VIJAYAWADA: The power distribution companies (DISCOMs) in the State have once again proposed an increase in electricity charges through the Fuel and Power Purchase Cost Adjustment (FPPCA) mechanism. The proposed FPPCA for the financial year 2022-23 amounts to Rs 8,113.60 crore. The Andhra Pradesh Electricity Regulatory Commission (APERC) is set to conduct a virtual public hearing on this proposal on October 18.
DISCOMs have clarified that these proposals, submitted for each quarter of FY 2022-23, are based on additional power purchase costs, following the Electricity Act 2003 and central government guidelines. The APERC will review and approve these adjustments, which will then be passed on to consumers. Contrary to some reports, the average adjustment for the entire State is expected to be Rs 1.27 per unit, not the Rs 5.6-7 per unit previously mentioned.
Historically, the Fuel Surcharge Adjustment (FSA) was levied on a quarterly basis until FY 2013-14. However, FSA regulations were later repealed, and the costs were included in the subsequent year’s Annual Revenue Requirement (ARR). In FY 2020-21, the FPPCA regulations were reintroduced following an order from the Appellate Tribunal for Electricity (APTEL). From April 2021, FPPCA has been charged quarterly, with an automatic monthly pass-through of Rs 0.40 per unit starting in March 2023.
DISCOMs have also cited a ‘true-down’ in FY 2020-21 due to reduced demand during the COVID-19 lockdown, followed by substantial ‘true-ups’ in subsequent years as demand surged, leading to significant financial losses. Without the approval of FPPCA charges, the DISCOMs could face severe losses, forcing the State government to absorb around 75% of the losses for FY 2022-23.