Discos Seek to Refund Consumers Rs4.5 Billion with a 31 Paise Per Unit Cut in Fuel Cost Adjustment

In a rare move, government-owned power distribution companies (Discos) have requested a negative fuel cost adjustment (FCA) of 31 paise per unit. This adjustment is aimed at refunding approximately Rs4.5 billion to consumers, who were overcharged in July due to a 20% increase in base tariff for the current fiscal year.

Formal Petition Filed by CPPA

The Central Power Purchasing Agency (CPPA), a subsidiary of the power division, has formally petitioned the National Electric Power Regulatory Authority (Nepra) for a 31 paise per unit reduction. This reduction is based on the difference between the reference tariff of Rs9.352 per unit, which was charged to consumers in July, and the actual fuel cost of Rs9.038 per unit.

The proposed refund is a result of the lower-than-expected fuel costs, which stem from a decline in international market rates, contrary to the higher fuel and exchange rates assumed for the current fiscal year. The CPPA has requested that this difference be returned to consumers in their September bills.

Details of Power Generation and Costs

According to the petition, around 14,880 gigawatt-hours (GWh) of electricity were generated in July at a total fuel cost of Rs133.295 billion, translating to Rs8.95 per unit. Of this, 14,411 GWh was delivered to Discos at a cost of Rs130.243 billion, or Rs9.03142 per unit.

• Hydropower: Contributed the largest share at 36%, with no associated fuel costs.
• LNG-Based Power Generation: Accounted for 20% of the total supply, with a generation cost of Rs24.88 per unit in July, down from Rs26.32 per unit in June.
• Nuclear Power: Provided 13.36% of the grid’s supply.
• Local Coal: Contributed over 10%, with a generation cost of Rs11.33 per unit.
• Local Gas: Accounted for 7.93% of the supply, with a generation cost of Rs13.79 per unit.
• Imported Coal: Provided 7.64% of the grid’s supply, with a generation cost of Rs16.20 per unit.
• Renewable Energy: Wind, bagasse, and solar together contributed 4% to the grid, with wind and solar having no fuel costs, and bagasse generation costs remaining stable at around Rs6 per unit.

Upcoming Public Hearing

Nepra has accepted the CPPA’s request and has scheduled a public hearing on August 28, 2024. After approval, the negative FCA will be reflected in consumers’ bills for September, offering some relief amidst the ongoing economic challenges.