26.07 rupees per unit relief for three months not approved for winter package Nepra
In a shocking development for Pakistani residents, NEPRA has announced another hike in electricity bills for the months of September and November 2024. The National Electric Power Regulatory Authority (NEPRA) will add Rs. 1.7 per unit to electricity bills, further straining consumers already grappling with rising inflation.
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Rise of Rs. 1.743 Per Unit in Electricity Bill by NEPRA
Increased electricity charges continue to burden Pakistani consumers. NEPRA has introduced a new fee of Rs. 1.743 per unit, which will be added to electricity bills starting in September 2024. This increase will affect millions of people already struggling with inflation and high energy costs. With this adjustment, distribution companies, including K-Electric, will recover Rs. 43.23 billion for the fourth quarter of the fiscal year 2023–2024.
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Consumers Face Rs. 51 Billion Hike Due to Power Costs and New GST
A major portion of this recovery will be directed toward paying independent power producers for capacity charges to maintain electricity production. Additionally, Rs. 7.3 billion will go toward market operator fees and system usage charges, while Rs. 11.23 billion will compensate for transmission and distribution losses. With the imposition of an 18% General Sales Tax (GST) on these recoveries, the total burden on consumers will reach Rs. 51 billion, further adding to the financial strain.
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NEPRA Rejects Rs. 51 Million Legal Costs
Last month, NEPRA rejected a request from distribution companies to cover Rs. 51 million in additional legal fees as part of this adjustment. NEPRA pointed out that legal fees are already accounted for under the Market Operation Fee (MOF), which has allocated Rs. 500 million for legal costs in the fiscal year 2023–2024. Despite this, distribution companies argued that lower-than-expected sales necessitated changes to electricity rates for the quarter.
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NEPRA Grants a Rs. 43.23 Billion Positive Adjustment
NEPRA has approved a positive adjustment of Rs. 43.23 billion for the fourth quarter of the fiscal year 2023–2024. This adjustment accounts for various factors, including capacity charges, variable operation and maintenance costs, higher sales recovery, and market operator fees. Additionally, Kot Addu Power Company’s claim of Rs. 72.23 million for tax differentials was rejected by NEPRA, along with an adjustment of Rs. 73.18 million for the January 2024 PPIB fee.
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Conclusion
NEPRA’s decision to increase electricity rates by Rs. 1.7 per unit will have a significant impact on consumers across Pakistan. The rise in electricity costs, combined with additional charges for capacity payments, operational expenses, and transmission losses, will burden consumers with a total increase of Rs. 51 billion, exacerbated by the imposition of an 18% GST. This move will further tighten the financial situation of households struggling with already high utility bills.
FAQs
Why has NEPRA increased electricity prices?
NEPRA has raised electricity prices to recover costs for capacity charges, operational expenses, and transmission losses incurred by distribution companies.
When will the new electricity rates take effect?
The new rates will apply to bills starting from September 2024.
How much will electricity prices increase by?
Electricity rates will increase by Rs. 1.7 per unit.
What is the total financial burden on consumers?
Consumers will face a total increase of Rs. 51 billion due to the electricity price hike and the imposition of an 18% GST.
Are legal fees included in the new electricity charges?
NEPRA rejected a request for an additional Rs. 51 million in legal fees, stating that legal costs are already covered by the Market Operation Fee (MOF).
What portion of the recovery is for capacity charges?
A significant part of the recovery will go toward paying capacity charges to independent power producers to ensure the continued supply of electricity.
Will K-Electric customers also be affected by the hike?
Yes, customers of K-Electric and other distribution companies will be affected by the new electricity rates.
Why did NEPRA reject Kot Addu Power Company’s tax differential claim?
NEPRA found the tax differential claim of Rs. 72.23 million by Kot Addu Power Company invalid and rejected it.
What is the role of the General Sales Tax in this price increase?
The 18% GST added to the recovery amount will further increase the financial burden on consumers.
How can consumers prepare for this electricity hike?
Consumers should budget for higher utility bills starting in September and consider energy-saving measures to mitigate the impact of the rate increase.
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