Domestic consumers using over 700 units: Nepra to allow levy of Rs1.25/unit surcharge

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has agreed in principle to allow federal government to impose a surcharge of up to Rs 1.25 per unit on domestic consumers using over 700 units and other categories of commercial and industrial consumers aimed at cross subsidizing other domestic consumers as "special arrangement in special circumstances."

This understanding was reached between the federal government and Nepra so that an amount of Rs 700 million may be raised through quarterly tariff adjustments.

The Federal Government recently promulgated an Ordinance, seeking powers to impose surcharges on power consumers as per agreement with the International Monetary Fund (IMF) and World Bank.

On Monday when hearing began on the Federal Government's reconsideration request, Nepra Chief Tauseef. H. Farooqi stated that during his recent meeting with the IMF the Fund's team clearly stated that the regulator has no powers to hear any such request of the federal government. But when he started agreeing with the viewpoint of CPPA-G, an unpleasant situation was witnessed at the hearing hall.

Chairman Nepra and Member Sindh, Rafique Ahmad Shaikh were seen disagreeing with each other on prospects of applicability of force majeure clause by the IPPs, if the regulator accepts government's request due to Covid-19 situation.

The Nepra had determined quarterly adjustments of Rs 1.72 per unit for Q4 of FY 2019-20 and Q1& Q2 of FY 2020-21 for all categories of consumers except lifeline consumers. Currently, applicable quarterly adjustment is Rs 1.65 per unit for domestic consumers, however, for temporary supply, the rate is Rs 2.89 per unit and for peak load requirement less than 5 kW is Rs 1.09 per unit.

Power Division, in its tariff review request stated 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. Furthermore, 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. Opposing observations made in the determinations with respect to the power of the Federal Government to impose surcharges is, accordingly, required to be reconsidered.

The review request further states that the Federal Government has, keeping in view the socio-economic conditions of the country as well as the prevalent policies, has decided that the previous tariff rationalization methodology be adopted and, accordingly, surcharge is to be levied on categories of consumer(s) specified therein, for the purposes of fulfilling the financial obligations of the Federal Government in respect of the electric power services, which shall be within the revenue requirement determined by the Authority.

During the hearing, Acting CEO CPPA-G Waseem Mukhtar stated that the government wants to replace the existing quarterly adjustment of Rs 1.72 per unit being collected from consumers with Rs 1.65 per unit of September 2021, to be charged in bills of October 2021, the financial impact of which will remain the same for domestic consumers using less than 700 units. However, domestic consumers who used over 700 units during the Q4 of FY 2019-20 and Q1& Q2 of FY 2020-21 will have to pay Paisa 7 per unit.

Other categories of consumers, who are paying Rs 2.89 per unit as quarterly tariff adjustments, will have to pay Rs 2.97 per unit from October 1, 2021 after imposition of surcharge of Rs 1.25 per unit – an increase of Paisa 8 per unit but for those consumers who have peak load requirement less than 5 kW they will pay additional Paisa 11 per unit. Wrapping up the hearing held on Federal Government's review request, Chairman Nepra clarified that the rate for domestic consumers' who use up to 700 units will remain unchanged from October 1, 2021 whereas those consumed during Q4 of FY 2019-20 and Q1& Q2 of FY 2020-21 have to pay an extra Paisa 7 per unit. Other categories of consumers who are paying Rs 2.89 per unit as quarterly adjustment will have to be charged Rs 2.97 per unit from October 1, 2021.

Copyright Business Recorder, 2021