Just like when you get more than expected marks in an exam, even after looking at the result card several times you cannot believe that it is your result, the same is the case after seeing the electricity bills of August, but this time the surprise is not a pleasant one.
When you look at the electricity bill, you first blame the AC on the wall or the iron on the table, but then when you look at the units used, it’s not much more than last month.
On closer inspection, your eyes fall on the three English letters ‘FPA’ and you easily make a mistake by reading the amount written in front of it.
Looking at the amount written under FPA i.e. Fuel Price Adjustment, you ultimately blame the current government and not the electrical appliances or any householder for the bill.
Unfortunately, this summer the story has become a household one, and for the past two months, everyone has been budgeting their homes thinking that the electricity bill is due. Not only this, there have also been protests against electricity bills in different parts of the country.
What is fuel adjustment?
To understand the fuel price adjustment, it is important to understand the actual fuel cost (the cost of fuel in a month) and the reference fuel cost.
At the beginning of every financial year, the National Electric Power Regulatory Authority (NEPRA) issues a reference fuel cost. That is, a reference against which to compare the total cost of fuel each month.
The total cost of fuel used in the production of electricity in a month (basket fuel cost) is calculated based on the cost of fuel (such as coal, LNG, furnace oil) used in different sources of energy in the country. goes
Thus, at the end of each month, the total fuel cost of that month is compared with the reference fuel cost and accordingly this ‘adjustment’ is added to the electricity bills after two months.
If the total fuel cost in that month is more than the reference cost, then the amount of FPA will increase in your bill, while if the total fuel cost of that month is less than the reference cost, then the amount of FPA will decrease. This is called fuel price adjustment.
How fuel adjustment is determined?
According to economists there a number of factors used to determine the fuel cost adjustment, but the most important is the source of energy produced.
“If a power plant uses coal, it will be seen how much coal it used and at what price it was purchased, ie the overall power generation from which energy sources and how much it cost.”
For example, if the electricity production by hydel has increased, the overall fuel price will decrease, or if gas is used more in a month, because its price is higher, the fuel price will be higher. .’
Why there is need to include FPA in the bills?
Experts say that the government used to give subsidies in the form of fuel price adjustment, which led to budget deficits, increased inflation and the government had to take loans.
Now for the last one year it has been decided to put it in the bill itself, whether negative or positive so that it is adjusted. The cost of fuel was not changing much, but in the last few months, the prices of LNG and coal have started to increase significantly across the world.
However, they said that ‘In the coming months, prices are expected to decrease in the global market and the share of hydel in the energy mix will also increase, so the overall fuel cost is likely to decrease.’
The power experts further said, ‘The fuel price adjustment is actually taking place with a delay of two months, which means that the fuel price adjustment for the month of June will be seen in the bill for the month of August.
“In the coming months, the overall cost will come down as Hydel’s share increases.”
