December 2, 2020 (MLN): National Electric Power Regulatory Authority (NEPRA) on Tuesday, has approved the Support Package for Additional Consumption and abolishment of time of use tariff scheme for industrial consumers of XWDISCO and K-Electric.
To note, on November 26, 2020, Ministry of Energy Power Division requested NEPRA to revise industrial power tariff and abolish Time of Use (ToU) charges in accordance with the decisions of ECC and CCoE.
As per the statement issued, NEPRA said that it has no objection in approving the instant proposal for industrial consumers, as it does not have any impact on NEPRA determined tariff, as the federal government intends to further reduce the peak rate for industrial consumer through provision of additional subsidy. Hence, the Authority approves the proposal as submitted by the government whereby, during peak hours the off peak rate along with applicable quarterly adjustments would be charged w.e.f. from November 01, 2020 till April 30, 2021 and the difference in this regard would be picked up by the government as subsidy.
The Authority also said that it has considered the proposal of the Federal Government whereby the Federal Government has decided that there is no subsidy requirement to the extent of Rs.12.96/kWh, however for the period from 1st November, 2020 to 30th June, 2021, whereby the rate of Rs. 12.96/kWh is to be reduced to Rs.8/kWh for Bi, B2 and B3 consumers, the impact on subsidy would be around Rs.14 billion. The Authority does not see any issue in this regard as it is a subsidy neutral proposition in general to the extent of Rs. 12.96/kWh, however, for the specific period of eight months i.e. 15th November, 2020 to 30th June, 2021 as mentioned above, the Government has already decided to meet up the subsidy requirement of around Rs. 14 billion for the reduced rate of Rs.8/kWh from COVID-19 Economic Stimulus Package on actual consumption basis for each month. Thus, the Authority approves both proposals, it said.
In its decision, the Authority further stated that it has considered the request of the Ministry of Energy and agrees with the proposal regarding Special rate for industrial consumers on incremental consumption. However, keeping in view the fact that K-Electric tariff structure is different from XWDISCOs whereby, as per para 19.9 of the K-Electric's MYT MLR decision dated 9th October, 2017, the risk of sales, whether positive or negative lies with K-Electric, therefore, the discount of Rs.4.96/kWh for BI, B2 & B3 Industrial consumers from the base rate & difference regarding rate of Rs.12.96!kWh for B4 & B5 industrial consumers, for incremental sales would be picked up by the GoP as tariff differential subsidy.
NEPRA further endorsed the proposal of the Federal Government that rate of Rs.12.96/kWh on incremental consumption basis shall be applicable for all hours of the day till 30th April, 2021.
“No Quarterly adjustments would be passed on to Bl, B2, B3 and B4 industrial consumers to the extent of incremental sales till continuation of the instant package, as the capacity charges would be actualized from the previous level of corresponding months sales,” it said further.
Furthermore, NEPRA also decided that positive monthly FCA would be applicable to Bi, B2 and B3 industrial consumers on the incremental sales till continuation of the instant package, however, negative FCA would not be allowed to Bi, B2 and B3 industrial consumers i.e. consumers paying Rs.8/kWh subsidized rate on incremental sales, from 1st November 2020 to 30th June 2021. The amount so retained by DISCOs, if any, would be off-set against the overall GoP subsidy, said NEPRA.
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