Fuel Cost Adjustment: Consumers protest against inflated electricity bills
Power consumers protested in major cities against the government and power supply companies due to excessive residential and commercial bills that were issued under the pretext of Fuel Cost Adjustment (FCA).
A number of Lahore residents were seen protesting outside LESCO offices, complaining about the skyrocketing electricity bills, chanting anti-LESCO slogans at Dharam Pura, Begum Kot and Ghazi Road.
A number of farmers in Jhang also participated in a protest by burning their power bills while obstructing traffic on the Jhang Road. On the other hand, the shopkeepers and locals of Faisalabad organised a sizable protest against FESCO for billing residential and commercial customers for nearly twice the actual cost of electricity.
PM Shehbaz demands urgent report on inflated electricity bills
In response to complaints from the public about excessive electricity bills, Prime Minister Shehbaz Sharif ordered the relevant authorities to provide an immediate report to address the issue.
The premier ordered the concerned officials to present a thorough report with recommendations for resolving consumer complaints against energy bills on an urgent basis.
What is FCA?
In addition to criticising the power supply companies, consumers are questioning the FCA charges that take up a significant portion of their monthly bills.
Understanding the actual fuel cost (the cost of fuel in a month) and the reference fuel cost is crucial for comprehending the fuel price adjustment.
Simply put, FCA is charged/adjusted in customers’ monthly bills to reflect the actual increase or decrease in fuel prices.
Based on the price of fuel (such as coal, LNG, or furnace oil) used in the nation’s various energy sources, the total cost of fuel used in the production of electricity in a month (basket fuel cost) is calculated.
The entire fuel cost for that month is therefore compared to the reference fuel cost at the end of each month, and as a result, the FCA is applied to the power bills after two months.
The electricity bill will reflect a change in the FCA amount if the total fuel cost for that month exceeds the reference cost, while it will reflect a change in the FCA amount if the total fuel cost is less than the reference cost. We refer to this as a fuel price adjustment.
How power suppliers calculate FCA?
Whenever a power plant uses coal, it is possible to estimate how much coal was burnt and at what cost, as well as the total cost of the energy needed to generate the power.
For instance, if hydel electricity generation has increased, the overall fuel price will reduce; likewise, if gas is consumed more frequently in a month due to its higher price, the fuel price would climb.
It is also impacted by the rupee’s appreciation or depreciation. This is due to the fact that coal, LNG, and furnace oil are imported, therefore a weakening or strengthening rupee directly affects the cost as a whole.