Consumers to Face Rs 1.25 per Unit Increase in Electricity Bills
Staff Report
The consumers of power distribution companies (Discos) and K-electric (KE) will face an increase of Rs 1.25 per unit in their electricity bills in December 2023.
They will also face an increase in their utility bills for December 2023 and January-February 2024.
The National Electric Power Regulatory Authority (NEPRA) indicated on Tuesday that it may allow power distribution companies, including K-Electric (KE), to increase the power tariff by Rs 1.25 per unit for consumers.
If approved, this tariff hike will be reflected in utility bills for December 2013 and January-February 2024.
NEPRA conducted a public hearing on the petition of these companies seeking approval to transfer Rs 22.92 billion to power consumers. The petition is related to quarterly adjustments for the first quarter of the fiscal year 2023-24, covering July to September.
Although NEPRA has not made a final decision, calculations based on data submitted by the companies suggest a potential increase of Rs 1.25 per unit, according to a senior official.
The final decision is expected in the coming days and will apply to all Distribution Companies (Discos) and K-Electric customers, excluding lifeline customers.Nepra increases Power Tariff up to Rs 3.28 per unit
Under recent federal government guidelines, decisions made for Discos will automatically apply to K-Electric with the same amount and timeframe. If NEPRA approves the increase for the next three months (Dec-Jan), it will also apply to Karachi residents.
The Central Power Purchasing Agency (CPPA), representing Discos, cited various factors for the increase, including capacity charges, variable operation and maintenance (O&M), recovery on incremental sales, use of system charges, market operator fee, and Fuel Cost Adjustment (FCA) impact on transfer and distribution (T&D) losses.
Out of the total additional amount of Rs 22.92 billion, Discos are seeking permission to collect Rs 12.96 billion for capacity charges, allocated to Independent Power Producers (IPPs) to cover the cost of electricity not injected into the national demand due to system constraints or low requirements.
Consumers will also pay Rs 4.28 billion for variable O&M costs, Rs 6.42 billion for T&D losses on monthly FCA, and Rs 10.3 billion for use of system charges and market operator fees.
It’s important to note that, as per the authority’s decision on November 3, 2021, no quarterly adjustments would be applicable to incremental consumption.
The impact of incremental units for the quarter has been calculated at a negative Rs 11.047 billion, representing the cost of units purchased for industrial incremental sales.
Recoveries for Discos’ inefficiencies, power losses, and system theft will be passed on to consumers.
During the hearing, when questioned about the factors influencing the base tariff increase, the Authority mentioned high inflation, exchange rates, and petroleum prices.
However, they clarified that if inflation decreases to single digits, the interest rate is reduced, or the rupee strengthens, the base tariff will not necessarily be reduced. Adjustments can be made through quarterly and monthly reviews.
Regarding the IMF’s new demand for a government tariff increase, NEPRA stated that they have not received any petition from the government and cannot comment on it.
