ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has increased tariffs of power Distribution Companies (Discos) by 7.90 per unit for May 2022 to recover over Rs 113 billion from consumers under monthly Fuel Charges Adjustment (FCA) mechanism.
The Central Power Purchasing Agency-Guaranteed (CPPA-G) had sought positive adjustment of Rs 7.96 per unit for May owing to expensive generation in the month of May 2022. The determined positive adjustment of Rs 7.9040 per unit will be recovered in the bills of July 2022.
Nepra conducted a public hearing on June 27, 2022 to quiz officials of CPPA-G, NTDC, and NPCC about the reasons for the massive increase in FCA and other relevant issues.
According to determination of Nepra from perusal of the information provided by CPPA-G, the actual pool fuel cost for the month of May 2022 was Rs 13.8969/kWh, against the reference fuel cost component of Rs.5.9322/kWh against notified consumer-end tariff of Discos for the FY 2019-20. The actual fuel charges, as reported by CPPA-G, for the month of May 2022 increased by Rs.7.9647/kWh as compared to the reference fuel charges.
During the hearing, the Authority also observed that energy from costlier RFO and HSD based power plants was generated to the tune of over Rs.43.452 billion and Rs.857 million, respectively, during the month of May 2022. The Authority has been directing NPCC/NTDC & CPPA-G repeatedly to provide complete justification in this regard to the satisfaction of the Authority and submit complete details for deviation from Economic Merit Order (EMO), showing hourly generation along-with the financial impact for deviation from EMO, if any, along with reasons.
May FCA: Discos get Rs7.90/unit tariff hike
The Authority observed that the required data/ information was submitted by CPPA-G along-with the monthly FCA data of May 2022; however, it was not as per the requirements of the Authority. Accordingly, CPPA-G was directed to submit that the report as per the desired format for consideration of the Authority.
The officials of NPCC/ NTDC during the hearing, explained operation of power plants on RFO; however, the Authority observed that an in-house analysis has also been carried out to work out the financial impact due to deviation from EMO based on the information submitted by NPCC.
As per the in-house analysis/ workings carried out by Nepra, the net amount deductible, on provisional basis, from the overall claim due to deviation from EMO is Rs. 796 million (Rs. 794.61 million financial impact due to system constraints and Rs. 1.4 million due to underutilization of efficient power plants).
The Authority has decided to deduct this amount provisionally in the instant FCA, until NPCC/ NTDC and CPPA-G provide the required details along with complete justification in this regard to the satisfaction of the Authority. The Authority also observed that CPPA-G has purchased energy of 54.525 Gwh from Tavanir Iran in May 2022 at a cost of Rs l.034 billion; however, contract between CPPA-G and Tavanir Iran for import of power up to 104 MW expired on December 31, 2021. In view thereof, the cost of electricity purchased from Tavanir Iran is being allowed strictly on provisional basis, subject to its adjustment once the Authority decides the extension in the contract between CPPA-G and Tavanir Iran or otherwise. The cost being allowed on provisional basis is to avoid piling up of the cost and one time burdening of the consumers in future.
The Authority noted that as per Nepra (Alternative and Renewable Energy) Distributed Generation and Net Metering Regulations, 2015, the price payable by a Distribution Company for net kWh shall be the national average power purchase price (NAPP) of the Distribution Company as determined by the Authority and notified by the Federal Government. The currently notified NAPP is Rs. 12.95/kWh.
The Authority considering the exorbitant increase in the monthly energy purchase price, directed CPPA-G to provide details of net metering units purchased by all Discos along with its subsequent monthly FCA request.
Member Sindh, Rafique Ahmad Shaikh, in his additional note has highlighted the consistent non-compliance of CPPA- G, which according to him is serious in order to fix the governance issues of power sector.
He said, CPPA- G is also working as an agent of Discos; this function of CPPA- G requires economic procurement of electricity from the power plants. The direction of the Authority was to ensure the operation of power plants in economic merit order. However, CPPA-G is in consistent failure to the above direction of the Authority. This non-compliance is a major impediment in identifying the weak links and fixing of the same. In view of the non-compliance, the Authority, through third party, has initiated a comprehensive assessment of the system operator for the past three years while the process to carry out the audit of CPPA- G is in process. CPPA-G is required to start compliance of the Authority decision - failure of CPPA-G shall be considered as a deliberate attempt of no cooperation to fix the power sector issues.
He maintained that the Fuel Price Adjustment (FPA) is for the month of May 2022 and its impact is around Rs. 113 billion, i.e., the amount to be recovered by Discos. Under 1aw this adjustment should have been done within first 7 days of June 2022 for its recovery in the month of June. In terms of time value and money, he queried as to how and to whom this delay will affect? The delay in processing of this adjustment ultimately affects the electricity consumers or the taxpayers. Therefore, CPPA- G must look into its process to ensure adjustment of the fuel price, negative or positive, to be passed-on to the consumers within stipulated time.
Copyright Business Recorder, 2022
Comments
Comments are closed.