Tag: Distribution Companies

  • Nepra approves Rs7.056 per unit hike for power consumers

    Nepra approves Rs7.056 per unit hike for power consumers

    In a setback for the already burdened public grappling with inflation, the National Electric Power Regulatory Authority (Nepra) has greenlit a fuel cost adjustment, paving the way for a Rs7.0562 per unit increase in tariffs for March 2024.

    This decision grants state-run power distribution companies the authority to impose additional charges, projecting a staggering financial burden of around Rs56 billion on consumers.

    This figure could potentially soar to nearly Rs66 billion, taking into account the 18 per cent general sales tax (GST).

    It’s important to note that this tariff adjustment is applicable across all consumer categories, except for electric vehicle charging stations (EVCS) and lifeline consumers.

    The Central Power Purchasing Agency (CPPA), representing the distribution companies, had initially sought Rs7.13 per unit in its petition.

    Earlier this month, The News highlighted the plea from ex-Wapda distribution companies (XWDiscos) seeking Nepra’s approval for the Rs7.13 per unit increase.

    This was attributed to a significant drop in hydropower production and systemic constraints, such as the incapacity of the high-voltage direct current (HVDC) transmission line to efficiently transport economically viable power from southern producers to the north.

    Amidst these developments, commentators express concern over the substantial surge in fuel costs, reaching Rs14.6206/kWh for January 2024.

    In response, Nepra has taken decisive action, initiating an investigation under Section 27-A of the NEPRA Act to uncover the reasons behind this significant fuel cost, as claimed by CPPA-G for January 2024.

  • Electricity bills to reflect Rs3.07 per unit hike in December

    Electricity bills to reflect Rs3.07 per unit hike in December

    The National Electric Power Regulatory Authority (NEPRA) has officially sanctioned a Rs3.07 per unit increase in electricity prices for October 2023, attributed to Fuel Charges Adjustment (FCA), as communicated in its notification on Tuesday.

    This tariff adjustment will be separately reflected in the power bills based on the units consumed by consumers of all ex-Wapda DISCOs (XWDISCOs) during October 2023. NEPRA has specified that XWDISCOs are to incorporate the FCA in the billing cycle for December 2023.

    It is important to note that this tariff adjustment does not apply to K.Electric (KE) consumers, Electric Vehicle Charging Stations (EVCS), or lifeline consumers.

    The adjustment in the approved tariff for Ex-WAPDA DISCOs was prompted by variations in fuel charges for October 2023, as indicated in the request submitted by CPPA-G via a letter dated November 15, 2023, the authority clarified. NEPRA emphasised the need for XWDISCOs to adhere strictly to court orders while implementing the FCA.

    In a separate development, a NEPRA inquiry report disclosed that numerous electricity consumers in Pakistan were overcharged during July and August of the current year. 

    The report highlighted that distribution companies (DISCOs) billed consumers for over 40 days, leading to widespread overbilling. NEPRA identified MEPCO, followed by GEPCO, FESCO, LESCO, and HESCO, as the main contributors to this overbilling, holding all DISCOs responsible for this unjustified practice.

    The report recommended legal actions against power distribution companies, including K-Electric Limited (KEL), under NEPRA Fine Regulations, 2021, for violating the provisions of the NEPRA Act, Consumer Service Manual (CSM), and tariff terms and conditions.

  • NEPRA exposes overbilling scandal impacting thousands of electricity consumers 

    NEPRA exposes overbilling scandal impacting thousands of electricity consumers 

    An investigative report by the National Electric Power Regulatory Authority (NEPRA) unveiled a disconcerting situation in Pakistan, affecting thousands of electricity consumers during the months of July and August this year.  

    The report disclosed that distribution companies (Discos) had billed consumers for over 40 days, a major contributor to the issue of overbilling in the mentioned months. Notably, MEPCO, followed by GEPCO, FESCO, LESCO, and HESCO, were identified as the Discos significantly involved in this overbilling, implicating all Discos collectively in this unjustified practice. 

    As a response to these findings, NEPRA recommended initiating legal proceedings against the power distribution companies, including K-Electric Limited (KEL), under NEPRA Fine Regulations, 2021. The basis for these actions lies in the violation of the provisions outlined in the NEPRA Act, Consumer Service Manual (CSM), and tariff terms and conditions. 

    Expressing concern, NEPRA emphasised the unfortunate deliberate malpractices by distribution companies undertaken to conceal their inefficiencies. These practices resulted in higher electricity bills for thousands of consumers.  

    The report highlighted the failure of Discos to adhere to the percentage checking mechanism outlined in the Consumer Service Manual (CSM), along with the unauthorised charging of detection bills, contravening Clauses 9.1 and 9.2 of the CSM, which provide a specific procedure for charging detection bills. 

    NEPRA noted with concern that detection bills charged by Discos were found to be fake and frivolous, contributing to a significantly low recovery ratio in certain Discos.  

    The authority initiated an inquiry in response to widespread complaints from consumers across the country regarding excessive, inflated, and erroneous bills during July and August 2023. A hearing was conducted on November 13, 2023, wherein CEOs of all distribution companies participated online, presenting their perspectives. 

    During the proceedings, it was observed that numerous distribution companies were charging metre readings, with discrepancies between snap readings and the readings recorded on consumers’ bills. 

    Additionally, some cases were identified where snaps of metre readings were either invisible or intentionally not taken. Monthly metre readings were reported to be taken beyond the standard billing cycle of 30 days in certain instances, leading to undue and inflated charging of upper slab bills for less frequent users and a consequent change in category from protected to unprotected. 

     

  • NEPRA approves Rs5.40 per unit power tariff increase for quarterly adjustment

    NEPRA approves Rs5.40 per unit power tariff increase for quarterly adjustment

    The National Electric Power Regulatory Authority (NEPRA) has given its approval for a quarterly adjustment, resulting in an increase of Rs5.40 per unit in the power tariff.

    This adjustment comes as NEPRA recognises the limitations of the current structure of electricity distribution companies in providing relief to consumers. However, it’s important to note that this revised tariff won’t apply to Lifeline and K-Electric consumers.

    According to Samaa, NEPRA’s decision to revise the tariff comes after a thorough review of requests from distribution companies to raise the tariff by Rs5 per unit for the fourth quarter of the fiscal year 2022–23. Among these requests, FESCO, GEPCO, HESCO, and IESCO sought increases of Rs23.49 billion, Rs16.13 billion, Rs9 billion, and Rs9 billion, respectively.

    Additionally, LESCO requested a substantial increment exceeding Rs31 billion, while MEPCO, PESCO, QESCO, SEPCO, and TESCO collectively proposed tariff hikes totaling Rs27 billion, Rs9 billion, Rs7 billion, Rs5 billion, and Rs4 billion.

    Consumers should be aware that this tariff adjustment will be gradually recovered during September, October, and November, resulting in an added financial burden of Rs5.40 per unit.

    Distribution companies, in their submissions, highlighted revenue challenges stemming from decreased industrial demand. Particularly, LESCO faced a deficit of three billion units of electricity due to climate-related issues and industrial shutdowns. Both LESCO and HESCO faced higher capacity charges due to industry closures and reduced demand.

    Presently, there’s a backlog of approximately 350,000 pending connections with distribution companies. To recover revenue and address declining demand, the Central Power Purchasing Agency imposed surcharges amounting to Rs7.91.

  • Govt implements Rs4.96 per unit power tariff hike, aims to collect Rs3.28 trillion from consumers

    Govt implements Rs4.96 per unit power tariff hike, aims to collect Rs3.28 trillion from consumers

    The National Electric Power Regulatory Authority (Nepra) announced a significant increase of Rs4.96 per unit in the electricity base tariff for the fiscal year 2024, in response to a demand from the International Monetary Fund (IMF). This adjustment will result in the government collecting Rs3.281 trillion from power consumers across all distribution companies.

    Additionally, the government is actively working on raising gas rates, as the Oil and Gas Regulatory Authority (OGRA) has already determined a 45-50 per cent increase in gas prices on June 2, 2023.

    The implementation of the power tariff hike is scheduled to commence on July 1, with the tariff rising to Rs29.78 per unit from the current rate of Rs24.82 per unit.

    Customers utilising time-of-use (ToU) meters will be charged up to Rs49.35 per unit. During peak hours from 5pm to 11pm, they will pay Rs49.35 per unit, while during non-peak hours, the charge will be Rs33.03 per unit.

    This decision has imposed an additional burden on the residents of Karachi, as Nepra has also raised the monthly fuel charges adjustment for the month of May by Rs1.44 per unit, which will be reflected in the billing for July.

    However, the increase in the base tariff will be implemented differently for various categories. Some categories will experience a lower increase, while for others, the increase may reach up to Rs6 per unit, depending on the government’s decision.

    The power regulator has determined an average increase in the base tariff of Rs4.96 per unit. Apart from the new base tariff of Rs29.78 per unit, end consumers will also be required to pay a financing cost surcharge of Rs3.23 per unit from July 1.

    This surcharge aims to generate Rs335 billion to address the power sector’s debt and liabilities, which currently amount to Rs2.6 trillion. Furthermore, consumers will continue to pay the Tariff Rationalisation Surcharge of Rs0.47 per unit.

    Within the base tariff increase of Rs4.96 per unit, the payment for capacity charges has risen to 70 per cent, equivalent to Rs3.472 per unit, while 30 per cent accounts for energy prices.

    The new base tariff increase has been calculated considering a dollar value of Rs287, an inflation rate of 17 per cent, and a 7 per cent growth in electricity generation. As a result, consumers will pay capacity charges totaling Rs1.874 trillion, compared to Rs1.251 trillion in 2022-23.

    Unfortunately, the end electricity consumer in Pakistan is being burdened with additional costs to compensate for ongoing inefficiencies in the power sector, in addition to paying for the actual cost of electricity. These costs include tariff rationalisation charges, financing cost surcharges, electricity duty, PTV license fee, GST, income tax, extra tax, further tax, and sales tax.

    In reality, consumers are paying 31 per cent above the actual cost of electricity in the form of surcharges, duties, and taxes. Electricity Duty, a provincial duty, is levied on all consumers, ranging from 1.0 per cent to 1.5 per cent of Variable Charges. General Sales Tax (GST) is charged at a rate of 17 per cent on all consumers under the Sale Tax Act 1990.

    Income Tax is applicable to non-taxpayer consumers at varying rates depending on the tariff and electricity bill amount, and commercial consumers pay 5 per cent on bills up to Rs20,000 and 7.5 per cent on bills exceeding Rs20,000. Further tax of 3 per cent is charged from all consumers without a Sales Tax Return Number (STRN), except for domestic, agriculture, bulk consumers, and street light connections.

    The increase in power tariffs was a necessary requirement imposed by the IMF to provide financial assistance to Pakistan. The IMF has consistently urged the government to raise tariffs and eliminate power subsidies as part of its efforts to reduce the country’s fiscal deficit.

    However, Nepra attributes the tariff increase to factors such as low sales growth, rupee devaluation, high inflation, exorbitant interest rates, and the addition of new capacities.

  • NEPRA okays Rs3.21 per unit hike in power tariff

    NEPRA okays Rs3.21 per unit hike in power tariff

    A quarterly adjustment of Rs3.21 per unit of power for the period of April to June 2022 has been approved by the National Electric Power Regulatory Authority (NEPRA).

    A further burden of Rs93.95 billion will be placed on energy consumers as a result of the most recent price increase. To be effective as of October 1, 2022, the authority transmitted its decision to the federal government.

    According to specifics, the prior adjustments’ time period ended on September 3, 2022. As of October 1, the electricity customers will not receive any respite as the authority implements fresh adjustments immediately following the expiration of the prior adjustment.

    For K-Electric customers, the NEPRA earlier in the day authorised a cut in power rates of Rs4.89 per unit due to a fuel cost adjustment (FCA) for August 2022.

    The notification states that, in contrast to KE’s plea for Rs4.21, the fuel cost adjustment for K-Electric customers would be reduced by Rs4.89 per unit. However, it specified that the tariff cut for July would only be valid for that particular month.

    According to the NEPRA, all consumer categories would be affected by the drop in FCA, with the exception of lifeline consumers, home consumers consuming up to 300 units, agriculture consumers, and EVCS (Electric Vehicle Charging Station).