• Regulator orders investigation into overbilling by distribution companies
• Consumers accuse Nepra of acting as rubber stamp for tariff hikes
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday called on the government to seriously work on corrections in power generation contracts to provide substantial relief amid widespread public outcry over a tariff increase of up to Rs7.12 per unit.
During a public hearing, Nepra also announced it had taken notice of last month’s overbilling by distribution companies due to changes in the meter reading mechanism to ‘pro rata’ adjustment and had ordered a detailed investigation.
Representatives from the power division and its subordinate companies claimed that the average tariff for the current fiscal year would be lower than the previous year’s due to fewer quarterly tariff adjustments and monthly fuel cost changes.
They said the government had finally provided a Rs50bn subsidy for three months to provide relief to residential consumers using up to 200 units per month. However, a senior Planning Commission official told the hearing that the cabinet’s decision about this relief had yet to be officially notified.
The public hearing, presided over by Nepra Chairman Waseem Mukhar on government’s request for rebasing national average tariff envisaging up to 51 per cent hike, attracted strong criticism from almost all consumer categories from across the country, including Karachi. Even the export sector, for which the government claimed to have reduced tariff worth Rs155bn during this fiscal year, claimed that their effective tariff at Rs42 per unit still worked out at 15 cents per unit compared to 8-9 cents in the region, making the sector uncompetitive.
Both online and physically present consumers criticised Nepra for allegedly acting as a rubber stamp for government tariff hikes, with little effort to address inefficiencies in the power sector.
Some participants also highlighted contradictory policy stance by the Punjab and federal governments, with the provincial government providing subsidised solar panels adding to surplus capacity and the Centre imposing fixed capacity charge on consumers.
Elephant in the room
Nepra’s tariff member, Mathar Niaz Rana, highlighted that he had been pointing out that “the elephant in the room is generation and needed to be looked into”. He said the government should examine whether the independent power producers (IPPs) and generation plants are operating efficiently without violating their contracts.
Similarly, the working capital requirements for 15-day operations could be examined in addition to insurance costs and so on. There is a lot of potential to work on operational efficiencies, and it should be looked into. Nepra Chairman Mukhtar said the regulator had a lot of concerns over inefficiencies and the distribution companies were way behind efficiency and regulatory standards, barring a couple of Discos that were meeting or were close to those standards.
He said the power companies had failed to improve recoveries beyond 92pc over the years, which should be 100pc. “Drastic steps are needed. Business as usual will not deliver. At least bring some sense of reward and accountability in the system to restore public confidence,” he asked the government team, led by Joint Secretary of Power Division, Mahfooz Bhatti.
Mr Bhatti said the government had already started working in that direction, and the prime minister was himself monitoring power sector reforms. He said the key performance indicators were now being introduced for Discos, support units were being created, and boards were being transformed with sector experts, while some areas also needed investments.
Overbilling probe
Nepra’s member for consumer affairs, Rafique A. Shaikh, said the power regulator had constituted an investigation team on recent complaints of overbilling through pro rata application of units that moved many consumers out of the protected category or breached a specific slab.
The team has already visited the Power Information Technology Company that maintained the power sector data on meter reading and billing, etc. and was able to access 60pc of the data, which is currently in the process of sensitivity analysis.
He noted that similar complaints last year led to an investigation and adjustments for overbilled consumers. He also stated that while Nepra could impose fines on power companies, some decisions faced challenges in higher judicial forums.
The Nepra chairman disagreed with the general perception that the regulator was acting like a rubber stamp. He said the government had demanded a Rs8.33 per unit increase in the average national tariff, but the regulator brought it down to Rs5.90 per unit, which was further reduced to Rs5.72 on the day of final determinations with the applicability of the last interest rates. He said the final tariff revision decision would be issued in a day or two.
Published in Dawn, July 11th, 2024
