ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has allowed Discos to increase tariff by paisa 84 per unit for July 2020 on provisional basis under monthly fuel component adjustment (FCA), sans lifeline and KE consumers.
The Authority conducted the hearing on the matter on September 1, 2020, which was attended by the officials of CPPA-G, NPCC and NTDC. The increase will be applicable after the Power Division issues a formal notification. The Cabinet, in its recent meeting decided not to implement the previous decision of Nepra for the time being that recommended an increase in power tariff by Rs 1.62 per unit, except those consumers who use up to 200 units per month.
Nepra's Member (Sindh), Rafique Ahmad Shaikh, in his dissenting note stated that he did not support passing on the impact of costlier electricity purchased from power plants operated in violation of Economic Merit Order (EMO).
The regulator, with the explicit mandate to safeguard consumer interests, did not mention any arguments put forth by General Manager, National Power Control Centre (NPCC) Muhammad Ayub in its determination. Ayub had challenged the working of Nepra's technical team and provided a justification for running plants based on FRO and HSD which angered the Authority and resultantly he faced a tough time.
CPPA-G, in its generation data, claimed an amount of Rs 568 million on account of previous adjustments and supplemental charges of Rs 370.49 million during the month of July 2020. Regarding adjustment of Rs 241.89 million, Rs 157.85 million and Rs 168.70 million for QTPL, Haveli Bahadur Shah and Balloki respectively, CPPA-G provided its working in this regard.
After scrutinizing the provided information/data, the Authority observed that the cost already allowed to these plants has not been correctly accounted for by CPPA-G in its working. By taking into account the costs already allowed by the Authority for these plants, the adjustment worked out at Rs 165.73 million, Rs 143.35 million and Rs 155.72 million for QATPL, Haveli Bahadur Shah and Balloki respectively.
For the remaining previous adjustments and supplemental charges, the amounts claimed by CPPA-G have been considered while working out the FCA of July 2020 therefore for the purpose of FCA for July 2020 an amount Rs 835.29 million was considered.
As per the data submitted by CPPA-G, Discos purchased 13.067 GWh from Captive Power Plants (CPPs) during July 2020, for which CPPA-G provided actual details of energy purchased from these plants.
According to the details provided by CPPA-G, the actual fuel cost of energy was Rs 197.47 million. However, as per the adjustment mechanism approved by the Authority for CPPs/NPPs, the amount worked out at Rs 197.42 million, which was considered while working out the FCA of July 2020.
The Authority during the hearing also observed that, prima facie, certain efficient power plants were not fully utilized and instead energy from costlier RFO and HSD based power plants was generated to the tune of over Rs 14.043 billion (Rs 11.953 billion from RFO and Rs 2.09 billion from HSD based power plants for July 2020). The Authority noted that had this energy been generated from sources like RLNG or coal, this would have resulted in reduction in total fuel cost claimed by CPPA-G.
In view thereof, the cost of furnace oil and HSD claimed by CPPA-G in the monthly FCA was allowed only on provisional basis, subject to its verification by the Authority. Accordingly, both CPPA & NPCC directed to provide complete justification in this regard, to the satisfaction of the Authority and submit complete details for generation made on RFO/HSD, showing hourly generation along-with the financial impact for deviation from Economic Merit Order (EMO, if any, along with reasons.
The Authority after incorporating the presumed adjustments, has allowed the fuel cost, including cost arising due to application of various factors as provided in the respective PPAs of the power producers and claimed by CPPA-G in its monthly FCAs.
However, the amount arising out of application of the PPA factors, for the six RFO based IPPs, incorporated under 2002 Power Policy, is being allowed on provisional basis and would be subject to adjustment, based on the final outcome of the ongoing suo moto proceedings against the RFO based lPPs.
The Authority, after incorporating the adjustments, has reviewed and assessed an increase of Rs 0.8376 per unit in the applicable tariffs of Discos on account of variations in the fuel charges for July 2020 as the actual fuel charges component for July 2020 was Rs 4.3796/kWh against corresponding reference fuel charges component of Rs 3.5420/kWh.
NTDCL reported T&T losses of 381.09 GWh i.e. 2.65% based on energy delivered on NTDCL system during July 2020, however, this has been verified at 2.6283%. Nepra further stated that units sold to Discos as reported by CPPA-G, are higher compared to units sold to Discos worked out on the basis of 'T&T' losses verified for NTDCL, and the FCA has been worked out based on the units sold to Discos as reported by CPPA-G.
Member Sindh, Rafique Ahmad Shaikh has written a dissenting note on the FCA determination of the Authority.
In his note, he said that non-utilization of efficient power plants to their full capacity and operating the costlier power plants is serious, and causing huge financial losses, which has been confirmed by the M & E department in an additional note.
Keeping in view, NPCC & CPPA-G were directed as follows: (i) any out of merit power plant dispatch by NPCC shall be notified to CPPA-G, with a copy to Nepra immediately; (ii) CPPA-G being procurer of power on behalf of Discos shall thoroughly scrutinize the generation data to be sent with monthly FSA and furnish a certificate that power plants were operated strictly following the merit order. In case, any power plant is operated with disregard to the merit order CPPA-G would quantify and verify the commercial impact on the customers and submit it to Nepra.
Member Sindh further stated that direction given to NPCC and CPPA-G is not being followed. He maintained that under the impact of losses (on account of operation of costlier power plants in violation of EMO) is being passed on to consumers provisionally, but he did not agree with the decision due to: (i) CPPA-G /NPCC has not complied with the direction given in Nov, 2019; (ii) CPPA-G has neither furnished the requisite certificate nor submitted the commercial impact of operation of power plants in violation of EMO; and (iii) the information submitted in August 2020 should have been verified within the month.
"I am of the considered opinion that consumers shouldn't be burdened on non-performing of duties of the entities," he concluded.
Copyright Business Recorder, 2020