Government Faces Backlash Over Transferring Rs 81.5b to Consumers

Staff Report

The government came under fire on Wednesday for seeking permission from the power regulator to pass on Rs 81.5 billion to honest consumers who pay regular bills, citing capacity payments and losses.

Intervenors have called for strict action to address the issue. The National Electric Power Regulatory Authority (Nepra) held a public hearing to consider a petition for the recovery of Rs 81.5 billion from power consumers for the 2nd quarter of the financial year 2023-24. Nepra Renews Distribution and Supply Licenses to KE

During the hearing, it was revealed that DISCOs sought a total of Rs 75,139 million for capacity charges and Rs 10,818 million for T&D losses under the monthly Fuel Charges Adjustment (FCA).

“Is there an end to the capacity payments charges, which are likely to increase further with the addition of more power projects?” an intervenor questioned during the public hearing. Capacity payments are allocated to power plants that remained idle, yet consumers are obligated to pay due to agreements signed by governments with power producers on a take-or-pay basis.

It was highlighted during the hearing that electricity consumption decreased by 12 to 13 percent in this quarter. Regarding efforts to reduce circular debt, Nepra expressed dissatisfaction with the ongoing efforts and criticized the absence of senior officials from power distribution companies during the hearing.

Chairman Nepra emphasized the importance of their presence to address public concerns. Noting the absence of senior officials from CPPA and the Power Division, a Nepra member questioned the decrease in power consumption.

Nepra also expressed displeasure over CPPA’s failure to respond to queries and observed rampant load shedding in electricity companies, despite consumers bearing capacity payments. Nepra officials stated that electricity companies are reluctant to provide new connections, with pending power connections requiring 1100 MW.

Nepra announced its decision to issue a decision after scrutinizing the data provided. According to DISCOs’ plea, they sought a total of Rs 81,498 million for capacity charges, UoSC & MoF, and the impact of T&D losses on monthly FCA. Individual DISCOs specified their amounts requested, with FESCO seeking Rs 9,446 million, GEPCO Rs 2,663 million, HESCO Rs 3,524 million, IESCO Rs 6,921 million, LESCO Rs 15,105 million, MEPCO Rs 14,884 million, PESCO Rs 11,583 million, QESCO Rs 10,983 million, SEPCO Rs 2,879 million, and TESCO Rs 3,510 million.

The policy guidelines issued by the federal government for applying uniform quarterly adjustments dictate that the 2nd quarter adjustment for the financial year 2023-24 of DISCOs, determined by Nepra, shall apply to consumers of K-Electric. Nepra conducted a hearing to make an informed decision on the matter.

Pursuant to the notified tariff, DISCOs have filed requests for adjustments for the 2nd quarter of FY 2023-24, including capacity charges, transmission charges, market operator fees, the impact of incremental units, and the impact of T&D losses on FCA and variable operations & maintenance charges for October-December 2023, in accordance with the notified mechanism.