Nepra finalises Rs2/unit hike for Discos3 min read

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ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Monday determined about Rs200 billion worth of additional electricity costs for ex-Wapda distribution companies (Discos), necessitating at least Rs2 per unit increase in consumer tariff.

On the completion of determination process of all 10 Discos, the average determined tariff has increased to Rs15.45 per unit from existing rate of Rs11.50 per unit.

The regulator released determinations for six Discos from Quetta, Gujranwala, Multan, Sukkur, Hyderabad and Peshawar on Monday with a combined additional financial impact of Rs90bn. On same account, the regulator had issued early this month the determinations of four Discos from Islamabad (Iesco), Lahore (Lesco) and Faisalabad (Fesco) as part of multi-year tariff (MYT) and Tribal Electric Supply Company as yearly tariff adjustments.

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An official explained that the combined impact of all previous outstanding issues that were pending in courts or at various levels of settlement or late notifications on account of prior year adjustments (PYA), capacity payments, net hydel profit and additional power purchases was worked out at Rs200bn. The previous backlog is cleared now, he said.

He said the overall impact of Net Hydel Profit (NHP) to Punjab and Khyber Pakhtunkhwa as part of various decisions of the Council of Common Interests (CCI) for fiscal year 2017-18 was worked out at Rs250bn but about Rs70bn of that amount was already part of the tariff being paid by the consumers.

The regulator has now forwarded fresh schedule of tariff showing additional tariff requirement for each consumer category for all Discos separately. After adjusting for tariff differential subsidy in the budget, the fresh tariff increase for consumers was estimated at Rs2 per unit.

Also Read: Discos blamed for piling of circular debt

Last week (Sept 7), Nepra had concluded the process of public hearing on quarterly adjustments for prior year power purchase prices (PPP) for fiscal year 2017-18 when it heard requests of six distribution companies for quarterly adjustments.

Prime Minister Imran Khan had already given a go ahead for notification of base tariff for Discos for year 2015-16 on the basis of a briefing to him by the Power Division and regulator with an impact of about Rs2 per unit or Rs200bn on existing power rates.

The regulator had worked out PYA for fiscal year 2015-16 that were notified by the federal government on March 22, 2018. The notified determinations provide mechanism for quarterly adjustments on account of Power Purchase Price.

The Discos had sought PYA against capacity payments, operations and maintenance (O&M), use of system charges and transmission and distribution (T&D) losses other than fuel component.

Officials said the Nepra-determined tariff for fiscal year 2014-15 and 2015-16 could not be notified by the Power Division despite lapse of almost four years. The division and power companies had filed a request for review with higher allowances for theft and losses which was rejected by the regulator. The government challenged the decision in the court which remanded the case back to the regulator to resolve the matter.

The regulator delivered its determination in October last year as desired by the Power Division, but a final tariff could not be notified as then government shied away from taking a political decision so close to elections that it had been insisting for over three years through amendments in Nepra ordinance.

During a recent presentation by the Power Division, the ECC was given a rundown on the impact of industrial support package, Azad Jammu and Kashmir subsidised units, Balochistan agricultural tubewells and Fata receivables, as well as the impact of the existing time lag on tariff determination mechanism of Nepra. The ECC decided that there was no reason to keep sitting on tariff determination and more so when it was providing relief in cash flows to the power sector marred by circular debt.

In the process, all Discos including Iesco, Lesco and Fesco that were in profit until two years ago suffered financial losses and were placed in the privatisation list through capital market listings. However, later these were withdrawn from the sell-off list because of their negative balance sheets.

(This news/article originally appeared in DAWN on September 11th, 2018)

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