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Express Tribune
10-05-2025
- Business
- Express Tribune
Consumers pay Rs69b for idle plants
Listen to article The inefficiencies in the country's electricity transmission system have burdened consumers with capacity payments of Rs69 billion in the quarterly tariff adjustment (QTA) for ex-Wapda distribution companies (DISCOs) for the third quarter of financial year 2024-25. Three power plants had been operating at lower capacity during the period under review, but they received Rs69 billion in capacity payments, which the electricity consumers had to pay. National Electric Power Regulatory Authority (Nepra) Member (Technical) Rafique Ahmad Shaikh has pointed out inefficiencies in the country's transmission system due to which Rs69 billion was paid to three coal-fired plants in capacity charges despite extremely low utilisation. He submitted these comments in his additional note on the QTA for the third quarter of 2024-25, in which a reduction of Rs1.55 per unit was allowed to refund Rs52.6 billion to the consumers of DSICOs and K-Electric (KE) in the bills for May, June and July 2025. According to him, transmission constraints continue to limit the utilisation of several cost-effective power plants located in the southern region, notably Port Qasim, China Power and Lucky Electric. Despite their potential to provide affordable electricity, these plants reported extremely low utilisation factors – approximately 1% for Port Qasim, 10% for China Power and 0% for Lucky Electric – during the quarter. Nevertheless, they claimed substantial capacity payments amounting to Rs26.95 billion, Rs30.88 billion and Rs11.26 billion, respectively. In total, around Rs69.09 billion was claimed in capacity charges despite minimal generation. This reflects a major inefficiency in the system and underscores the urgent need to address transmission bottlenecks and improve generation dispatch practices to ensure the optimal use of the available low-cost generation resources. It is noted that the capacity claimed by DISCOs for the third quarter of FY 2024-25 amounted to Rs362.395 billion, which was significantly lower than the reference figure of Rs459.286 billion. During the same period, electricity sales stood at 19,968 gigawatt hours (GWh) compared to reference sales of 21,846 GWh in the corresponding period. Ordinarily, a decline in electricity sales would result in an upward adjustment in capacity charges due to the fixed-cost nature of capacity payments. However, during this quarter, the termination of certain power purchase agreements (PPAs) and other adjustments related to the independent power producers (IPPs) operating within the system have contributed to a reduction against the projected capacity payment. Consequently, this led to a negative adjustment in the third quarter of FY 2024-25. Although the quarterly adjustment for the third quarter decreased significantly, he said that enhanced governance and more efficient system operations could have further improved electricity sales, potentially leading to an even greater reduction in the adjustment amount. In that regard, several key observations were highlighted for consideration and focused action by the relevant stakeholders. Genco-II (Guddu old), Genco-III (TPS Muzaffargarh) and Genco-I (Jamshoro Power Company) collectively claimed capacity payments of Rs1.237 billion during the quarter – Rs469 million, Rs350 million and Rs418 million respectively – despite generating no electricity during the period. These plants are characterised by high generation costs and poor operational efficiency, with little-to-no likelihood of receiving dispatch orders from the system operator in the future, given the availability of abundant and more cost-effective surplus capacity in the system. Continuing capacity payments to such non-operational and inefficient assets imposes an unnecessary financial burden on both the power sector and end consumers. A targeted and strategic review is, therefore, essential to rationalise these expenditures and improve the overall sector efficiency.
Express Tribune
07-03-2025
- Business
- Express Tribune
NEPRA directs power tariff cut nationwide
The National Electric Power Regulatory Authority (Nepra) on Thursday directed ex-Wapda distribution companies (XWDISCOs) and K-Electric (KE) to reduce the power tariff by up to Rs3 per unit for consumers. The power regulator issued decisions based on the monthly fuel charges adjustments (FCA) for December 2024 in respect of KE and January 2025 for XWDISCOs. The power regulator directed XWDISCOs to reduce the tariff by up to Rs2.124 per unit and KE by up to Rs3 per unit for Karachi consumers in their March 2025 electricity bills. It is to be noted that in their petitions, KE suggested that it was ready to refund Rs4.95 per unit, while XWDISCOs were willing to return Rs2.0 per unit to their consumers. These decisions shall apply to all consumer categories except lifeline consumers, domestic protected consumers, Electric Vehicle Charging Stations (EVCS), and prepaid electricity consumers of all categories who have opted for the prepaid tariff. The regulator also clarified that if any March 2025 bills are issued before the notification of this decision, the adjustment may be applied in the subsequent month. Rafique Shaikh, a member of the authority, handwrote a note on the decision, stating, "I am of the considered opinion that the impact of yet another violation of the Economic Merit Order (EMO) should not be passed on to consumers (i.e. around Rs1.5 billion)." In the case of DISCOs other than KE, the power regulator noted that after the recent tariff rebasing and the re-targeting of power subsidiesresulting in the creation of a protected tariff categorythe subsidy for non-protected residential and agricultural consumers has been significantly reduced. In light of this, and considering the submissions of the Ministry of Energy, Nepra has decided to pass on the negative FCA to all non-protected residential and agricultural consumers.
Express Tribune
10-02-2025
- Business
- Express Tribune
Security deposit hike opposed
KARACHI: Rejecting the proposed increase in security deposit rates by electricity distribution companies (DISCOs), business leaders have asked the National Electric Power Regulatory Authority (Nepra) to address their concerns and oppose the rate hike. They said it would put a halt to industrialisation and weaken the competitiveness of local industries because the proposed increase, such as the rise in B2 (a tariff category) security deposits from Rs2,010 per kilowatt to Rs54,783/KW, was unbearable. Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Jawed Bilwani urged Nepra to put the proposed hike in security deposit rates in abeyance until the requisite information was transparently shared with all the relevant stakeholders and an inclusive and meaningful consultation process must also be initiated to ensure that any decision considered the financial constraints of consumers and businesses alike. In a letter sent to the Nepra registrar, Bilwani said members of the business community, trade bodies and consumers had expressed grave concern over the recent petitions filed by various ex-Wapda DISCOs, seeking an unprecedented increase in security deposit rates. Those proposals, if approved, would place an excessive financial burden on consumers, businesses and industries across the country, he said. DISCOs have sought Nepra's approval to revise the security deposit rates in accordance with electricity consumption, property size and even market value. Such a drastic increase, without a transparent and well-communicated rationale, will create financial hardships for consumers and businesses already struggling with escalating electricity tariffs and economic pressures. "The proposed rise, such as the hike in B2 security deposits from Rs2,010/KW to Rs54,783/KW, is excessive and financially unviable," Bilwani said. He cautioned that such an unbearable hike would leave no other option for consumers but to switch to self-generation of electricity via solar technology, which would plunge DISCOs in a deep crisis as their consumers would rapidly diminish. He said DISCOs including K-Electric had collected security deposits amounting to roughly four times the maximum demand and seven times the average demand from consumers. Bilwani elaborated that K-Electric had collected security deposits from all its consumers to sanction a massive 13,000 megawatts. However, even during peak times, the electricity demand reaches only 3,500 megawatts while under normal circumstances it averages between 2,200 and 2,400MW. "This clearly indicates how excessively the utility service has exploited the public by imposing unfair security deposits. Similar is the situation with the rest of the country as all DISCOs including KE have sanctioned a gigantic load of 97,800MW whereas the electricity demand all over the country peaks at 23,000MW only." In another letter to the Nepra registrar, Bilwani said Nepra must direct all DISCOs to conduct an extensive audit of security deposits and consumer contributions.
Express Tribune
30-01-2025
- Business
- Express Tribune
Power consumers poised to get Rs1.03 relief
Listen to article ISLAMABAD: Power consumers are set to receive a relief of Rs1.03 per unit on account of fuel cost adjustment for the month of December 2024. At the same time, it has been revealed that the closure of 969-megawatt Neelum-Jhelum hydropower plant for months is hitting the consumers as they have not been provided cheap electricity from the plant. A government official revealed this at a public hearing held by the National Electric Power Regulatory Authority (Nepra) to consider a petition of Central Power Purchasing Agency-Guarantee (CPPA-G), which sought approval for a reduction of Rs1.03 per unit in electricity prices under fuel cost adjustment for December. If Nepra approves the release of refund, it can provide some financial relief to electricity consumers in February. However, the tariff adjustment will not apply to lifeline consumers, electric vehicle charging stations and K-Electric customers. According to CPPA-G, the positive impact of winter package is being felt, with electricity prices being lower due to seasonal measures. However, it also highlighted the negative impact of non-functioning of the Neelum-Jhelum hydropower project. CPPA-G officials stated had the project been operational, electricity prices could have been even lower. Another issue raised during the hearing was the non-operation of 747MW Guddu power plant. CPPA-G was questioned as to why the plant was not running, which contributed to a rise in electricity costs. The agency did not give a clear response. Electricity consumers expressed concern and called for taking further steps to reduce electricity prices. A consumer pointed out that system's inefficiency was exacerbated by weather conditions, adding that "when it rains, lines go down, and when it's hot, lines go down." According to data submitted by CPPA-G, in December 2024, nuclear energy provided 2,065 gigawatt hours (GWh), or 26.48% of total electricity generation. It was followed by hydroelectric power that produced 22.8% at zero cost and re-gasified liquefied natural gas (RLNG)-based power plants, which contributed 20.7% of electricity. As the cost of fossil fuel sources, such as natural gas and local coal, stays higher, nuclear power remains a cornerstone of Pakistan's energy strategy due to its lower cost and environmental benefits. In January too, nuclear energy generation was the top source, contributing 20.78%, or 1,728 GWh, to the grid. The milestone was first achieved in December 2022, when nuclear power contributed more than 27% (2,284.8 GWh) to the country's energy mix. In December 2024, nuclear power comprised 26.48% of the energy mix, outpacing hydroelectric power and RLNG-based electricity. Earlier this month, Nepra also announced a reduction in electricity tariff of up to 75 paisa per unit for consumers of ex-Wapda distribution companies (DISCOs) and K-Electric on account of fuel charges adjustment. The regulator cut tariff up to Rs0.7556 per unit for DISCOs due to variations in fuel charges in November 2024. For K-Electric consumers, it slashed power price by Rs0.4919 per kilowatt-hour (kWh) for October 2024. The reimbursement was due to be made in electricity bills for January 2025. Discussing a tariff application of DISCOs, the regulator said that National Transmission and Despatch Company (NTDC) reported provisional transmission and transformation (T&T) losses of 244.158 GWh, equivalent to 2.946%, based on energy delivered to NTDC system during November 2024. Additionally, NTDC reported T&T losses of 19.528 GWh, or 3.391%, for Pak Matiari-Lahore Transmission Company's (PMLTC) high-voltage, direct-current line. NTDC is allowed T&T losses of 2.639% at 500-kilovolt and 220kV levels. For PMLTC, the permitted T&T losses are up to 4.3%.
