ISLAMABAD: The Federal Government is all set to introduce electricity tariff of Rs12.66/kWh country-wide on incremental consumption for four months of winter season starting from November 1, 2021, to be available to Time of Use (ToU) and non-ToU domestic and commercial consumers, sources close to SAPM on Power and Petroleum told Business Recorder.
The Cabinet Committee on Energy (CCoE) headed by Minister for Planning, Development and Special Initiatives, Asad Umar, will consider the proposal of Power Division, in its meeting scheduled for Monday (today).
The sources said the Power Division has also proposed that similar but inverse gas pricing mechanism may be developed for the domestic gas sector by the Petroleum Division. Power Division's proposal of concessional tariff is based on its previous year's package which also helped the government in bridging a portion of gigantic circular debt with consumption of surplus power in winter.
Power Division argues that due to limited availability of natural gas during winter months in recent years consumers need an alternative affordable resource for meeting the heating requirements. For this, the consumers can switch to electric heaters as an alternative if cheap electricity is available at discounted rates.
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In 2020, to address this issue, a discount on incremental consumption namely "Use more Pay Less Package" was offered for the period of November 2019 till February 2020 by offering a rate of Rs 11.97/KWh for incremental consumption. The discount was available to domestic, commercial & industrial consumers of Discos and yielded a growth of 16% in consumption. Power Division maintains that any increase in the incremental consumption for heating through electricity is aligned with the long-term trajectory of the energy efficiency and conservation objective. Moreover, it will enable optimum use of system generation capacity.
Power Division has also claimed that the proposed package is also consistent with the Prime Minister's decision of January 13, 2021 regarding increasing the electricity consumption by introducing seasonal pricing.
Accordingly, incentive package has been proposed for all domestic, commercial, and general services consumers of Discos for winter months i.e., from November 1, 2021 to February 28, February 2022.
The sources said the Power Division has submitted the following proposals: (i) rate of Rs 12.66 kWh shall be charged to domestic consumers (non-ToU) on the incremental consumption, above monthly 300 units or above the reference consumption in the corresponding months of reference period, whichever is greater; (ii) rate of Rs 12.66 /kWh shall be charged to commercial consumers (non-ToU)and General Services consumers on the incremental consumption above the reference consumption in the corresponding months of reference period; (iii) rate of 12.66 Rs/kWh shall be charged to domestic consumers (ToU) and commercial consumers (ToU)) on the respective peak/off-peak incremental consumption, above the reference peak/off-peak consumption in the corresponding months of reference period; (iv) new and existing consumers having no reference consumption available in period of November 2020 to February 2021 shall be offered the same package at the concessionary rate of 12.66 Rs/kWh through benchmark consumption methodology; (v) no quarterly adjustments would be applicable on incremental consumption; and (vi) on incremental consumption, only positive fuel price adjustments shall be passed to consumers availing the incremental consumption package.
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According to the Power Division, incremental consumption is subsidy neutral. Under the prevailing dynamics of energy sector, overall savings in monthly bills of consumers are anticipated if the package is offered to the consumers in the winter season. Additionally, ECC has already granted incremental consumption package for industrial consumers of Discos till October 2023, at the concessionary rate of Rs.12.96/kWh.
Power Division argues that in order to alleviate the pressure on natural gas supply system the concessional tariff proposals will have a more positive impact if an inverse gas pricing mechanism for same winter months is introduced.
The CCOE has been requested to issue guidelines to Nepra for approval of proposed package and incorporation in the regulatory framework. It has also proposed that similar but inverse gas pricing mechanism may be developed for the domestic gas sector by Petroleum Division.
The sources said summary was circulated to Finance Division, Power Information Technology Company (PITC), and National Energy Efficiency and Conservation Authority (NEECA) for views and comments. Finance Division and PITC have supported the proposal in the present form whereas NEECA has also endorsed package with certain observations.
Copyright Business Recorder, 2021