For March, discos want to raise electricity rates significantly

Ex-Wapda distribution companies (XWDiscos) have requested a startling R7.13 per unit hike from the National Electric Power Regulatory Authority (Nepra) for March, which is expected to deal a blow to the inflation-weary masses with a significant increase in their electricity bills, The News reported on Wednesday.

In addition to systemic limitations such as the high voltage direct current (HVDC) transmission line’s inability to efficiently transfer economically viable power from southern producers to the north, resulting in a notable financial burden on customers, the request for Nepra’s approval comes amid a notable decline in hydropower production.

Because of this, the south has relied less on affordable energy sources and more on expensive alternatives like residual fuel oil (RFO) and high-speed diesel. The rising cost of fuel is one of the reasons for these high rates.

Nepra, meanwhile, has set a public hearing for February 23 to examine the Central Power Purchasing Agency’s (CPPA) case, which was filed by the organization on behalf of Discos.

Remarkably, these corporations asserted a recovery of Rs2.568 billion from prior adjustments, on top of the overall demand.

In January 2024, 8,314 gigawatt-hours (GWh) of power were produced, according to the appeal, at a cost of Rs114.634 billion, or Rs13.7885 per unit. Additionally, distribution businesses (Discos) received 7,938 GWh, initially priced at Rs116.06 billion, while transmission losses accounted for 4.24% (or 352 GWh) of the total generation. On the other hand, it was 3.51 percent (271 GWh) in December 2023 and 3.51% (298 GWh) in January 2023.

In January 2024, the amount of power generated was 2.4% less than the 8,515 GWh generated in the same month the previous year.

On the other hand, the generation grew by 7.6% in December 2023. It’s interesting to note that during the month, real power generation fell 4.7% short of reference generation. Increased capacity costs are expected during the third quarter of fiscal year 2024 QTA (Quarterly Tariff Adjustment) due to this decrease in generation.

The petition claims that from Rs11.2 per unit in December 2023 to Rs13.79 per unit YoY in January 2024—a concerning 43.9% increase in generation costs. In a similar vein, the unit cost climbed by 41.3% over the previous month (December 2023, at Rs 10.13).

In January 2024, the cost of generating power per unit using imported coal increased by 22%, from Rs. 17.25/unit to Rs. 21.05/unit. However, from Rs12.33 per unit in December 2023 to Rs11.9 per unit, the cost of producing local cola decreased by 3.3%.

The costly generation was produced using diesel and RFO. RFO-based generation during the month totaled 750 GWh, up 346 % over the previous month (168 GWh) and 62% from the same month the previous year.

Its generating cost per unit was $35.44, which represented a 22.3% increase over the same month in the prior year. HSD generated 102 GWh at a cost of Rs45.61 per unit; in contrast, this costly source was not employed to generate electricity in the preceding month and just 5.4 GWh were created in the same month of the previous year.

According to the appeal, users were charged Rs7.4894 per unit for fuel in January, although the actual fuel cost was Rs14.6202 per unit. The CPPA contends that customers ought to bear the additional Rs7.1308 cost burden per unit.