Nepra imposes Rs60 million fines on CPPA and NGC over January 2024 fuel adjustment

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has levied fines amounting to Rs60 million on the Central Power Purchasing Agency (CPPA) and the National Grid Company (NGC) in connection with the heavy fuel price adjustment (FPA) for January 2024.

According to Nepra’s decision, the average fuel cost recorded in January 2024 stood at Rs14.60 per unit. The regulator said the target estimate for fuel cost had been fixed at Rs7.49 per unit.

Based on that difference, an increase of Rs7.13 per unit was sought under the fuel price adjustment mechanism. Following the January 2024 FPA, electricity became costlier by Rs7.05 per unit.

Regulator details January fuel cost gap

Nepra’s ruling set out the gap between the benchmark fuel cost and the actual average fuel cost for the month. The figures cited in the decision showed that the actual cost of generation fuel was substantially higher than the target estimate used for tariff purposes.

The regulator’s action resulted in financial penalties for both CPPA and NGC, with the combined fines reaching Rs60 million. The decision was linked to the heavy fuel price adjustment for January 2024.

The fuel price adjustment mechanism is used to reflect changes in generation fuel costs in electricity bills. In this case, the requested increase under the adjustment was Rs7.13 per unit, while the resulting rise in electricity prices under the January 2024 FPA was Rs7.05 per unit, according to Nepra’s decision.

The development comes as the power sector continues to face scrutiny over tariff calculations and cost pass-throughs. In its decision on the matter, Nepra specifically recorded the January 2024 average fuel cost at Rs14.60 per unit against the target estimate of Rs7.49 per unit.

The regulator’s order, as reported, centered on the heavy fuel price adjustment and the resulting impact on consumer electricity rates for that month. The fines imposed on CPPA and NGC total Rs60 million.

No further details were provided in the report regarding the breakdown of the penalties between the two entities.