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ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Tuesday approved in principle a refund of Rs 3.6 billion to the consumers under monthly Fuel Cost Adjustment (FCA) mechanism, overcharged by Discos in May 2021, amid reports of massive loadshedding across the country due to fuel supply issues and gas shedding.

The refund figure was finalised at a public hearing presided over by Chairman Nepra, Tauseef H Farooqi flanked with members of the Authority.

Central Power Purchasing Agency Guaranteed (CPPA-G), in its request had sought approval to refund Rs 1.5 billion at the rate of Paisa 12.5 per unit. However, Nepra's team has calculated FCA refund at Rs 28.66 per unit on the basis of deductions made for violating economic merit order and using expensive fuels.

This benefit will not be provided to lifeline consumers, agriculture consumers and those domestic consumers who use upto 300 units in a month.

During the hearing, on a question about fuel supply to the power sector including LNG shortage from June 29 to July 5, 2021, Chairman Nepra said that Nepra had not been taken on board on the fuel issue.

"The issue of dry docking of LNG vessel came under discussion at the meeting of CCoE but power regulator has not been taken into confidence. We will make efforts to minimise the load shedding during this period," said Chairman Nepra.

Like previous hearings, a heated debate was witnessed between Nepra Authority and "junior" officials of National Power Control Centre (NPCC), an arm of National Transmission and Despatch Company (NTDC) on violation of Economic Merit Order (EMO) and system constraints, which make electricity expensive for the consumers.

Nepra argued that NTDC had not made the requisite effort to improve its transmission system at some locations due to which consumers are financially overburdened. On the other hand, NPCC claims that it has upgraded its system which is now able to transport 25000 MW of electricity from 14,000 MW and is moving ahead with new plans and investments.

Nepra's technical team calculated financial impact of violations in EMO at Rs 864.98 million, of which Rs 510 million was related to LNG shortage. It was noted that average RLNG allocated to the power sector was 660 MMCFD against a firm demand of 800 MMCFD.

The financial impact of system constraints was Rs 200.57 million and Rs 153.72 million due to underutilization of efficient plants.

After discussion, Nepra decided to allow Rs 510.69 million to NPCC as gas companies supply 140 MMCFD less RLNG against the firm demand but disallowed Rs 354 million related to constraints and underutilization of efficient plants. The per unit impact of Rs 354.29 million has been calculated at Paisa 2.78 per unit.

The officials of NPCC argued that they were making all out efforts to operate the system as per the agreements but in some instances deviation from merit order became a compulsion, which was not in their control. They opposed deduction in the name of system constraints and deviation from merit order.

Chief Financial Officer (CFO), CPPA-G proposed that Nepra should seek a system improvement plan from NPCC instead of deductions so that constraints are removed.

According to the data submitted to Nepra, hydel generation was recorded at 3465.58 GWh which constituted 26.64 percent of total generation in May; power generation from coal-fired power plants was 2,618.97 GWh (20.13 percent of total generation) at a rate of Rs 7.83 per unit, whereas generation from HSD was recorded at 20.32 GWh at Rs 21.69 per unit. Generation from RFO was 771.5 GWh (5.93 percent of total generation) at Rs 14.34 per unit; electricity generation from gas-based power plants was 1,454.39 GWh (11.18 percent) at Rs 7.8506 per unit, RLNG 2,828.55 GWh (21.74 percent of total generation) at Rs 10 per unit, nuclear 1271.35 GWh at Rs 1.1388 per unit (9.77 percent of total generation), and electricity imported from Iran was 47.39 GWh at Rs 11.41276 per unit. Power generation from different sources (mixed) was 16.39 GWh at a price of Rs 4.6467 per unit, generation from baggasse recorded at 45.45 GWh at Rs 5.9822 per unit.

The energy generated from wind was recorded at 403.21 GWh, 3.10 percent of total generation and solar at 66.54 GWh, 0.51 percent of total generation in May 2021.

The total energy generated recorded at 13,009.51 GWh, at a basket price of Rs 5.7009 per unit. The total cost of energy was Rs 74.166 billion. CPPA-G also sought a reduction of Rs 23 million in supplemental charges. The sale to IPPs was also reduced by 19.28 GWh, the price of which was Rs 523 million while the reduction in transmission losses was recorded at 311.73 GWh.

According to the CPPA-G data, net electricity delivered to Discos in May 2021 was 12,678.50 GWh at a rate of Rs 5.8067 per unit, total price of which was Rs 73.620 billion.

CPPA-G in its tariff petition said that since the reference fuel charges for May 2021 were estimated at Rs 5.9322 per unit whereas the actual fuel charges were Rs 5.8067 per unit, hence a reduction of Paisa 12.55 per unit has been sought for the month May 2021.

According to Nepra team, actual fuel component in May 2021 was Rs 5.6734 per unit against reference fuel charge component of Rs 5.9322 per unit, which was Paisa 25.88 per unit. However, after clubbing financial impact of Rs 354.29 million (Paisa 2.78 per unit) owing to deviation from merit order, the total decrease in FCA has been calculated at Rs 3.6 billion or Paisa 28.66 per unit.

During the hearing, it was noted that overall negative impact of Quarterly Tariff Adjustment (QTA) has been calculated at Rs 7.180 billion in the third quarter of 2020-21. The yearly financial impact of QTA is Paisa 7 per unit and if divided on the quarter, it will be Paisa 28 per unit.

However, Chairman Nepra clarified that it was the prerogative of government to pass it on to consumers or not.

Questions were raised on capacity purchase price claims of Islamabad Electric Supply Company (Iesco) and Peshawar Electric Supply Company (Pesco) which were over Rs 4.5 billion.

The Authority was informed that the reason for higher capacity price claims was higher demand from both Discos against their earlier estimates.

Before wrapping up the hearing, Nepra official stated that a difference of coincidental cost of Rs 1.977 billion has to be given to KE against supply of electricity from wind farms. Nepra has already approved the KE's request.

An official of CPPA-G stated that CPPA-G's calculation of QTA for third quarter is Rs 10.8 billion against Rs 7.180 billion because re-appropriation of 12 days of February 2021 has not been included in the request. After including the implication of 12 days of February, the net impact will be Rs 8.8 billion.

Copyright Business Recorder, 2021

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