ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has increased tariffs of Distribution Companies (Discos) by Rs1.95 per unit for August 2021 under monthly Fuel Component Adjustment (FCA) mechanism, amid dissenting note from Vice Chairman Nepra on purpose of power plants whose PPAs were altered without Authority’s approval.
Central Power Purchasing Agency- Guaranteed (CPPA-G) had sought an increase of Rs2.07 per unit, having financial impact of Rs32.30 billion. However, Nepra has approved increase of Rs 1.954 per unit, having impact of Rs30.4 billion.
The FCA will be charged in billing of October 2021 to all consumer categories of Discos except lifeline consumers and Karachi Electric.
According to details, the Authority conducted the hearing in the matter on September 30, 2021 at NEPRA headquarters.
The Authority, comprising Chairman Tauseef H Farooqi, Vice Chairman Rafique Ahmad Shaikh, Member, Balochistan, Rehmatullah Baloch and Member KP, Engineer Maqsood Anwar Khan reviewed the information provided by CPPA-G seeking monthly FCA and due diligence was done accordingly. From perusal of the information provided by CPPA-G, the actual pool fuel cost for August 2021 was Rs6.8053/kWh, against the reference fuel cost component of Rs4.7334/kWh. The actual fuel charges, as reported by CPPA-G, for August 2021 increased by Rs2.0719/kWh as compared to the reference fuel charges.
The Authority, from the data provided by CPPA-G, observed that fuel cost of certain power plants has not been claimed by CPPA-G as per the Authority’s approved rates, accordingly, rates have been adjusted downward in line with the Authority’s approved rates.
The Authority also observed that CPPA-G has purchased energy of 45.263 GWh from Tavanir Iran in August 2021 at a cost of Rs559 million. The Authority also observed that CPPA-G has filed its request with the Authority for approval of extension of contract between CPPA-G and Tavanir Iran for import of power up to 104MW for the period from January 1, 2020 to December 31, 2021, which is under consideration of the Authority. In view thereof, the cost of electricity purchased from Tavanir Iran has been allowed strictly on provisional basis, subject to its adjustment once the Authority decides the extension in the contract between CPPA-G and Tavanir Iran. The cost being allowed on provisional basis is to avoid piling up of the cost and one time burdening of the consumers in future.
CPPA-G also claimed amount of Rs3.283 billion on account of previous adjustments for August 2021. However, the Authority verified it as Rs3.255 billion, which has been included in the monthly FCAs of August 2021. The difference of Rs27.541 million is on account of previous adjustment claimed for Tavanir Iran, which has not been considered and would be accounted for only after the Authority decides the PAR submitted by CPPA-G in this regard.
Previous adjustments claimed by CPPA-G also include positive adjustment of Rs542 million pertaining to Haweli Bahadur Shah and negative adjustment of Rs105 million pertaining to Balloki Power plants. This has been claimed by CPPA-G due to revision in the FCC of these plants by Nepra, for the period from July 2018 to June 2020. These adjustments are being allowed provisionally in the FCA of August 2021, subject to adjustment, once final verification of the claimed amounts is completed and would be adjusted in the subsequent monthly FCAs.
During the hearing, the Authority also observed that, prima facie, certain efficient power plants were not fully utilized and instead energy from costlier RFO/HSD based power plants was generated to the tune of over Rs30.136 billion during August 2021. The Authority has been directing NPCC/NTDC and CPPA-G repeatedly to provide complete justification in this regard, to the satisfaction of the Authority and submit complete details for deviation from Economic Merit Order (EMO), showing hourly generation along-with the financial impact for deviation from EMO, if any, and the reasons, thereof.
NPCC/NTDC during the hearing, explained operation of power plants on RFO/HSD, however, the Authority observed that an in-house analysis has also been carried out, to work out the financial impact due to deviation from EMO based on the information submitted by NPCC. As per the in-house analysis/workings carried out, the net amount deductible, on provisional basis, from the overall claim due to deviation from EMO due to underutilization of efficient power plants worked out as Rs 1.381 billion. The Authority has decided to deduct this amount provisionally in the instant FCA, until NPCC/ NTDC and CPPA-G provide the required details along-with complete justification in this regard to the satisfaction of the Authority.
Further, while reviewing the FCA claim, the Authority observed that partial load was provided to Balloki, HBS and QATPL power plants even during forced outages and Failure to Achieve Despatch (FADL), which is non-performance/fault of the said power producers. The Authority is of the considered view that part load can only be provided if the plant is available but NPCC despatches it on part load due to system requirements. Similarly, part load cannot be provided in the case of failure of the plant to achieve the despatch instructed by the NPCC. Therefore, an amount of Rs358.91 million (Rs46.89 million for Balloki, Rs215.42 million for Bhikki and Rs96.6 for HBS) for the month of July 2021 has been deducted on account of partial load charges, while working out the FCA of August 2021.
The Authority, after incorporating the aforementioned adjustments, has reviewed and assessed an increase of Rs1.9539/kWh in the applicable tariff for XW DISCOs on account of variations in the fuel charges for the month of August 2021.
However, Vice Chairman, Rafique Ahmad Shaikh, in his dissenting note has asserted that NPCC again failed to comply with the directions of the Authority to report the dispatches of generation plants, out of merit order on daily basis. He maintained that consistent failure warrants legal proceeding against NPCC.
Likewise, CPPA-G has also again failed to submit the segregation of financial impact on account of fuel shortages: (i) impact on account of efficient power; (ii) system constraints; and (iii) underutilization of efficient power plants etc. and as such the mismanagement into the availability of required RLNG cannot be passed on to consumers.
Further, huge amount under the head of “previous period adjustments” cannot be passed on to consumers without detailed audit. Therefore, FCA request of CPPA-G is that it only be presented before Authority after financial and technical audit.
“I have also reservations on purchase of electricity from all those power plants whose PPAs were amended/extended without approval of the Authority,” he said.