Consumers to bear the brunt of Rs3.33 per/unit Fuel Cost Adjustment in July bills

The National Electric Power Regulatory Authority (Nepra) notified an additional Rs3.33 per unit fuel cost adjustment (FCA) for May consumption. This decision allows ex-Wapda distribution companies (Discos) to collect an additional Rs41 billion in July.

Conversely, Nepra announced a reduction of Rs1.67 per unit in FCA for K-Electric consumers based on their April consumption, which will be reflected in their current bills, resulting in a financial impact of approximately Rs2.35 billion. 

K-Electric had proposed a Rs1.17 per unit negative FCA, amounting to a Rs1.67 billion refund to consumers, but Nepra revised this to Rs1.67 per unit.

The negative adjustment for K-Electric will apply to all consumer categories except lifeline consumers, domestic users consuming up to 300 units, electric vehicle charging stations, and agriculture consumers. However, domestic consumers with Time of Use (ToU) meters will benefit from this reduction regardless of their consumption levels.

For Discos, Nepra reviewed and assessed a national average uniform increase of Rs3.3287 per kWh (kilowatt-hour) in the applicable tariff for XWDISCOs due to variations in the fuel charges for May 2024. 

The net increase for Discos’ consumers would range between Rs11 and Rs14 per unit this month, considering the base tariff increase of Rs5.75 to Rs7.12 per unit already approved by the cabinet and pending Nepra’s final consent on July 8.

The Rs3.33 per unit additional FCA would translate into Rs5.50 per unit due to partial spillover to the quarterly adjustment later.

The Central Power Purchasing Agency (CPPA) had sought permission to collect Rs41.87 billion additional revenue in July through a Rs3.4133 per unit additional FCA for May consumption over the reference tariff of Rs5.71 per unit already charged to consumers in May. The actual average fuel cost in May amounted to Rs9.122 per unit, nearly 60% higher than the pre-fixed fuel cost.

The CPPA reported that approximately 12,617 gigawatt hours (GWh) of electricity were generated at an estimated fuel expenditure of Rs110.3 billion (Rs8.744 per unit) in May, of which 12,267 GWh were delivered to Discos at the cost of Rs111.9 billion (Rs9.122 per unit). After adjustments, the regulator calculated the total fuel cost for May at Rs9.038 per unit.

The CPPA explained that an LNG import order was placed three months before consumption to run RLNG plants, anticipating high electricity demand due to forecasted high temperatures. However, the weather remained moderate for the first half of the month, requiring the consumption of the already ordered LNG. Power generation was 5.5% lower than the generation assumed in the reference tariff.