Discos privatisation can lead to decrease in power tariff: Nepra chairman

ISLAMABAD – Chairman National Electric Power Regulatory Authority (Nepra) has Thursday said that the privatization of power distribution companies (Discos) is the only way to bring improvement, efficiency and can lead to decrease in power tariff.

Chairman NEPRA Tauseef H. Farooqi made these remarks while conducting a public hearing regarding Winter Incentive Package for electricity consumers on incremental consumption during the four months of winter season. NEPRA also reviewed the extension in industrial package for KE industrial consumers in a separate hearing. During the public hearing, NEPRA officials said that government had requested for approval of the package for the period from November to February. The package will be applicable to customers of XWDiscos and KE using over 300 units. NEPRA member inquired that after this package, expensive plants will have to be run. Power Division officials said that if consumption increases in January, the demand for LNG will increase for electricity generation in winter. 

They said that strategic action plans are also being worked out in collaboration with all the Discos. During the hearing, power division officials said that in the current situation, there is a difference in fuel prices. Due to the industrial package, the growth of electricity had increased by 4%. The vice-chairman of NEPRA said that if the problem could not be rectified in seventy years, it would be necessary to see where the problem lies. Regarding industrial package for K-Electric consumers, Nepra was informed that industrial consumers will get electricity at Rs12.96 per unit instead of 14.61 per unit. Chairman Nepra said that industrial packages had brought revolution as it had boosted economic growth.

In a motion placed before NEPRA, the Ministry of Energy(Power Division) said that “Cabinet Committee on Energy (CCoE) had approved the winter incentive package for all domestic, commercial, and general services consumers of XW-DISCOs and K-Electric with the direction that the actual marginal cost to be utilized for subsidy calculation of K-Electric shall be provided by NEPRA and shall also provide appropriate mechanism for adjustment of the same, keeping in view existing tariff determinations of K-Electric. As per the proposed package for all domestic, commercial, and general services consumers of ex-Wapda distribution companies and K-Electric for the winter months; November to February. The reference period for incremental consumption will be November 2021 to February 2022.The rate of Rs12.96 per unit shall be charged to domestic consumers (non-ToU) on the incremental consumption, above monthly 300 units or above the reference consumption in the corresponding months of reference period, whichever is greater. The Power Division said that the rate of Rs12.96 per unit shall be charged to commercial consumers (non-ToU) and general services consumers on the incremental consumption above the reference consumption in the corresponding months of reference period.

The rate of Rs12.96 per unit shall be charged to domestic consumers (ToU) and commercial consumers (ToU) on the respective peak/off-peak incremental consumption, above the reference peak/off-peak consumption in the corresponding months of reference period. Additional supplementary grant for the additional cumulative subsidy of approximately Rs 1.3bn for K-Electric consumers will be required.

The new and existing consumers having no reference consumption available in period of November 2020 to February 2021 shall be offered the same package at the concessionary rate of Rs12.96 per unit through benchmark consumption methodology.

The Power Division has asked NEPRA that “In view of above and pursuant to, inter alia, Section 7 and 31 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, the Authority is requested to incorporate the cabinet approved winter incentive package, as referred to para I and 2 of the instant motion, in the tariff adjustment’s methodology / tariff structure, including the verification / determination of marginal cost for K-Electric to be utilized for calculation of subsidy, so that winter incentive package can be implemented accordingly,”.

Similarly, the industrial support package had been approved by the ECC on November 2, 2020 at the rate of Rs l2.96 per unit and approved its application for ToU industrial consumers of Discos from November 2020 till October 2023.However, the applicability of the same for industrial consumers of K-Electric (KE) was limited till June 30-2021. The decision for K-Electric is as follows: “discount of Rs 4.96/kWh from the base rate, will be offered for industrial consumer categories (B1, B2 B3) from November 1, 2020 to June 30, 2021 for off-peak hours on incremental consumption in corresponding months of the period March 2019 to February 2020. In this case, an estimated subsidy requirement for K-electric shall be approximately Rs 7 billion which shall be provided by the Finance Division from Covid Economic Stimulus Package on actual consumption basis for each month.

The Power Division has requested NERPA for the extension of the Industrial Support Package for the KE consumers from July 1, 2021, till October 2023. The respective subsidy requirement for extending the incremental consumption package at the rate of Rs 14.61 per unit will generate a subsidy requirement of Rs 21.66 billion from July 2021 till October 2023. NEPRA has reserved judgment in both the hearings.

Article source: https://nation.com.pk/22-Oct-2021/discos-privatisation-can-lead-to-decrease-in-power-tariff-nepra-chairman