Nepra proposes capping tariff for EVCSs at Rs45 per unit

ISLAMABAD – NEPRA has proposed capping the tariff for Electricity Vehicles Charging Stations (EVCSs) at Rs 45 per unit along with two other options for the prospective and current investors in the power stations business.

In a public hearing regarding tariff to be charged from electric vehicles by EVCS at NEPRA headquarters, the stakeholders proposed subsidy on electricity prices to attract the investors in the business. The stakeholders proposed the regulator to let the tariff uncapped, so the market forces can determine its own rates.

The hearing was attended by the representatives of the Ministry of Industries, OMCs, EVCS, Discos, and prospective investors. Chairman NEPRA Tauseef. H . Farooqi, who was presiding over the hearing, said that this is just initial hearing and the regulator wants to get the input from the interveners and will hold a follow up session soon.

In a presentation, NEPRA official said that ‘The National Electric Vehicle Policy’ provides that “NEPRA shall develop a policy to enact EV tariffs and to ensure compliance with EV standards and specifications.  

The Authority in view thereof, in exercise of powers under section 7 read with section 31 of NEPRA Act read with 3(1) of NEPRA Tariffs (Standards Procedure) Rules, 1998 has decided to initiate proceedings to amend the terms and condition of XWDISCOs and KE’s tariff as proposed hereunder; In A-2 Commercial, following may be added for tariff applicable for;“ix) Electric Vehicle Charging Stations”. In addition in A-2 Commercial, following may be added; “The Electric Vehicle Charging Station shall provide “charging service” to Electric Vehicle with a maximum cap as determined by the Authority from time to time.”

It was informed that regarding EVCS standards, specification and relationship of EVCS with DISCOs separate proceeding will be carried out.

The question for hearing was “What should be the tariff to be charged from EVs by EVCS? The interveners were asked “Whether there should be any maximum cap for tariff to be charged form EVs by EVCS? If so what should be the maximum cap? In this regard three pricing options were presented regarding EV Charging Stations. The first option was that private sector to set customer charges/ tariff with no price caps. The second option was given a ceiling, private sector to compete to reduce tariff below ceiling. And the third option was to determine customer charges/tariff for all private EV charging stations.

According to NEPRA calculations Fossil Fuel vehicles (FFV) give 8 to 16km/liter mileage while EV mileage is 30 kWh per 100 miles.

The tariff of Rs. 47.7 per kWh is breakeven with FFV while at Rs. 45.3 per kWh it is 95% of FFV, the NEPRA official said. Therefore NEPRA has proposed capping the tariff at Rs 45 per unit.

However, majority of the intervener was not favoring the idea of capping the tariff and proposed that NEPRA should stay out of the matter and let the market forces completely free to decide the tariff. Beside they also demanded the government to provide subsidy to the EVCS. The tariff for the electricity should be equal to the domestic consumers and may be a bit high but they should not be charged commercial rates. The commercial per unit along with taxes cost Rs 30 per unit and it will not be feasible for the investors to sell it at Rs 45 per unit, they argued. 

An EVCS owner said that he had invested around Rs 10 million in the business and is selling at Rs 35 per unit with daily serving two vehicles. He said that with this tariff he is not even making his routine expenses. He said that to attract the investors the electricity tariff for the EVCS should be subsidized. Chairman NEPRA said that the circular debt has ballooned to Rs 2.4 trillion because of subsidies and further subsidies on tariff is becoming unaffordable. He said that NEPRA cannot provide the subsidy as it is the government discretion. Chairman NEPRA further said that by capping the tariff the regulator is trying to protect the consumers. 

An official of the Engineering Development Board said to attract the consumers to electric vehicles as the beginning the price of charging should be kept low. People will only attract to electric vehicles there is huge difference between fuel and electricity charging price, he added.  

He further said that the regulator should also ensure the quality of the charging stations. There are European, Chinese and other models and to ensure quality NEPRA should set the standards. 

Chairman NEPRA asked all the intervener to send their proposal in written within seven days, so a follow up session can be convened on the subject. 

Article source: https://nation.com.pk/09-Sep-2021/nepra-proposes-capping-tariff-for-evcss-at-rs45-per-unit