Govt to cut agri power tariff

The government has decided to pass on the reduction in electricity prices on account of fuel cost adjustment (FCA) to the agriculture sector and domestic consumers using up to 300 units per month. The Ministry of Energy (Power Division) has sent a letter to the National Electric Power Regulatory Authority (Nepra), asking it to implement the decision. In the communication, Power Division Minister Awais Ahmed Leghari called for passing on the relief to agricultural consumers and domestic users who were consuming up to 300 units per month. He recalled that the Economic Coordination Committee (ECC) had issued policy guidelines on May 21, 2015 that any reduction on account of monthly FCA would not be passed on to the domestic consumers who were already paying subsidised electricity tariff. The regulator, in its FCA decision on June 24, 2015, also decided on the non-applicability of negative FCA to non-time of use (TOU) domestic consumers of up to 300 units. Furthermore, its decision about non-applicability of negative FCA to agricultural consumers has been in effect since November 2010. The Ministry of Energy, through its letter dated June 9, 2021, issued policy guidelines for re-targeting power subsidies in future. In line with the guidelines, Nepra in its September 2021 decision created new protected and unprotected non-TOU domestic consumer categories. Since then, tariffs for the unprotected category have been increased gradually in line with the government policy. The power minister said that following tariff rationalisation, the policy of not passing on negative FCA to unprotected domestic consumers and agricultural consumers may not align with the principle behind past decisions. "It is requested that the authority may reconsider the non-applicability of negative FCA to unprotected domestic and agricultural categories," he said. Relief for KE consumers Separately, the consumers of K-Electric (KE) are set to enjoy a tariff relief of Rs4.95 per unit on account of FCA for December 2024. Nepra conducted a hearing on Wednesday to take decision on the request. The relief will be passed on to consumers in March 2025 bills. Its aggregate amount is calculated at Rs4.94 billion. Since September 2024, this is the fourth consecutive negative FCA being passed on to KE customers. The relief requested for November 2024 was Rs4.98 per kilowatt-hour (kWh), preceded by Rs0.27 per kWh for October and Rs0.16 per kWh for September. At the hearing, various stakeholders including consumer representatives discussed KE's historical FCA and their impact, electricity procurement and generation costs. KE officials said the negative FCA for December 2024 was driven by zero furnace oil consumption, a lower share of re-gasified liquefied natural gas (RLNG) and increased supply from Central Power Purchasing Agency-Guarantee (CPPA-G). Furnace oil use was zero against the reference proportion of 13%, RLNG consumption was 19% against the reference proportion of 21% while power offtake from CPPA-G increased from 52% to 74%. KE submitted the hourly data of economic merit order along with responses to the queries made by Nepra. Jehanzaib, a Karachi-based consumer, inquired about FCA comparisons between KE and ex-Wapda distribution companies (DISCOs) over the past few years. In response, Nepra Member Technical from Sindh Rafique Ahmed Shaikh mentioned that KE had provided greater FCA relief to consumers in the last two years compared to other DISCOs and emphasised that FCA decisions were made transparently and applied across all DISCOs. Another customer asked for the negative FCA to be accounted for in the summer, especially to offset high electricity bills due to increased demand during those months. Discussions were also held on the status of KE's Bin Qasim Power Station-I (BQPS-I) units 1 and 2, with Arif Bilwani seeking clarification on whether the units were operational. KE officials responded that while an extension request was submitted to the regulatory authority for making the units operational, no decision had been notified so far and no cost had been claimed for those units. Umer, who represented a think tank, emphasised the importance of negative FCA for reducing electricity costs for consumers. He commended Nepra's approach of gradually adjusting the fuel cost relief, citing the November FCA, rather than passing on the entire amount in one go. "This strategy will help balance future costs and shield consumers from sudden price spikes," he said. Umer was of the view that such a measured approach would contribute to greater stability and sustainability in electricity prices. Building on the same perspective, an energy correspondent appreciated Nepra for its futuristic approach. He inquired about the outstanding balance, which was yet to be adjusted, responding to which Nepra officials said Rs5 billion out of Rs13 billion had already been incorporated.

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