BERC PUBLIC HEARING PDB admits raising income possible without price hike [ Tritiyo Matra News ]

BERC PUBLIC HEARING PDB admits raising income possible without price hike

Local September 26, 2017

The state-run Power Development Board and the Bangladesh Energy Regulatory Commission technical committee on Monday admitted that the power board could raise its earning by Tk 0.73 from sales of each unit of bulk electricity even without increasing the price.
They made the admission during cross-examination by Consumers Association of Bangladesh energy adviser M Shamsul Alam in the public hearing held by the commission on a power board proposal for an increase in bulk electricity price by Tk 0.72 to Tk 5.58 per unit or kilowatt-hour.
Power board chairman Khaled Mahmud led its team while commission’s director AK Mahmud led its technical team in the hearing.
Shamsul Alam and representatives from left democratic organisations and business bodies said that the commission should not raise the power price as the power board could profit Tk 0.01 from the sale of a unit of bulk electricity accumulating an annual profit of about Tk 500-600 crore.
During the hearing a protest rally outside the commission office at Karwan Bazar, organised by left democratic organisations, demanded reduction of power prices by Tk 1 per unit through reducing prices of fuel oils and ensuring proper management.
They threatened to go for general strike if the commission raised the power prices as it had already increased the prices by nearly 70 per cent between 2010 and 2015.
The commission’s technical report showed that the power board might save Tk 0.32 per unit or about Tk 1,871.5 crore in total in 2017-18 financial year if the government reduced prices of diesel and furnace oil for power generation in line with the international market.
Shamsul Alam, however, showed that the oil price adjustment could enable the power board to save Tk 2,852.7 crore reducing generation cost by Tk 0.49 per unit.
He also said that that the power board could save annually Tk 855.80 crore and Tk 1,301.41 crore by using least cost options in power generation and rationalising capacity payment to rental power suppliers under the extended contracts.
The suggestions made by Shamsul and admitted by the technical committee and the board included exclusion of the money allocated for Electricity Maintenance Fund, Tk 0.26 per unit, as it was created through a price hike in 2011, from the proposed price hike.
The power board showed interest at a rate of Tk 0.21 per unit on government loan, supposed to be treated as the government subsidy having no compulsion of repayment or interest.
The board and the committee also admitted that power generation cost increased by Tk 0.09 per unit by running a 305MW power plant on diesel instead of the company’s contractual obligation of using furnace oil and such additional cost should be excluded from the proposed price hike as the consumers should not pay for the violation of contract.
They also admitted that a loss of Tk 0.05 per unit incurred by the board should be excluded from the proposed price hike as the Rural Electrification Bard did not use peak/off-peak meters in receiving bulk electricity from the power board.
The power board should include a profit of Tk 0.08 per unit earned from electricity sales to the large scale consumers from its 132 kV and 230 kV transmission system and the earning from power factor correction charge at a rate of Tk 0.04 per unit.
The commission is scheduled to hold hearing on the power board’s proposal for retail price hike by 3 per cent today, Rural Electrification Board’s proposal for 10.75 per cent hike on September 27, Dhaka Power Distribution Company’s proposal for 6.24 per cent hike on September 28, Dhaka Electric Supply Company’s proposal for 6.34 per cent hike on October 2, West-Zone Power Distribution Company’s proposal for 10.36 per cent hike on October 3 and North-West Zone Power Distribution Company’s proposal for 24 per cent hike on October 4.
The commission would also be requested to consider the price of bulk electricity, if it was increased, in determining the retail tariff of electricity, said officials of power distribution utilities.
Citing higher prices of fuel oils and growing dependence on them, the commission already raised the average retail price of electricity by 69.25 per cent, up from Tk 3.76 per kilowatt-hour or unit to Tk 6.33, in eight phases, between March 2010 and September 2015.
The commission also increased the bulk price of electricity by 106.75 per cent, up from Tk 2.37 per unit to Tk 4.90 per unit, in seven phases, between March 2011 and September 2015.