NEPRA Considers Electricity Tariff Hike Amid Fuel Charges Adjustment

Power distribution companies are currently seeking approval from the National Electric Power Regulatory Authority (NEPRA) to potentially raise electricity tariffs by up to Rs3.48 per unit. This proposed hike is linked to the fuel charges adjustment (FCA) for April 2024. The Central Power Purchasing Agency (CPPA) has submitted a petition on behalf of XWDiscos, leading to NEPRA scheduling a public hearing on May 30, 2024, to deliberate on this matter.

In April 2024, a total of 8,639 GWh of electricity was generated, incurring a cost of Rs 79.55 billion. After accounting for transmission losses, 8,375 GWh were delivered to distribution companies. The CPPA has decided to make a backward adjustment of Rs3.06 billion, resulting in a revised total cost of Rs75.2 billion. Notably, power generation from local coal witnessed a 2.2 percent increase, while generation from imported coal experienced a significant surge compared to the previous month.

Despite a decline in power generation from renewable sources in April 2024, there was an opportunity for the government to further reduce costs for consumers by leveraging these resources. The CPPA argues that consumers should bear the additional fuel cost of Rs3.4883 per unit due to the actual incurred cost surpassing the reference fuel cost.

Hydropower generation saw an increase, whereas coal-based generation notably decreased. Additionally, natural gas and RLNG-based power generation witnessed declines, with nuclear power showing a slight uptick. In a separate development, K-Electric (KE) has obtained NEPRA's approval for its Power Acquisition Programme (PAP) for the period FY 2024-2028. This initiative aims to bolster power supply reliability in Karachi by integrating renewable energy and local fuel sources.

KE's PAP is in alignment with national energy policies and plans, with a focus on adding 1,282 MW of renewable energy by 2030, including solar and wind projects. Notable projects such as the 270 MW solar PV plant in Karachi and a 200 MW hybrid plant near the Dhabeji Grid Station are anticipated to significantly contribute to the city's energy mix, fostering sustainability and reducing carbon emissions.

The potential increase in electricity tariffs, driven by fuel charges adjustments, underscores the complexities of balancing energy costs and sustainability. As the energy landscape evolves, initiatives like KE's PAP signal a shift towards a more diversified and environmentally conscious power generation approach, offering hope for a greener and more reliable energy future.