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ISLAMABAD: The regulator of the power sector on Wednesday sought a detailed report from the power distribution companies (Discos) regarding improvement in their performance within 15 days after they sought permission to collect an additional Rs29.8 billion fuel charges adjustment in the next month.

A public hearing was held on the petition filed by ex-WAPDA Discos at the National Electric Power Regulatory Authority (Nepra), regarding the month of July fuel charges adjustment, and CPPAG submitted a request for increase of Rs2.07 per unit under the FCA. The FCA was requested to be collected in the billing month of September for electricity consumed in July with a financial impact of Rs22.8 billion.

However, the authority was informed that subsequent to the technical audit of some Discos, the total impact is being lessened by Rs7 billion to around Rs23 billion. The regulator told the CPPA as there was a violation of 121 merit orders; therefore, the prudent cost would be allowed.

The regulator also sought data from the Discos. The authority reserved its judgement on the petition filed by the Discos on FCA after the hearing.

During the hearing, the authority also inquired why coal-fired power production cost has been high despite falling coal prices and directed the CPPAG to submit a performance report on coal-fired power plants.

The authority remarked that over the years, expensive power plants are being run due to the low efficiency of some grids and wanted to know why the capacity of some grids was not being improved or enhanced.

The Nepra has asked the NTDC to submit a report in this regard and efforts should be made to prevent power theft and reduce line losses. The authority has sought a report from the Discos regarding improvement in performance within 15 days and stated that it would hold a hearing after three weeks to assess the performance of the Discos.

The authority said today it only heard the stakeholders, did not take any decision, adding that it will issue its detailed decision after further scrutiny of the data.

The increase in FCA is despite the fact that the base average tariff has gone up by more than Rs7.5 per unit last month. The additional cost is also despite the fact that the country’s hydropower plants made the healthiest contribution of over 37pc to the overall national power grid in July against 26.96pc in June. Hydropower has no fuel cost.

The CPPA claimed on behalf of Discos that the consumers were charged a reference fuel cost of Rs6.89 per unit in July, but the actual cost turned out to be Rs8.96 per unit; hence an additional charge of Rs2.07 per unit should be allowed.

Pursuant to Section 31(7) of the Nepra Act (XL of 1997) and the mechanism for monthly fuel price adjustment prescribed by the authority in the tariff determinations of ex-WAPDA Distribution Companies, the authority may on a monthly basis make adjustments in the approved tariff on account of any variations in the fuel charges and policy guidelines as the federal government may issue and notify the tariff so adjusted in the official Gazette.

Under the tariff mechanism, changes in fuel cost are passed on to consumers only on a monthly basis through an automatic mechanism while quarterly tariff adjustments on account of variation in power purchase price, capacity charges, variable operation and maintenance costs, use of system charges and including impact of transmission and distribution losses are built in the base tariff by the federal government.

Copyright Business Recorder, 2023


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