Electricity Prices likely to hike by 48 to 98 Paisa per unit

The news of electricity prices increase by 0.98 Paisa has spread like fire in the country. Therefore, consumers are really worried after hearing the news of the price increase in electricity.

However, CPPA (Central Power Purchasing Agency) claims an increase of Rs 0.9846 Per kWh to meet the fuel charges of Rs 3.2045/kWH, especially for August 2020.  Likewise, another primary reason behind the gradual increase in electricity price is to earn additional revenues of almost Rs 5-7bn Rupees.

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Although the news about the increase in electricity prices was made public in August 2020 but still no action was taken. However, authorities didn’t pass any official statement before the petition. Yet NEPRA has invited the affected people who cannot afford the burden of an additional price.

Therefore, it will try to respond to all the objections and resentment faced after the decision is made.

However, the authorities proposed this adjustment of fuel prices will be made monthly.

Electricity Prices likely to hike by 48 to 98 Paisa per unit For Consumers

Cost of electricity	Means of electricity generation
Rs 59,482 million	The total cost of generated energy
37.39 pc	Hydropower
20.90 pc	RLNG
17.30 pc	Coal-based power plants
9.59 pc	Gas
5.42 pc	Nuclear power plants
0.36 pc	Imported Irany Electricity

Who will make the final decision?

However, this time the federal government has left the final decision in the hand of NEPRA. Therefore, they will take the final action after conducting the public hearing and analyzing the petition result. Thus, the law will take care of this whole process.

Subsequently, the idea of filing a petition was proposed by CPPA.

Getting easier!

Who is exempted from facing the high electricity bill?

According to the recent news, NEPRA has decided to raise the prices of electricity prices across the country. Thus, the regulator’s approval is required before the decision is taken towards the approval of the authorities.

However, the major reason behind this hike is to provide relief to the masses in the future. Furthermore, these charges might fluctuate with time and location.

So, the exempted consumers are:

• A lifeline consumer whose maximum usage is approximately 50 units per month
• A k-electric power consumer

According to the revised price/petition order, consumers other than the above are supposed to pay the electricity bill. This also includes all the industries and larger companies.

Yet the federal cabinet has decided to increase the electricity prices due to the increased fuel/oil prices. However, this factor largely influences the price of electricity that might affect low wagers.

The total cost of energy generation through different means:

Meanwhile, in Pakistan there are multiple sources though by which electricity can be generated. Thus, every means of energy production generates a certain amount of power. Perhaps, that power has its own specific cost.

Furthermore, the total value or cost of the electricity produced is calculated to be, is Rs 59,482 million. Additionally, the average per-unit fuel cost is expected to be almost Rs 4.1891 per unit.

Yet in this figure, the hydropower sector has contributed the largest share of electricity production cost. That is nearly up to 37.39 pc for August 2020.

Secondly,

RLNG based power plants also contributed to the above share, however, it contributed almost about 20.90 pc.

Thirdly,

Besides the hydropower generation and RLNG power plants, coal-based power plants also contributed to the cost of around 17.30 pc.

Lastly,

Other sources like gas and Iranian electricity that added up to the value of the electricity generated was 9.59 pc and 0.36 pc respectively.

Moreover, the electricity generated by nuclear power plants was about 5.42 pc.

Final Thoughts

As a result, now we know the reason behind the increase in electricity prices across the country. Moreover, we all know that our country is going through a crucial phase and so do our people. Therefore, we have to sit together and find possible solutions to come out of this difficult situation.

As a fact, consumers and regulators both are an essential part of the policymaking program. However, still organizations like NEPRA, CPPA, and DISCO are playing a vital role in taking charge and decisions on their behalf of them.

Furthermore, to meet the fuel adjustment requirement, the government has to make tricky decisions to prevent the country from facing a fuel shortage. Perhaps, the only benefit that CPPA and DISCOs will gain from the price increase would be additional revenue.

Moreover, fuel adjustment is necessary to balance the debt rate and economy in 2023. However, still, the collective synthesis of other companies and regulators will be required to formulate the final decision.

That’s how this cycle works.

Read more about NEPRA Letters.