Islamabad, Oct 25: The National Electric Power Regulatory Authority (Nepra) has allowed negative adjustment of paisa 86 per unit in August FCA of Discos to refund Rs10 billion to the consumers for August 2024.
The decision of the authority also instructs sharp variations between the authority on the tariff of bagasse fired plants approved by the authority and included in the CPPA-G FCA adjustment request.
Both the Member (Finance and Tariff) and other authority’s member including the chairman have tendered separate additional notes on the tariff of bagasse-fired power plants. CPPA-G has requested negative adjustment of paisa 55.75 per unit for the consumed units of 12,752 GWH to refund nearly seven billion to consumers against billings of August 2024.The refund will be against the billings of October 2024.
On 26 of September 2024, the authority conducted a public hearing to confirm the data provided by the CPPA-G and the market operator and for further deliberation.
The Member (Tariff and Finance informed in his additional note that there had been much consumer resentment about the bagasse-based tariff whereby the tariff has been determined high and decided without any consumer involvement.
This has led to shockingly high tariffs, which sometimes surpass even the local coal prices – a clear area of concern that deserves urgent focusing.
The CPPA-G explained this during a public hearing of the August FCA by proposing a steep bagasse tariff by June, August 2024 but is cheaper than local coal.
In June, the average bagasse tariff was Rs5.982 per kWh, was unchanged in July 2024, and then shot up to Rs12.48 per kWh in August 2024.
However, there was a slower spike in the local of coal tariff, which stood at Rs 11.03 per kWh in June-2024, Rs 11.33 in July 2024 and then Rs 12.27 in August-2024.
However, by August 2024 the baggasse tariff not only went up significantly but also went beyond the local coal tariff.
This has caused concern among the candid consumers as they have also blanched for being part of the decision making of this bagasse tariff.
He suggested the Notification of the negative FCA of Rs1.2628 per unit and it do not include generation capacity based on bagasse under the new tariff plan.
It is therefore my humble advice that the authority which has been vested with so much power to correct errors take corrective measures in relation to its decision and immediately commence the suomoto curative proceedings under the laws of the NEPRA Act, NEPRA (Tariff Standards and Procedure) Rules and any others that applies regarding the NEPRA Act.
Again, as noted a public hearing is crucial to ensure a detailed and comprehensive evaluation of the bagasse-based tariff for consideration of pricing options, in addition to facing controversial issues. Accommodating these claims in the August FCA, would subvert the proposed suomoto review process.
Moreover, the above examined doesn’t consider the variable cost efficiencies for the coal-fired and the bagasse power plants and hence the overall fuel cost.
However, if we estimate it from the lens of the yearly timeframe of FY 2023-24, it is clear that the adjusted fuel cost component of baggasse projects is indeed cheaper compared to the local coal power plant projects fuel cost component of Rs13.76/kWh.
They argued that since the decision has not been attacked by the loser in any forum provided for by the law, the suo motto curative review being sought by submissions of the stakeholder should not be undertaken automatically and that the authority must consider whether substantial injustice has been done.
If that is not the position then it is better to respond to stakeholder reactions by providing a rational for the decision and thus, maintain the legitimacy of the regulatory process and hence, consistency and predictability.
