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Tariffs for Electricity Generation, Transmission and Distribution

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In Pakistan, tariffs for Electricity Generation, Transmission and Distribution must be known to everyone particularly to Chinese companies dealing in energy sector. (Sajid Imtiaz)

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Tariffs for Electricity Generation, Transmission and Distribution

  1. 1. The Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Act, 20l7 Tariff  The Authority shall, in the determination, modification or revision of rates, charges and terms and conditions for the provision of electric power services, be guided by the national electricity policy, the national electricity plan and such guidelines as may be issued by the Federal Government in order to give effect to the national electricity policy and national electricity plan.  The Authority, in the determination, modification or revision of rates, charges and terms and conditions for the provision of electric power services shall keep in view: (a) Protection of consumers against monopolistic and oligopolistic prices; (b) Research, development and capital investment program costs of licensees; (c) Encouragement of efficiency in licensees, operations and quality of service; (d) Encouragement of economic efficiency in the electric power industry; (e) Economic and social policy objectives of the Federal Government; and (f) Elimination of exploitation and minimization of economic distortions.  Without prejudice to the generality of sub-section (2), the following general guidelines shall be applicable to the Authority in the determination, modification or revision of rates, charges and terms and conditions for provision of electric power services, namely: (a) Tariffs should allow licensees the recovery of any and all cost prudently incurred to meet the demonstratedneedsof their customers:Providedthatassessmentsoflicensees'prudence may not be required wheretariffs are set on other than costof servicebasis, such as formula based tariffs that are designed to be in place for more than one year; (b) Tariffs should generally be calculated by including a depreciation charge and a rate of return on the capital investment of each licensee commensurate to that earned by other investments of comparable risk; (c) Tariffs should allow licensees a rate of return which promotes continued reasonable investment in equipment and facilities for improved and efficient service; (d) Tariffs should include a mechanism to allow licensees a benefit from and penalties for failureto achievethe efficiencies in the costof providingthe serviceand the quality of service; (e) Tariffs should reflect marginal cost principles to the extent feasible, keeping in view the financial stability of the sector; (f) The Authority shall have a preference for competition rather than regulation and shall adopt policies and establish tariffs towards that end; (g) Tariffs may be set below the level of costof providing the serviceto consumers categories consuming electric power below such consumption levels as may be prescribed, as long as such tariffs are financially sustainable;
  2. 2. (h) Tariffs should, to the extent feasible, reflect the full costof serviceto consumer categories with similar service requirements; (i) Tariffs should seek to provide stability and predictability for customers; and (j) Tariffs should be comprehensible, free of misinterpretation and shall state explicitly each component thereof. Provided that the Authority shall strikea balance to the extent possible, among the general guidelines in order to optimize the benefits to all persons likely to be affected by the determination, modification or revision of rates, charges and terms and conditions.  Subject to sub-sections (2) and (3), the Authority shall, in the public consumer interest, determine a uniform tariff for distribution licensees wholly owned and controlled by a common shareholder, on the basis of their consolidated accounts.  The Authoritymay specifyproceduresforthe determination, modification or revisionof rates, charges and terms and conditions for the provision of electric power services, including without limitation, - (a) time frame for decisions by the Authority on tariff applications; (b) opportunity for customers and other interested parties to participate meaningfully in the tariff approvalprocess;and(c)protection forrefund,if any,to customerswhiletariffdecisions are pending.  Notification of the Authority's approved tariff, rates, charges and other terms and conditions for the supply of electric power services by generation, transmission and distribution companies shall be made by the Federal Government in the official Gazette, within 15 days of intimation of the final tariff by the Authority: Provided that the Authority may, on a monthly basis and not later than a period of 7 days, make adjustments in the approved tariff on account of any variations in the fuel charges and policy guidelines as the Federal Government may issue and notify the tariff so adjusted in the official Gazette.

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