Fuel cost adjustment of Rs3.5 more per unit to further inflate bills

ISLAMABAD: The Cen­tral Power Purchasing Agency (CPPA) on Mon­day sought a massive Rs3.55 per unit as fuel cost adjustment (FCA) for ex-Wapda distribution comp­anies (Discos) to raise another Rs33bn from consumers in Dece­mber, des­pite a healthy 76 per cent ele­ctricity generation from cheaper domestic fuels.

This comes on top of about 26pc increase in the annual base tariff and around 18pc hike under the currently implemented quarterly tariff adjustment (QTA).

This means that consumers would benefit little from low consumption in December, as they would be charged such a big FCA amount on the relatively higher number of units consumed in October. This is mainly due to the CPPA claiming over Rs28bn for some past adjustments, resulting in an additional cost of Rs2.95 per unit, instead of just 59 paise for the generation cost in October.

In a petition filed before the National Electric Po­wer Regulatory Autho­rity (Nepra), the CPPA acting as commercial agent of the Discos demanded an additional FCA of Rs3.54 per unit in billing month of December for electricity consumed in October. Nepra has accepted the petition and scheduled public hearings on November 29.

The increase in FCA is despite the fact that base average tariff has risen by about Rs7.5 per unit since July 1. The additional cost is notable even as the country’s cheaper domestic fuels produced about 76pc of the overall power supply in September.

Hydropower’s contribution to the national grid decreased to 32.54pc in October from 37.6pc in August and September. LNG-based power generation increased to 20.25pc, securing the second position, up from 16pc in September. Nuclear power’s contribution fell to 19pc in October, ranking third.

Local coal-based generation was about 14pc in October, up from 11.08pc in September. The total share of coal-based power generation increased to 17.5pc in October from 16pc in September. Power supply from domestic gas declined to 7.35pc in October from 7.54pc in September.

LNG-based power generation cost slightly decreased to Rs23.7 per unit in October from Rs24.2 in September. The cost of power generation from domestic gas slightly increased to Rs13.6 per unit in October, slightly higher than Rs13.52 per unit in September.

The cost of local coal-based generation increased by 58pc to Rs12 per unit in October from Rs7.6 per unit in September. The cost of imported coal-based generation decreased to Rs13.3 per unit in October from Rs15.79 in September and Rs20 per unit in August.

Renewable energy sources contributed about 3.1pc in October, down from a 3.9pc in September. Wind and solar have no fuel cost, while bagasse-based generation cost remained unchanged at about Rs6 per unit.

The CPPA, on behalf of Discos, claimed consumers were charged a reference fuel cost of Rs7.89 per unit in October, but the actual cost was Rs8.4 per unit.

With past claims of Rs28.3bn (Rs2.96 per unit), the total fuel cost was claimed at Rs11.43 per unit, requiring an additional charge of Rs3.54 per unit.

Upon Nepra’s approval, the increased FCAs would be adjusted in consumers’ bills in the upcoming billing month of October.

Published in Dawn, November 21st, 2023