Consumers to face Rs33bn burden due to Rs3.5/unit FCA hike

The Central Power Purchasing Agency (CPPA) has requested a significant fuel cost adjustment (FCA) of Rs3.55 per unit for ex-Wapda distribution companies (Discos), aiming to generate an additional Rs33 billion from consumers in December.

This request, on top of a 26 percent increase in the annual base tariff and an 18 percent hike under the currently implemented quarterly tariff adjustment (QTA), may impact consumers despite a 76 percent electricity generation from cost-effective domestic fuels.

Consumers may experience minimal benefits from reduced consumption in December, as the substantial FCA amount would be applied to the relatively higher number of units consumed in October.

This is attributed to the CPPA’s claim of over Rs28 billion for past adjustments, resulting in an additional cost of Rs2.95 per unit, significantly higher than the 59 paisa for the generation cost in October.

In a petition filed with the National Electric Power Regulatory Authority (Nepra), the CPPA, acting as the commercial agent of the Discos, has sought an additional FCA of Rs3.54 per unit for electricity consumed in October, with public hearings scheduled for November 29.

Despite a rise of about Rs7.5 per unit in the base average tariff since July 1, the FCA increase remains notable. The contribution of cheaper domestic fuels to the overall power supply was approximately 76 percent in September.

In October, hydropower’s contribution to the national grid decreased to 32.54 percent, while LNG-based power generation increased to 20.25 percent, securing the second position.

Nuclear power’s contribution fell to 19 percent, and local coal-based generation increased to about 14 percent. The total share of coal-based power generation increased to 17.5 percent in October. Power supply from domestic gas declined to 7.35 percent.

The CPPA’s claim is based on consumers being charged a reference fuel cost of Rs7.89 per unit in October, whereas the actual cost was Rs8.4 per unit. With past claims of Rs28.3 billion, the total fuel cost was calculated at Rs11.43 per unit, necessitating an additional charge of Rs3.54 per unit pending Nepra’s approval. If approved, the increased FCAs will be reflected in consumers’ bills in the upcoming billing month of October.