SAM

Published:
2019-11-05 11:46:38 BdST

Retail power price hike likely


FT ONLINE

The retail level electricity distributors have sought a fresh hike in electricity prices for almost all types of consumers from January 2020.

State-run electricity distribution companies submitted the tariff hike proposals to the energy regulator a week after a similar proposal to raise the bulk electricity price by the Bangladesh Power Development Board, or BPDB.

The Bangladesh Energy Regulatory Commission has accepted the proposals after initial scrutiny and arranged a four-day public hearing, which will start from November 28.

Unlike the previous occasions, the state companies did not seek any fixed rate for retail level electricity tariff but sought the BERC's decree following the bulk tariff rate increase.

Electricity distribution companies, as part of their responsibility, sell electricity to retail consumers after purchasing electricity in bulk from the power board.

The Board is the lone buyer of electricity from the producers, including independent power producers, or IPPs, and public, rental, quick rental, fast-track power plants. Imported electricity from neighbouring India is also included.

In its bulk tariff hike proposal, the Board has argued it will have a revenue shortfall of Tk 86.08 billion in the fiscal year 2019-20 unless the price is raised.

It will require around Tk 452.08 billion to purchase electricity from the power plants while producing power from its own plants.

The Board will get around Tk 366 billion by selling electricity to bulk consumers at the existing rate, it said. Currently, the per-unit bulk tariff (1 kilowatt hour) electricity is Tk 4.87.

The Board, in its proposal, argued that the latest hike in a tariff of natural gas pushed up electricity generation costs from the gas-fired power plants by around 41 percent.

The Commission last raised retail electricity tariff in November 2017. The bulk electricity tariff was last raised by the Commission in August 2015.

In the past, the energy regulator raised average retail level electricity by 69.25 percent to Tk 6.33 per unit (1 kilowatt-hour) from Tk 3.76 per unit, in eight phases, between March 2010 and September 2015, citing higher prices of imported oil and growing dependence on those to generate electricity, said officials.

The Commission also spiked the bulk price of electricity by 106.75 percent to Tk 4.90 per unit from Tk 2.37 per unit in seven phases, between March 2011 and September 2015, citing higher electricity buying costs from the producers.

In the latest retail electricity tariff hike proposals, the distributors also sought slapping of a 5.0 percent simple interest rate against unpaid bills instead of the existing 2.0 percent compound interest rate and an increase in demand charge.

They also sought separate retail level tariff structure for battery charging stations for three-wheeler rickshaws and three-wheelers.

The Board has so far provided electricity connections to around 5,000 battery charging stations across the country.

In a separate proposal, state-backed Power Grid Company of Bangladesh Ltd, or PGCB, also sought a hike in electricity transmission charge.

The Commission has arranged public hearing over the bulk tariff hike proposal from the Board and grid operator's transmission charge on November 28 at the auditorium of Trading Corporation of Bangladesh, or TCB.

Hearing against the retail level tariff hike proposals of the Board and the Northern Electricity Supply Company Ltd will be held on December 1.

Against the retail tariff hike proposals of Dhaka Power Distribution Company, or DPDC, and the Dhaka Electric Supply Company, or DESCO, a public hearing will be held on December 02.

Public hearing against the tariff hike proposals of West-Zone Power Distribution Company, or WZPDC, and Rural Electrification Board, or REB, will be held on December 03.

A consumer rights group said the tariff kike proposals are unjustified.

Energy advisor of the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam urged the government to check corruption, thus containing an illogical increase in electricity generation cost.

"A significant volume of electricity generation capacity has been kept unused, resulting in higher capacity payments to the power plant owners," he said.

A good number of high-cost rental and quick rental as well as oil-fired power plants are still operational.

Instead of retiring the expensive oil-fired power plants, the Power Division under the Ministry of Power, Energy and Mineral Resources extended their tenures, he noted. "Most of the power purchase deals were unsolicited in the name of increasing electricity generation capacity," he alleged.

Prof Alam said if corruption is checked and irrational costs are reduced, no hike in power tariff at the bulk level will be required.

The retail level tariff hike proposals are unjustified, he added.

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