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Govt to Recover Rs. 52 Billion FCA Charges from Power Consumers

The federal government has asked the National Electric Power Regulatory Authority (NEPRA) for policy guidelines on transferring a Rs. 52 billion burden to power consumers due to fuel charges adjustments (FCAs) for the months of June and July 2022.

The government has requested that the power regulator issue policy guidelines for the recovery of Rs. 52 billion that it had previously deferred, between March 2023 and October 2023, based on the recovery rates specified for XWDISCOs and K-Electric, respectively.

The federal government has requested NEPRA’s policy guidelines under Section 31 of the Regulation, Generation, Transmission, and Distribution of Electric Power Act 1997 for the recovery of staggered fuel charges adjustment applicable for the months of August and September 2022 in a petition submitted to the regulator.

The federal cabinet has already approved the recovery of the amount due to the two deferred FCAs through circulation.

For the months of June and July 2022, NEPRA determined FCAs of Rs. 9.8972 per unit and Rs. 4.3435 per unit, respectively. The FCA for both months was supposed to be charged in the XWDiscos billing months of August and September 2022, respectively.

The regulator determined an increase of Rs. 9.8972 per unit for K-Electric customers due to FCA to be charged in the August 2022 billing cycle. Similarly, the tariff was raised by Rs. 8.0909 per unit due to FCA for June 2022, which was scheduled to be charged in September 2022.

Because the July FCA was negative Rs. 4.1171 per unit, consumers were supposed to pay only an additional Rs. 3.9738 per unit for June FCA instead of the Rs.8.0909 per unit hike determined by NEPRA for June FCA.

The federal government notified the rebasing of uniform tariff determined by NEPRA and recommended by it as “final tariff” for publication in the official gazette in order to not burden consumers disproportionately in a sequence of Rs. 3.5 per unit in July 2022 and Rs. 3.5 per unit in August 2022. In August billing, consumers were hit with Rs. 9.8972 per unit FCA plus Rs. 7 per unit rebasing. This represents an average increase of Rs. 16.90 per unit over July rates. The tariff changes mentioned above significantly increased electricity bills for the months of August and September 2022.

Furthermore, the widespread flooding caused by unusually heavy monsoon rains impacted consumers across the country. As a result of this scenario, the prime minister decided to stagger the recovery of XWD1SCOs and K-Electric FCAs that are valid in August and September 2022.

To extend flood relief to a limited class of domestic consumers, the federal government, in accordance with its economic and social policy objectives, is pleased to issue the following guidelines to make adjustments in the approved tariff of XWDISCOs and K-Electric to the extent of staggered recovery as follows:

Non-ToU Domestic (Protected) consumers consuming 200 units would pay only Rs. 3.8972 per unit FCA in the August 2022 billing month. The remainder of the FCA of Rs. 6 per unit (out of a total of Rs. 9.8972 per unit) would be recovered later.

Non-ToU Domestic (Protected) consumers with 300 units of consumption and private agriculture consumers would not be required to pay any FCA in the August 2022 billing month. The FCA of Rs. 9.8972 per unit would be recovered later.

Non-ToU Domestic consumers who consume 300 units in July 2022 will not pay any FCA in the September 2022 billing month. The FCA of Rs. 4.3435 per unit would be recovered later.

ToU exemption Domestic K-Electric customers who consumed 300 units in July 2022 would not have to pay any FCA in the September 2022 billing month. FCA of Rs. 3.9738 per unit would be recovered later (after passing on the negative FCA of Rs. 4.1171 per unit for the month of July 22 to consumers who consumed 300 units as well).

The policy guidelines approved by the federal government for the recovery of staggered fuel charges adjustment applicable for the months of August and September 2022, as specified in section 3 1 of the Regulation, Generation, Transmission, and Distribution of Electric Power Act, 1997, are hereby conveyed to the Authority for consideration.

The above-mentioned deferred FCAs will be recovered over an eight-month period beginning in March 2023 and ending on October 23, in accordance with the recovery rates mentioned for XWDISCOs and K-Electric, respectively.

The federal government intended to implement the previously mentioned deferred FCA recovery on March 1, 2023. The federal government has asked for a hearing opportunity for detailed submissions, including a session with the Authority’s technical professional team prior to the hearing. On March 2, 2023, NEPRA will hold a public hearing.

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