Fuel Price Adjustment (FPA) has been a contentious issue in Pakistan, particularly when it comes to electricity bills. However, a recent verdict by the Lahore High Court has declared the FPA in electricity bills as illegal.
The court observed that the demand for FPA and other tariff adjustments by the National Electric Power Regulatory Authority (NEPRA) was not fully constituted under the NEPRA Act. The judgement directs NEPRA to provide maximum subsidy to domestic consumers and explore cheap modes of producing electricity. This blog will delve deeper into what fuel price adjustment is in electricity bills in Pakistan.
What is Fuel Cost Adjustment (FCA)?
Fuel Cost Adjustment (FCA) is a mechanism that enables the passing on of the impact of variation in fuel prices, generation mix, and volume to consumers directly in their monthly bills in the form of Fuel Charge Adjustments (FCA). The determination of FCA is carried out by the National Electric Power Regulatory Authority (NEPRA) to account for the fluctuation in fuel prices and generation mix.
The actual increase or decrease in fuel cost prices is adjusted in the customers’ monthly bills through Fuel Charge Adjustments (FCA). The fuel adjustment clause, or FAC, is used to recover a portion of the cost of coal and natural gas needed to operate power plants. The fuel adjustment increases when the cost of coal and natural gas increases month to month, as has been observed this year.
Why FCA is included in bill?
The inclusion of fuel cost adjustment (FCA) in electricity bills has been a topic of debate among consumers. While some understand its purpose, others are left questioning why they have to bear the brunt of it.
According to experts, the FCA is imposed to adjust monthly electricity fees based on fluctuations in fuel prices in the international market.
The National Electric Power Regulatory Authority (NEPRA) issues a reference fuel cost at the start of every fiscal year, which is used to compare the actual fuel cost each month. The adjustment, which can be positive or negative, is added to the electricity bills after two months.
If you’re wondering how to calculate your electricity bill in Pakistan, there are a few things to keep in mind. The bill is calculated based on your electricity usage, which is measured in units. The rate per unit varies depending on your consumption and the time of day. You can also calculate K electric bill easily.
The government decided to include the FCA in bills last year to avoid budget deficits and inflation caused by subsidies. If you have any further questions about the fuel cost adjustment or your electricity bill, don’t hesitate to reach out to your electricity provider for more information.
If you want to check and pay your bills online, you can visit billchecker.pk and conveniently access your bills for FESCO bill, IESCO bill, KE duplicate bill, LESCO bill online, GEPCO bill, and many other electricity providers in Pakistan.
How do you calculate fuel adjustment FCA?
The fuel adjustment in electricity bills is calculated based on the difference between the reference fuel cost set by NEPRA at the start of each fiscal year and the actual fuel cost incurred by power generation companies each month.
To calculate the fuel cost adjustment unit price, the basic fuel price is subtracted from the average fuel price, and the result is multiplied by the basic unit price. At the end of each month, the basket fuel cost is evaluated by considering the total cost of different fuel sources used for power generation, such as coal, LNG, and furnace oil. If the basket fuel cost is higher than NEPRA’s reference fuel cost, the additional amount is added to consumers’ bills.
Conversely, if the fuel cost is lower, the adjustment is subtracted from the bill. This adjustment is then added to consumers’ electricity bills after two months. Thus, the fuel adjustment calculation ensures that customers are billed accurately based on the actual cost of generating electricity.
You can even simple calculate your FCA through the K-Electric website calculator.
Impact of FCA on Electricity Bills
The FCA can have a significant impact on the electricity bills of consumers in Pakistan, as it constitutes a major chunk of the total bill. In some cases, the FCA can double or even triple the bill amount. The impact of FCA can be more pronounced during the summer months when electricity consumption is higher due to the increased use of air conditioners and other cooling appliances.
In conclusion, the Fuel Cost Adjustment (FCA) is a mechanism used in Pakistan to account for the fluctuations in fuel prices and generation mix and to adjust monthly electricity fees based on the actual fuel cost incurred by power generation companies. The FCA is calculated based on the difference between the reference fuel cost set by the National Electric Power Regulatory Authority (NEPRA) and the actual fuel cost, and can have a significant impact on electricity bills, particularly during the summer months.
While the inclusion of FCA in electricity bills has been a topic of debate among consumers, its purpose is to ensure that customers are billed accurately based on the actual cost of generating electricity. With the recent verdict by the Lahore High Court declaring FPA in electricity bills as illegal, it remains to be seen how the electricity sector will adapt to ensure a fair and affordable electricity system for all.