Nepra reduces bulk supply tariff of Wapda by 27 per cent

Islamabad – National Electric Power Regulatory Authority (Nepra) on Monday has reduced the bulk supply tariff of Water and Power Development Authority (Wapda) by 27 per cent.

NEPRA has reduced the bulk supply tariff of Wapda by Rs 1.56 per unit from Rs 5.67 per unit to Rs 4.11 per unit, said a decision issued by Nepra here.

Wapda Hydroelectric had filed a tariff petition for determination of Bulk Supply tariff for FY 2020-2 1 for sale of power to NTDC/CPPA, pursuant to Nepra’s Tariff Standards and Procedure Rule, 1998. Wapda has requested Nepra to increase bulk supply tariff from Rs 5.67 per unit to Rs 6.20 per unit. However, Nepra, after careful consideration of different viewpoints of the stakeholders has reduced it to Rs 4.11 per unit. The decision will help reduce the power tariff for the end consumers.

The previous average rate for financial year 2018 stood at Rs5.67 per kWh, which included Rs 3.55 per kWh, NHP/hydel levies. The regulator has slashed it now to Rs 4.11 per kWh for financial year 2021, which includes Rs 0.96 per kWh NHP/hydel levies related.

According to decision, the base tariff for Wapda plants has increased from Rs 2.12 per unit to Rs 3.15 per unit registering an increase of Rs 1.03 per unit.

However, hydel profit and hydel levies have been reduced from Rs 3.55 to Rs 0.96 per unit. It was noted that the Authority in the last determination, allowed indexation at 5per cent at the rate of Rs 1.10 per kWh which increased the rate of NHP to Rs 1.155 per kWh. Council of Common Interests (CCI) in its decision, dated December 16, 2016, allowed payment of NHP to government of the Punjab @ Rs 1.10 per unit on the analogy of government of KPK, generated from 1-lydel power station located in the Punjab for the FY 2016-17. The same rate indexed at 5per cent was made applicable on Punjab based Wapda’s plant from the same year in the Wapda’s tariff. The petitioner has now indexed the rate by 5 per cent to Rs 1.2128 per kWh for FY 2021.

KPK government in its comments, said that Wapda has included NHP at the rate of Rs. 1.213 per KWh in its present tariff petition which needs to be Rs. 1.404 per KWh for the year 2020-21 as the 5 per cent indexation allowed according to the agreement has not been applied every year previously which should start from Rs 1.10 per kWh from FY 2016. The province, therefore, demands readjustment in the proposed tariff accordingly. Besides, the decision must be given effect and thus the arrears and differential shall be worked out and included in the tariff of Wapda as past year adjustments. Wapda proposes NHP 1 .213 Rs/kWh, which should be increased @ 1.404 Rs/kWh for the year 2020-21. Wapda also miscalculated NHP arrears amounting to Rs 618 million; however, it should be also determined for the missing indexation since 2015, which amounts to Rs 7,949 million.

However, the demand was not approved by the regulator, saying that it came to the knowledge of the authority that CCI, which is the relevant body, has not approved indexation on the rate of Rs 1.10 per kWh.

Therefore, based on the above discussion, NHP rate of Rs 1.10 per kWh has been assumed by the authority going forward for FY 2021 for Punjab and KP based hydropower stations and excess past payment made as a result of the application of 5per cent indexation should, therefore, be adjusted by the petitioner on yearly basis. However, if CCI make any decision with respect to indexation, the authority may consider it as per the applicable law. 

Nepra  has also rejected Wapda’s request for enhancing AJK’s  water utilisation charges (WUC) from Rs 0.15 to Rs Rs.1.155 per unit, saying that  the Mangla Raising Agreement of 2003 is yet to be amended, therefore, in the absence of revision in the base agreement,  revising the rate from current Rs. 0.15 per kWh is not justified at this stage.

On the question that whether petitioner’s request for allowance of Regulatory Gap amounting to Rs 17,675 million, Rs 20,950 million  and  Rs 23,600 million and for FY 2018,2019  and 2020 respectively is justified? The authority noted that the amount of Rs 11.024 billion claimed has risen due to ministry of water resource’s direction to the petitioner for early payment of NI-IP arrears/regular to provinces, the principal amount of which has already been made a part of allowed tariff. The authority is of the opinion that the petitioner complied with the direction of the government, which has caused the petitioner to incur extra cost in term of interest. Now it is the liability, parked on the petitioner’s books. The authority, therefore, decided that the amount being one time and computed based on a rate already lower than The Karachi Interbank Offered Rate (KIBOR) to allow this cost to the petitioner as its liability. This treatment is also endorsed by ministry of PD and SI. Further since the interest accounts for FY 2020 is not finalised, therefore, the amount of Rs 2,395 million being provisional in nature shall be adjusted on actual at the next tariff petition.

Article source: https://nation.com.pk/06-Apr-2021/nepra-reduces-bulk-supply-tariff-of-wapda-by-27-per-cent