LESCO Tariff Raised by Rs1.9 Per Unit
Today, the National Electric Power Regulatory Authority (Nepra) has approved an increase of up to Rs1.90 per unit in Lahore electricity tariff under quarterly adjustment for the fourth quarter of the financial year 2023-24, resulting in an overall burden of Rs46 billion on consumers.
This amount will be recovered from consumers of state-owned power distribution companies (DISCOs) and the private utility K-Electric. The increase is primarily due to lower electricity demand, reduced utilization of maximum demand indicators (MDI), and aggregate technical and commercial (AT&C) losses-driven load-shedding.
However, Nepra’s chairman claimed that consumers would receive relief of Rs1.80 per unit in their electricity bills for September 2024. This relief is attributed to a Rs0.31-per-unit reduction in fuel charges adjustment for July 2024 and a Rs0.90-per-unit decrease in the quarterly tariff adjustment for the third quarter.
The financial impact of AT&C losses-driven load-shedding and capacity payments made to independent power producers (IPPs) for unused booked capacity was not disclosed by Nepra. Chairman Waseem Mukhtar indicated that future tariff adjustments would likely be minor and not significantly impact consumer bills if current economic conditions persist.
For the fourth-quarter electricity tariff adjustment, various DISCOs requested significant amounts: Islamabad Electric Supply Company (iesco) sought Rs926 million, Lahore Electric Supply Company (Lesco) requested Rs3.995 billion, Gujranwala Electric Power Company (Gepco) Rs7.682 billion, Faisalabad Electric Supply Company (Fesco) Rs4.777 billion, Multan Electric Power Company (Mepco) Rs7.909 billion, Peshawar Electric Supply Company (Pesco) Rs674 million, Hyderabad Electric Supply Company (Hesco) Rs5.016 billion, Quetta Electric Supply Company (Qesco) Rs8.078 billion, Sukkur Electric Power Company (Sepco) Rs4.538 billion, and Tribal Areas Electric Supply Company (Tesco) Rs3.210 billion.
The total amount of Rs46.805 billion to be recovered from consumers includes Rs22.867 billion in capacity charges, Rs3.566 billion in variable operation and maintenance (O&M) costs, Rs7.513 billion for use-of-system charges and market operator fees, Rs11.067 billion for transmission and distribution (T&D) losses, and Rs1.792 billion for net metering.
Nepra stated that uniform quarterly adjustments would also apply to K-Electric consumers as per federal government policy. Member Rafique Ahmad Shaikh criticized DISCOs for denying the net metering facility, particularly by Pesco, which previously restricted net metering to 30% of transformer load but is now allowing 70%.
The regulator has sought explanations from DISCOs regarding AT&C losses-based outages and announced it would take action following an ongoing inquiry.
Who will be impacted by this tariff increase?
Consumers of state-owned power distribution companies (DISCOs) and the private utility K-Electric will be affected by this increase.
Why is the tariff being increased?
The increase is primarily attributed to lower electricity demand, reduced utilization of maximum demand indicators (MDI), and aggregate technical and commercial (AT&C) losses-driven load-shedding.
What components make up the total amount to be recovered from consumers?
The total of Rs46.805 billion includes:
- Rs22.867 billion in capacity charges.
- Rs3.566 billion in variable operation and maintenance (O&M) costs.
- Rs7.513 billion for use-of-system charges and market operator fees.
- Rs11.067 billion for transmission and distribution (T&D) losses.
- Rs1.792 billion for net metering.
