The National Electric Power Regulatory Authority (NEPRA) has notified an increase in electricity rates by up to Rs3.76 per unit due to a quarterly adjustment.

The hike allows power companies to recover over Rs46 billion from consumers for the third quarter of FY 2023-24. Of this total, Rs28.515 billion will be charged as capacity charges, which will be directed to independent power plants (IPPs) that have not produced any electricity and have remained idle.

As a result, diligent consumers who regularly pay their bills will bear the burden of this significant amount.

Read more: NEPRA highlights Rs32b burden on consumers

The substantial costs are a consequence of past governmental agreements to install power plants in large quantities, with guarantees to purchase the electricity produced.

These guarantees also included payments to the IPPs even if the electricity was not taken from them.

Consequently, although there is available capacity, it is not being added to the national grid, yet consumers are still required to pay for this idle capacity.

These flawed agreements with IPPs have led to consumers effectively subsidising these idle plants at a rate of approximately Rs17 per unit—substantially higher than the average electricity price of around Rs9 per unit.

Also read: NEPRA mulls another hike despite electricity demand drop

In pursuance of proviso (ii) to Sub-Section 7 of Section 31 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (XL of 1997), NEPRA has said that it notifies complete decision of the authority in the matter of Requests filed by XWDISCOs for periodic adjustment in tariff for the 3rd quarter of FY 2023-24 already intimated to the energy ministry (Power Division) on May 31, 2024.

Accordingly, the Authority has decided to allow the instant positive quarterly adjustments of Rs.46.613 billion pertaining to the 3rd quarter of the FY 2023 24, in a period of three months i.e. June 2024 to August 2024.

Out of the total burden of Rs46.613 billion, Rs28.515 billion will be charged on account of capacity charges, whereas Rs10.284 billion will be recovered on account of less FCA impact of T&D losses, Rs5.309 billion O&M, and Rs 2.541 billion use of system charges.

According to the NEPRA notification, the consumers will be charged at the rate of Rs1.90/unit, Rs0.9262/unit and Rs0.9262/unit for June, July and August 2024 respectively, to apply to all consumer categories, except lifeline consumers of XWDISCOs and K-Electric.

While effecting the Decision, the concerned entities including Central Power Purchasing Agency Guarantee Limited (CPPAGL), XWDISCOs and K-Electric shall keep in view and strictly comply with the orders of the courts notwithstanding this decision.

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