative control of Power Division.
The notified determination provides for a mechanism for periodic adjustment in certain components of tariff. Accordingly, Iesco and Fesco have filed their requests for adjustment on account of Power Purchase Price (PPP), indexation of distribution margin components and prior year adjustments in line with the notified tariff. Lesco, however, filed its request to the extent of adjustment on account of PPP only.
Lesco, in its petition has sought adjustment of capacity and transmission charges invoiced by CPPA-G to the company as per the notified transfer pricing mechanism. Lesco has further stated that the impact of T&D losses on the component of PPP as per notified tariff adjustment of variable O&M as per actual be passed on to Lesco. The company argues view that monthly adjustments being notified by the Authority are also being determined on the basis of current notified tariff and since PPP is a pass through for all the Discos it is requesting 1st quarterly adjustments and 2nd quarterly adjustments for FY 2017-18.
Fesco in its tariff petition has argued that, according to Nepra guidelines for determination of consumer end tariff (Methodology and Process) 2015 notified on January 16, 2015, in determination of Fesco's multi-year tariff determination of December 31, 2015 and Fesco's s motion for leave for review and re-determination in the matter of request for re-consideration filed by GoP, the following tariff components are to be adjusted/indexed, bi-annually and annually: (i) PPP adjustment including T&D losses; (ii) Operation & Maintenance Cost (O&M); (iii) depreciation expense; (iv) Return on Rate Base; (v) other income; and (vi) Prior Year Adjustment (PYA).
According to Fesco, it requires recovery of its cost of service at the current market prices to maintain its financial viability.
Iesco, in its mid-review tariff petition said that since its tariff for FY 2015-16 was re-determined by Nepra on September 18, 2017 and the subsequent periodical adjustments on account of PPP including impact of T&D Losses on FCA and prior year adjustment pertaining to the FY 2016-17 are still not notified, therefore, the reference tariff components of FY 2015-16 cannot be used for adjustment/indexation.
The company maintains that it requires recovery of its cost of service at the current market prices to maintain its financial viability.
Nepra which is scheduled to hold a public hearing on the mid-review tariff petitions of three Discos on July 31, 2018, said that since the impact of any such adjustment is to be passed onto the consumers, therefore, it considers it just and appropriate to conduct hearing in the matter so that the pubic may also present its viewpoint as interveners.
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