Nepra has announced an increase in the tariff for Distribution Companies (Discos) by Rs4.92 per unit for the month of February 2024.
In a recent development, the National Electric Power Regulatory Authority (Nepra) has announced an increase in the tariff for Distribution Companies (Discos) by Rs4.92 per unit for the month of February 2024.
This decision came as part of the monthly Fuel Charges Adjustment (FCA) mechanism, following a hearing conducted by the authority on March 28, 2024. The session was officiated by the entire authority, presided over by the chairman, Waseem Mukhtar.
During the hearing, the authority meticulously reviewed the request and information presented by the Central Power Purchasing Agency-Guarantee (CPPA-G), which sought adjustments in the monthly fuel costs. Upon careful examination, it was found that the actual pool fuel cost for February 2024, as claimed by CPPA-G, stood at Rs9.4254/kWh, compared to the reference fuel cost component of Rs4.4337/kWh.
A staggering figure of Rs2.765 trillion tariff adjustment was sought by 10 Discos, reflecting the magnitude of the financial impact. Nepra expressed deep concern over the continuous decline in demand, which had dropped by approximately 12 percent by February 2024, in contrast to the reference projections assumed in tariff calculations. This decline in sales is anticipated to result in higher quarterly adjustments, subsequently leading to a further escalation in the tariff rates.
Addressing these concerns, Nepra directed the CPPA-G and the Ministry of Energy (MoE) to conduct a comprehensive analysis of the implications of lifting commercial-based load-shedding on the demand side. They were instructed to formulate a well-considered proposal aimed at enhancing demand, which would be submitted for review by the authority.
Moreover, Nepra emphasized the need to reevaluate the tariff structure, noting that over 60 percent of the current tariff comprises capacity charges, which significantly surpass international standards. Accordingly, the CPPA-G was tasked with exploring avenues to reduce capacity charges while ensuring compliance with the legal framework.
In its assessment, Nepra highlighted the issue of wind-based power plants being curtailed, leading to Non-Performance of Must Run (NPMR), while expensive imported fuel-based power plants remained operational. The inefficient operation of plants, such as the Guddu Power Plant operating on open cycle instead of combined cycle, was also flagged as a contributing factor to increased generation costs.
Responding to concerns raised by stakeholders, the National Transmission and Dispatch Company (NTDC) defended the operation of RLNG-based power plants, citing the necessity to maintain system stability. NTDC argued that non-operation of these plants could potentially lead to national blackouts, necessitating additional costs to restart and normalize the system.
The revised FCA, reflecting the increased tariff, will be reflected in the bills issued in April 2024. This decision underscores the ongoing efforts of Nepra to balance the need for sustainable energy supply with the financial implications for consumers and stakeholders in the power sector.