Industrial Support Package Rate Revised
The National Electric Power Regulatory Authority, Nepra, has revised the rate under the incremental support package for industrial consumers. The rate has been raised from Rs22.98 per unit to Rs25.30 per unit. The decision was taken on Friday, and it changes the price that industrial consumers pay under the support package.
The incremental support package, known as the ISP, was introduced in December last year as an incentive to revive industrial activity. Its purpose, as described at the time of its introduction, was to encourage industrial activity by offering support on incremental consumption. The revision now changes the rate at which that support is provided, moving it from Rs22.98 to Rs25.30 per unit.
For industrial consumers, the rate matters because it affects the cost of the electricity they use under the package. A higher rate means a higher charge per unit for the consumption covered by the package, compared with the previous rate. The decision therefore changes the cost calculation for the industries that use the package, and it does so while the package is still described as an incentive to revive industrial activity.
Two Members Opposed the Revision
The revision was not unanimous. Two Nepra members opposed the revision, saying that the actual marginal cost stands at Rs31.83 per unit. Their opposition was based on that figure, which is higher than both the old rate and the new rate. According to those members, the actual marginal cost is Rs31.83 per unit, and that figure was the basis for their disagreement.
The difference between the figures is significant. The old rate was Rs22.98 per unit, the new rate is Rs25.30 per unit, and the marginal cost cited by the two opposing members is Rs31.83 per unit. The opposing members were therefore pointing to a cost that is higher than the rate that has now been set, and their opposition reflects a disagreement about where the rate should sit in relation to that cost.
Additional Fuel Adjustment in November Bills
Nepra has also allowed distribution companies to charge an additional amount in November bills under the monthly fuel cost adjustment. The additional charge is Rs2.37 per unit, and it will appear in November bills. The purpose of that charge, as described in the decision, is to recover an additional Rs25 billion.
The fuel cost adjustment is a separate mechanism from the incremental support package. It is applied on a monthly basis, and it reflects fuel costs. In this case, the adjustment for November is an additional Rs2.37 per unit, and the total amount to be recovered through that adjustment is Rs25 billion. That amount will be collected through the additional charge in the bills for that month.
Who Is Affected by the Decision
The decision affects consumers of K-Electric and other distribution companies. That scope is important, because it means the changes are not limited to one company or one area. K-Electric is named specifically, and other distribution companies are also included, so the decision applies across the distribution companies that supply electricity to consumers.
For industrial consumers, the effect comes through the revised incremental support package rate of Rs25.30 per unit. For consumers more generally, the effect comes through the additional fuel cost adjustment of Rs2.37 per unit in November bills. The two parts of the decision therefore affect different groups in different ways, but both are part of the same announcement from Nepra.
The chairman of Nepra is Waseem Mukhtar. The package itself was introduced in December last year, and the revision now changes its rate in the terms described in the announcement. The opposition of two members, the marginal cost figure of Rs31.83 per unit, the additional November charge, and the Rs25 billion recovery target are all part of the full picture of the decision as announced on Friday.
Source: Dawn
