ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has approved Re 0.42 per unit increase in tariffs of power Distribution Companies (Discos) for the third quarter (Jan-March) 2021-22 under Quarterly Tariff Adjustment (QTA) mechanism.
The Authority held a public hearing on June 15, 2022 on the petitions of Discos for adjustments in their quarterly tariffs under QTA mechanism. The impact of Re 0.42 paisa which is calculated based on 3-month sales will be charged in three months.
According to documents that came under consideration of the Authority, power Distribution Companies requested for recovery of additional Rs 10.546 billion from consumers on account of capacity charges, Use of System Charges (UoSC) and Market Operation i.e. CPPA-G fee, impact of T&D losses on FCA and variable operation and maintenance charges for the 3rd quarter of FY 2021-22 including impact of additional recovery on incremental sales i.e. January to March in line with the notified mechanism in this regard.
As per the documents submitted with NEPRA, all the Discos have sought cumulative negative adjustment in capacity charges to the tune of Rs 9.362 billion, followed by Rs 256 million negative adjustment in variable O&M and Rs 8.497 billion negative adjustment on account of additional recovery on incremental sale.
However, Discos sought positive adjustment of Rs 14.524 billion on account of UoSC and Market Operator fee and Rs 14.137 billion as impact of T&D losses on monthly FCA. The main reason for the huge positive impact of QTA in third quarter of current fiscal year is capacity payments of K-2, K-3 and 660 KV HVDC transmission line.
During discussion, the representative of CPPA-G requested the Authority to also allow positive adjustment of about Rs 4 billion pending as winter package given by the federal government. The Authority, however, did not allow it until the amount is verified by the Tariff Section of Nepra.
The representative of CPPA-G, Naveed Ahmed stated that total recovery on billed amount is 80-85 percent and the rest goes to circular debt.
Chairman Nepra noted that the government has to make payments to the IPPs and pointed out that the worth of the rupee is now half the value of the dollar and there is an obligation with respect to IPPs and payments are to be made in dollars. Previously, dollar rate was Rs 60, 80 or 100, is now not available even at Rs 205.
During the hearing, the Authority raised different questions with the officials of Discos with respect to their claims.
Chairman Nepra acknowledged that the amount of Discos’ receivables is about Rs 600 to Rs 650 billion. Nepra has slashed target of losses from 13.5 percent to 11.5 percent. He said rebasing of Rs 7.91 per unit is also included in new capacity in addition to cost of imported fuel.
“Discos have three ATMs i.e. consumers, subsidy and circular debt where inefficiencies are parked,” he said, adding that Nepra advocated at all levels that the only solution to Discos is privatisation, so why should the government bear the brunt of Discos inefficiencies.
In reply to a question, Chairman Nepra said there were no Key Performance Indicators (KPIs) in Nepra Act to judge the performance of members who are representatives of provinces. However, Nepra members play their role in resolution of issues at provincial level.
Chairman Nepra also joked about a recent statement of Finance Minister Miftah Ismail, where he stated that “your (public’s) bad luck would start soon” pointing out that when price of electricity is showing an upward trend, Nepra is allowing industries who use more than 1 MW of electricity to buy and sell electricity from cheapest plants under the CTBCM mechanism (wholesale market of electricity), launched on May 31, 2022.
Finance Minister had also criticized Nepra for issuing determinations of increase in Discos tariffs by Rs 7.91 per unit through rebasing which, he claimed, was determined last year but has been announced now.
Copyright Business Recorder, 2022