ISLAMABAD: Despite the annual base tariff already having increased by nearly 26%, and with approximately 18% quarterly adjustments currently under consideration, there seems to be no respite from escalating electricity expenses. Ex-Wapda Distribution Companies (Discos) are now requesting an additional Rs1.83 per unit in fuel cost adjustment (FCA), aiming to extract an additional Rs30 billion from consumers in the coming month.
Despite over 74% of power generation relying on cost-effective local sources like hydro, coal, gas, nuclear, wind, solar, and bagasse,
Distribution Companies (Discos) have collectively submitted a petition to the National Electric Power Regulatory Authority (Nepra). Their request is for an additional fuel cost adjustment (FCA) of Rs1.83 per unit, applicable to the October billing cycle for electricity consumed in August.
Nepra has approved the petition and scheduled public hearings for September 27.
These hearings will evaluate whether the proposed tariff increase aligns with FCA mechanisms and the economic merit order.
The increase in FCA occurs even though the base average tariff has risen by approximately Rs7.5 per unit as of July 1.
An additional quarterly tariff adjustment (QTA) of Rs5.40 per unit, totaling Rs146 billion, is currently pending.
The regulator has already concluded the public hearing process for this adjustment.
There is a consideration to extend the recovery of this adjustment over six months. This would be at a rate of Rs3.55 per unit, differing from the original plan of Rs5.40 per unit over three months.
Power Generation Trends in Pakistan: August Overview
Despite hydropower plants making the healthiest contribution of nearly 38% to the national power grid in August, compared to 37% in July and 26.96% in June, hydropower has no fuel cost. However, additional expenses have been incurred.
LNG-based power generation ranked second at 17.17% in August, down from 19.67% in July and 18.55% in June. Nuclear power plants contributed 12.79% in August, down from 14.2% in July and 13.54% in June.
Local coal-based generation accounted for 10.3%, with imported coal at 4.51%. Nepra has started separately reporting local and imported coal-based power generation. In July, the cumulative coal-based generation was 14.69%, compared to 17.75% in June.
Power supply from domestic gas contributed 7.60% in August, a continuation of its declining trend. Furnace oil-based power generation cost rose to Rs33.32 per unit in August. LNG-based power generation costs slightly reduced to Rs23.7 per unit in August.
Renewable energy sources (wind, bagasse, and solar) collectively contributed about 5.8% to the national grid in August, up from 4.5% in July and 5.6% in June. Wind and solar have no fuel costs, while bagasse-based generation costs remained steady at about Rs6 per unit.
Reference fuel cost
The CPPA, representing Discos, reported that consumers were initially charged Rs6.65 per unit in August. However, the actual cost was Rs8.47 per unit, justifying an additional charge of Rs1.83 per unit.
Once Nepra approves it, this higher FCA will be applied to all consumer categories except for certain exceptions in the next billing cycle in October.
The monthly FCA review is part of the national tariff system and affects consumers for one month. It also applies to domestic consumers with ToU meters, regardless of their usage.
However, regarding changes in fuel costs, they are automatically passed on to consumers monthly. Meanwhile, quarterly tariff adjustments encompass various factors and are included in the base tariff by the federal government.
