The National Electric Power Regulatory Authority (Nepra) has green-lighted an increase in power tariff of Rs1.65 per unit. It will allow the distribution companies to collect Rs173 billion from consumers in the coming year.
The electricity consumers were hoping for some relief at the expiry of early adjustments of Rs1.62 per unit on September 30, 2021, but, Nepra announced the transfer of new adjustments of Rs1.65 per unit to the consumers with effect from October 1, 2021.
Nepra spokesperson said that the regulator has permitted the power distribution companies to raise the power tariff by Rs0.8276 per unit for the fourth quarter of the fiscal year 2019-20, followed by Rs0.8966 for the first and second quarters of FY2020-21.
The official explained that the regulator had decreased the power tariff by Rs0.0673 per unit for the third quarter ofFY2020-21. The overall impact of the new adjustments is Rs1.65 per unit leading to the consumers paying Rs173 billion in power tariffs in one year.
Under this tariff mechanism, any changes in fuel costs are transferred to consumers on a monthly basis via an automatic mechanism.
The government adds the variation in the power purchase price, capacity charges, variable operation and maintenance costs, use of system charges, and impact of transmission and distribution losses within the base tariff on the basis of Nepra’s determination.
“The authority determined quarterly adjustments of XWDISCOs for the fourth quarter of FY2019-20 vide decision dated February 10, 2021, with a uniform rate of Rs0.8276/kWh, and the same was intimated to the federal government for notification in the official gazette. Subsequently, the authority determined quarterly adjustments for the first and second quarters of FY2020-21 vide decision dated May 6, 2021, with a uniform rate of Rs0.8966 per unit.”
It must be noted that the authority had determined quarterly adjustments of XWDISCOs for the second and third quarters of FY2019-20 with a uniform rate of Rs1.6236 per unit while making the decision. The federal government notified the said periodic adjustments to remain effective till September 2021.
The federal government filed a reconsideration request (the Request) dated May 21, 2021, against the decisions of the authority (February 10, 2021 and May 6, 20201) under the Regulation of Generation, Transmission, and Distribution of Electric Power (Amendment) Ordinance, 2021.
In the request, the government submitted that National Power Policy, 2013 developed by it and approved by the Council of Common Interests on July 31, 2013, is in vogue and, inter alia, stipulates that the low-end consumers will be protected from any price escalation and tariff rationalization will be done. Furthermore, the federal government submitted that in terms of the provisions of the act, as amended through Regulation of Generation, Transmission, and Distribution of Electric Power (Amendment) Ordinance, 2021, periodic quarterly adjustments are to be made by the authority, inter alia, in line with policy guidelines of the federal government.
As per the provision of recently added Section 31(8) of the Nepra Act, the federal government has been empowered to impose surcharges for the purposes stipulated therein. Contrary observations made in the determination with respect to the power of the federal government to impose surcharges are, accordingly, required to be reconsidered.
In view of the above discussions, considering the submissions made by the MoE in its request and during the hearing and keeping in view the interest of consumers, the authority accepts the request of the federal government that the effectiveness of the recommended periodic adjustments for the first and second quarters of FY2020-21, be made effective from October 2021 (after the lapse of the existing quarterly adjustments — September 30, 2021). Accordingly, the quarterly adjustments for the first and second quarters of FY2020-21, determined by the authority vide decision dated May 6, 2021, would be applicable from October 1, 2021, and would remain applicable till September 30, 2022.
Regarding quarterly adjustment for the fourth quarter of FY2019-20, the authority believes that since it will be interest of the consumers, therefore, the authority has no objection if the federal government desires to make it effective from October 2021.
It is critical to mention that the deferment of quarterly adjustments to be made applicable from October 1, 2020, is purely being done on the request of the federal government, thus, any financial impact arising on account of the delayed application of the determined quarterly adjustments, would not be allowed to be passed on to the consumers and would be borne by the federal government itself.
However, Nepra in a statement said that earlier quarterly adjustments of Rs1.62 per unit expired on September 30, 2021, and are replaced by Rs1.65 per unit. Hence, the net increase is three paisas per unit, Nepra insisted.