ISLAMABAD: Pakistani consumers are grappling with soaring electricity bills due to escalating capacity payments to independent power producers.
In the fiscal year 2023/24, capacity payments accounted for 71% of power purchase prices, with consumers burdened by charges reaching Rs16.22 per unit for capacity and Rs6.73 per unit for energy. Projections for fiscal year 2024/25 indicate a one-third increase in capacity payments to Rs2.8 trillion from Rs2.1 trillion, further straining consumers’ finances.
During a NEPRA public hearing, concerns were raised over the impact of high electricity prices on industrial operations, with many units already closing down. CPPA scenarios suggest a potential Rs5 per unit hike, adding Rs310 billion to consumers’ bills, with total power purchase prices expected to reach Rs3.58 trillion. Capacity payments will constitute a significant portion of this, ranging from Rs2.1 trillion to Rs2.8 trillion.
Despite the increasing capacity payments, the addition of three new IPPs to the national grid continues, further straining finances as payments are indexed to the dollar, worsening with rupee devaluation. Even power plants invested in rupees receive dollar-indexed payments under existing agreements.
Capacity payments, particularly to idle plants, significantly inflate costs. The CPPA petition for FY2024/25 outlines scenarios considering demand growth, exchange rates, and hydrological conditions, projecting consumers to bear 2.4% of US inflation, 12.2% of domestic inflation, and high-interest charges on electricity purchases.
Energy costs for the next fiscal year are estimated between Rs8.61 and Rs9.34 per unit, with capacity charges ranging from Rs15.49 to Rs17.42 per unit. For the current year, capacity charges were Rs16.22 per unit, and energy charges were Rs6.73 per unit.
Regarding net metering, 870-MW from solar net metering was added in the last eight months. Nepra emphasized the importance of actual demand in setting realistic prices, noting reduced consumption due to higher prices and increased use of solar-based electricity.
The CPPA’s projected power purchase for FY2024-25 is Rs3.58 trillion, Rs310 billion higher than the current Rs3.28 trillion, with seven scenarios for consumer-end tariffs. Proposed fuel costs range from Rs8.61 to Rs9.34 per unit, and capacity charges from Rs15.49 to Rs17.42 per unit.
The projected total power purchase price for the next fiscal year ranges from Rs25.03 to Rs27.11 per unit, with increases between Rs2.07 and Rs4.16 per unit.
XWDiscos’ distribution margins, currently Rs3.10 per unit, are expected to rise by 15 to 20%, potentially burdening Discos consumers with an additional Rs337 billion to Rs358 billion in 2024-25.
