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Tuesday, May 21, 2024

Electricity Tariff Surge Hits Consumers

NEPRA authorizes a significant surge in electricity tariffs, imposing additional charges on consumers amidst concerns about forecasting accuracy and rising fuel costs, exacerbating financial burdens for households and businesses.

In a recent announcement by the National Electric Power Regulatory Authority (NEPRA), consumers across the nation face a significant surge in electricity tariffs. NEPRA has authorized ex-Wapda distribution companies (XWDiscos) to impose a hefty Rs2.83 per unit charge in consumers’ electricity bills for May.

This adjustment, part of fuel cost adjustment (FCA) charges, reflects costs incurred in March, as outlined in a notification issued by NEPRA. However, exceptions apply to Electric Vehicle Charging Stations (EVCS) and lifeline consumers.

Last month, the government sought NEPRA’s approval to levy approximately Rs23 billion additional in FCA from consumers for electricity consumed in March. Despite 79 percent of power generation relying on cheaper local fuels, the Central Power Purchasing Agency (CPPA) requested an additional Rs2.94 per unit fuel cost adjustment, leading to questions about the accuracy of forecasting fuel costs. NEPRA accepted the request for a public hearing on April 26, during which it criticized power companies for inefficiencies.

The proposed FCA increase for March is primarily attributed to higher domestic coal and gas prices, despite the non-utilization of imported fuels like coal, diesel, and furnace oil. The data indicates declining consumption trends, with consumption in March 2024 being 8.3 percent lower than the same period last year. This year’s Rs2.94 per unit FCA for March is more than double that of March 2023.

Escalating Financial Burden

The NEPRA’s tariff hike, effective immediately, imposes an additional Rs2.83 per unit on consumers, exacerbating the economic strain on households and businesses. This adjustment, reflecting March’s fuel charges, translates to an additional Rs26 billion in costs for consumers. However, the tariff hike excludes Lifeline and K-Electric customers, offering them temporary respite from immediate financial repercussions.

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April saw NEPRA raise the power tariff by Rs2.75 per unit for all consumers nationwide, including Karachi residents. Additionally, in February, NEPRA implemented a Rs7.5 per unit increase in electricity prices as part of the fuel price adjustment (FCA).

NEPRA’s approval of a Rs7.5 per kilowatt-hour (kWh) increase in electricity tariffs for January 2024 will be reflected in consumers’ bills during March 2024. This relentless surge in electricity tariffs underscores the mounting financial pressure faced by consumers amidst ongoing economic challenges.