ISLAMABAD: The Central Power Purchasing Agency (CPPA) has requested a massive increase in fuel prices in the upcoming bills of Rs7.13 per unit due to the amount of electricity consumed in January. This move is intended to deal yet another blow to struggling electricity consumers by bringing in an extra Rs57 billion for power distribution companies (Discos) that were previously under Wapda.
The power sector bureaucracy’s ability to forecast fuel costs, even for a six- to seven-month period, is called into question by this, the highest-ever rise in fuel cost adjustment (FCA) suggested by the CPPA in history. This increase is nearly 96 percent greater than the pre-fixed fuel cost of Rs7.50 per unit currently charged to consumers in January.
In addition to the annual base tariff increase of roughly 26% and the additional 18% hike under the current quarterly tariff adjustment, there is also an increase in FCA. As a result, even with minimal consumption during the busiest winter months, customers will still have to pay high rates. The application for an open meeting on February 23 (Friday) has been approved by the National Electric Power Regulatory Authority (Nepra).
The increased local coal and gas costs are the primary source of the higher planned FCA on the energy use of January 2024, even if the exchange rate stayed consistent and the prices of imported fuels, such as LNG and furnace oil, were lower in January.
To generate Rs57 billion for discos, CPPA is requesting a record Rs7.13 per unit FCA in March bills.
Acting as Discos’ commercial agent, the CPPA filed a petition requesting an extra FCA of Rs7.1308 per unit to be paid in March for power used in January. According to the claim, the actual gasoline cost for January was Rs14.62 per unit, whereas the reference fuel cost was established at Rs7.489 per unit.
At an anticipated fuel expenditure of Rs114.6bn (or Rs13.79 per unit), around 8,314 gigawatt-hours (GWh) of electricity were generated in January, of which 7,938 GWh were delivered to Discos at a cost of Rs116.059bn (or Rs14.62 per unit), according to the report.
This comprised a meagre 11% hydropower share in January as opposed to 24% in December 2023 and 36.5 % in November. January is always cheaper than other months for hydropower, which doesn’t require fuel, because of canal closures for yearly maintenance.
Nuclear power accounted for the largest portion of the national grind in January, at over 21%, compared to 19% in December and 21% in November. In January, 18.22 percent of the total came from LNG imports, which accounted for 16.4 percent in December and 10.6 percent in November.
With the addition of almost 7% of imported coal, the total coal generation accounted for 23.4 percent in January, higher than the 22 percent total power production in December. The third-largest proportion of coal in January was local coal, at 16.5 percent, as opposed to 17 percent in December. Next came residential gas-fired electricity, which increased from 10.7 percent in December and 9.2 percent in November to 12.45 percent in January.
Compared to Rs38.5 per unit in December and Rs47 per unit in November, the fuel cost of furnace oil-based power generation decreased to Rs35.4 per unit in January. Due to a decrease in hydropower availability, the percentage of furnace oil-based generation increased to 9 percent in January from 2.2 percent in December.
Diesel-based generation costs grew marginally to Rs45.6 per unit in January from Rs42 in December, while their overall share increased to 1.22 percent in January from a pitiful 0.08 percent in December.
In January, the cost of generating power using LNG decreased to Rs24.3 per unit, from Rs26.22 in December. However, due mostly to higher output, the cost of domestic gas-based generation was marginally lower at Rs13.7 per unit as opposed to Rs14.6 in December.
In January, the cost of generating electricity locally using coal was Rs11.9 per unit, down from Rs12.33 in December and Rs15.3 in November. The price per unit of electricity produced using imported coal increased to Rs21 from Rs17.25 in December and Rs14.53 in November.
In January, the combined contribution of three renewable energy sources—solar, wind, and bagasse—to the grid was 3.4 percent, which is a decrease from 4 percent in December. Fuel costs are nonexistent for wind and solar power, but the cost of bagasse-based generating has stayed constant at roughly Rs6 per unit.
The rise in FCAs would be reflected on customers’ bills in the forthcoming billing month of March, following Nepra’s approval. The FCA is often applied to the consumer’s bills for a single month and is evaluated monthly in accordance with the tariff structure that is in effect throughout the nation.
All consumer categories would be subject to the higher FCA if approved, with the exception of those that use electric vehicle charging stations, agricultural customers, protected home users consuming up to 300 units, and lifeline power consumers.
No matter how much energy they use, household customers with time-of-use meters would likewise be subject to the modification.
Within the tariff mechanism, fuel price changes are only passed on to customers automatically on a monthly basis. Meanwhile, the federal government incorporates quarterly tariff adjustments into the base tariff to account for variations in power cost, capacity fees, variable maintenance and operation expenses, use of system charges, and the impact of distribution and transmission losses.
SOURCE: DAWN NEWS
