Nepra allows Rs1.02 hike in power tariff

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has allowed Rs1.02 per unit fuel cost adjustment in the consumer tariff of Wapda’s eight distribution companies for the month of February this year and the extra charge will be added to consumers’ bills for next month.
Nepra approved the increase, but rejected another 43 paisa per unit increase sought by the distribution companies on the grounds that the companies concealed relevant information and sought to charge ‘illegitimate’ mark-up on delayed payments to independent power producers (IPPs).

Practically, the fuel-based consumer tariff would remain unchanged because the power regulator had already allowed charging Rs1.02 per unit increase for the month of January which would continue to be charged to consumers next month.

In its determination, Nepra took strong exception to distribution companies’ concealment of facts, illegitimate build-up of mark-up on delayed payments to IPPs and failure to reduce line losses to the target set by the regulator. It said that “the verification of invoices revealed that some additional costs pertaining to supplemental charges under PPAs (power purchase agreements) were also included in the generation cost of January and February 2010”.

The determination noted that the chief operating officer of the Central Power Purchase Agency had said that although a separate disclosure was not made, all costs were legitimate and in accordance with the terms of PPAs. In his opinion till the circular debt was eliminated, the mark-up on delayed payments to IPPs could not be avoided and due to financial constraints it was not possible to the eliminate mark-up in the near future.

The ministry of water and power said that in principle “it did not support to pass on the impact of mark-up on delayed payments to IPPs. However, due to existence of circular debt of Rs180 billion at present, it was not possible to avoid the mark-up.

“The Authority (Nepra) took serious notice of non-provision of full disclosure of information and directed CPPA to ensure that such practice must not be repeated in future. In the authority’s considered opinion, consumers who pay their bills in time can’t be burdened with the mark-up on delayed payments to IPPs. Therefore, Nepra has decided to disallow the mark-up cost of Rs800 million to be passed on to consumers.”