NEPRA Allows Rs3.28 Per Unit Raise in Electricity Tariff for Six Months

Sat Sep 23 2023
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ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) allowed state-run power distribution companies (Discos) and K-Electric to implement a rate increase of Rs3.28 per unit for next six months, effective from October 2023 through March 2024.

During this period, all consumers will experience an additional charge of Rs3.28 per unit, attributed to the fourth quarterly adjustments for FY23 (April-June 2023), as reported by local media.

This rate adjustment is primarily due to fluctuations in capacity charges, Variable O&M, additional recovery on incremental sales, Use of System Charges, Market Operator Fee, and the impact of fuel charge adjustments (FCA) on transmission and distribution (T&D) losses.

Over the course of these six months, both Discos and K-Electric are expected to collectively accumulate approximately Rs183 billion, inclusive of GST. Excluding GST, Discos are projected to collect Rs135.58 billion, while K-Electric’s charges will amount to approximately Rs20 billion.

Notably, a significant portion of this collection (exclusive of GST), surpassing Rs130 billion, will be allocated towards payment of capacity charges to Independent Power Producers (IPPs).

It is important to highlight that quarterly adjustments will not be passed on to Bl, B2, B3, and B4 industrial consumers for the extent of incremental sales, in accordance with the Authority’s decision of December 1, 2020.

On August 24, 2023, NEPRA conducted a public hearing regarding the petition submitted by the companies. During the hearing, a representative of the Ministry of Energy proposed that the quarterly adjustment be spread over a six-month period to minimize its impact on consumers.

The Ministry contended that spreading the impact over six months would result in a charge of approximately Rs3.55 per unit, compared to Rs6.20 per unit if passed on to consumers over a three-month period.

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