ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has approved an additional charge of Rs1.743 per unit for electricity consumers, effective from September 2024. This decision allows both state-owned distribution companies (Discos) and K-Electric to recover Rs43.23 billion over the next three months. The recovery will address quarterly adjustments for the fourth quarter (April-June) of the fiscal year 2023-24.
Impact on Consumers
The increase in electricity prices will affect households already burdened by rising energy costs. Both Discos and K-Electric consumers will face higher bills, adding to the financial pressure. The additional charges are expected to cover a range of operational and system costs.
Breakdown of Costs
The largest portion of the recovery, Rs21.253 billion, will go towards capacity charges. These payments ensure that independent power producers (IPPs) maintain the generation capacity, regardless of how much electricity is consumed. Additionally, Rs7.368 billion will be recouped for system usage charges and market operator fees, Rs11.23 billion will cover transmission and distribution (T&D) losses, and Rs3.5 billion will account for variable operation and maintenance charges.
GST Increases the Burden
The imposition of an 18% GST on the total recovery amount will further inflate the burden, adding Rs7.78 billion. As a result, the total amount to be collected from consumers will rise to Rs51 billion. This additional cost will further strain household budgets, especially during a time of economic uncertainty.
Public Hearing and NEPRA’s Decision
A public hearing was held on August 26, led by NEPRA Chairman Waseem Mukhtar. During the hearing, Discos submitted that the adjustments were largely due to lower sales than projected for the quarter. NEPRA noted that certain companies, such as Peshawar Electric Supply Company (Pesco), opted for load shedding instead of drawing the required energy, reducing their capacity charges but also contributing to lower sales.
Although Discos sought to collect Rs1.9 per unit in additional charges, NEPRA approved the lower rate of Rs1.743 per unit.
Rejected Requests and Adjustments
The Central Power Purchasing Agency (CPPA), which acts on behalf of Discos, requested Rs51 million for legal charges in its quarterly adjustment petition. However, NEPRA rejected this request, stating that legal costs are already included in the Market Operation Fee (MOF), for which Rs500 million had been approved earlier for FY2023-24.
Furthermore, NEPRA declined the CPPA’s request to include Rs72.23 million in charges for the Kot Addu Power Company (Kapco) related to a tax differential from 2022. An additional Rs73.18 million charged by CPPA to Discos for the PPIB fee was also not approved, as it is still under separate consideration.
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