ISLAMABAD: The Federal government is likely to commence rebasing of electricity tariffs from January 1 each year instead of July 1, aimed at shifting financial shocks on consumers in winter when consumption and bills are lower than in the summer months, well informed sources in Finance Ministry told Business Recorder.
Finance Ministry, has conveyed no objection to the proposal of Power Division on the understanding that it has no financial/ subsidy implications.
However, Finance Division has proposed to the Power Division to consider discussing the proposal with the development partners; i.e., International Monetary Fund (IMF), World Bank and Asian Development Bank (ADB), as part of reform initiatives, before its submission to the ECC, the sources added.
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National Electric Power Regulatory Authority (Nepra) determines the consumer-end tariff for the Distribution Companies (Discos) and K-Electric as per Section 31 of the Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Act, 2021 read with Rule 17 of the Nepra (Tariff Standards and Procedure) Rules, 1998. The latest uniform tariff was duly notified by the Federal Government vide SRO No. 1039(I)/2024 on July 14, 2024.
In accordance with the Nepra (Tariff Standards and Procedure) Rules, 1998 read with Part 5 of the NEPRA Determination of Consumer-end Tariff (Methodology & Process) Guidelines, 2015, Discos are required to initiate the tariff determination process by submitting their minimum filing requirements by January 31 of each year.
The submission is followed by Authority’s internal meetings, public hearing, tariff determination and notification by the Government. Keeping in view the recent annual tariff determinations, the rebasing has been notified by the Government in the month of July each year with effect from 1st of July.
However, it is an unfortunate coincidence that consumers faced high Fuel Charges Adjustments (FCAs) as well as the annual tariff rebasing simultaneously in the summer months, the sources quoted Power Division is admitting in their proposal.
The Power Division has also acknowledged that this increase in tariff coupled with higher consumption leads to significant hike in the consumer electricity bills in the summer months which, in turn, results in public dissatisfaction and nation-wide protests in the country.
Power Division is of the view that the issue can be streamlined if the timing of annual rebasistable and sustainable electricity prices throughout the year.
The National Electricity Plan Strategic Directive 8 stipulates that the Regulator shall also revisit the “Guidelines for Determination of Consumer End Tariff (Methodology and Process), 2015” to enable alignment of schedule of regulatory proceedings for planning activities and rate and tariff determinations.
After explaining the background of the proposal, Power Division has sought approval from the Economic Coordination Committee (ECC) of the Cabinet on the following: (i) Policy guidelines may be issued to Nepra to revise the annual tariff determination process timelines by amending the relevant legal and regulatory framework in a way that the rebasing is notified with effect from January 1 each year, after completion of all regulatory proceedings ;and (ii) Power Division may be authorized to approach Nepra, for implementation of these Policy Guidelines.
Copyright Business Recorder, 2024