Nepra raises WAPDA hydel tariff by 55% to Rs4.81 per unit

The National Electric Power Regulatory Authority (Nepra) has approved a 55% increase in WAPDA's average hydropower tariff, raising it from Rs3.11 per unit to Rs4.81 per unit for FY2025-26.

In its determination, the regulator said the revised tariff reflects WAPDA's recurring revenue requirement and will apply under the hydropower tariff framework.

Nepra said the increase from Rs3.11 per unit, effective from FY2023-24, to Rs4.81 per unit over three years translates into a compound annual growth rate of about 16%, which it considered reasonable in view of rising costs.

The authority also clarified that WAPDA does not charge a single bulk tariff for all its hydropower plants. Instead, each of its 21 operational hydel plants is billed separately under plant-specific tariffs comprising energy charges, fixed operation and maintenance costs and hydel levies.

Rejecting concerns over the existing take-or-pay mechanism, Nepra said the issue had already been settled in its June 6, 2024, review decision and there was no basis to revisit it.

The regulator also dismissed claims that Interest During Construction was being recovered twice, stating that such costs are not included in WAPDA's capitalised asset base for tariff purposes.

During the proceedings, WAPDA argued that hydropower projects require a two-part tariff structure comprising an Energy Purchase Price and a Capacity Purchase Price because of their capital-intensive nature. It said its plants generated an average of 32,660 GWh annually over the past three years, exceeding Nepra's benchmark of 31,286 GWh, while hydrological risks remain with the power purchaser under the applicable policy.

As part of the determination, Nepra directed WAPDA to appoint independent third-party consultants to conduct plant-wise reviews of repair and maintenance programmes and assess the cost, implementation and execution of ongoing and future hydropower projects.

The regulator also instructed WAPDA to continue pursuing the transfer and operation of transmission assets with the relevant entities to ensure there is no duplication of transmission infrastructure. 

All projected costs and revenue components approved under the determination will remain subject to adjustment following audited financial statements and Nepra's prudence review.