Facing a capacity trap, the government plans to introduce a relatively cheaper flat rate for electricity consumers in winter months to encourage higher power consumption.
The move comes amid declining electricity consumption as ‘peak hours’ in summer turn into ‘lean hours’ in winter and power companies are unable to utilise the fuel the government orders for running power plants. As a result, consumers suffer the double whammy of making capacity payments to the plants without actually consuming electricity and gas pipelines face the risk of exploding due to extreme line-pack pressure.
This is a repeat of the move of late 1990s when the government had started promoting higher consumption as it had surplus power. Barring these exceptions, the government and its companies have been promoting the slogan of “save electricity, for yourself and for the country”.
Currently, the government is applying two different rates for peak and off-peak hours which increase the end-tariff for consumers. For example, a normal rate for consumption of over 300 units per month is around Rs10 per unit, which goes beyond Rs18 per unit for peak hours (normally 6pm to 10pm or 7pm to 11pm).
During summer, people usually consume more electricity in peak hours than off-peak hours because of maximum commercial activities and use of other electric equipment like air conditioners. However, now the government will abolish peak and off-peak rules and apply a flat rate throughout the day which will reduce the rate of electricity for consumers.
The power secretary said the total circular debt currently stood at about Rs1,200bn and no more investment could be materialised unless this debt was reduced. He said that currently 35,000MW electricity was available in the system and some more projects were coming online, but the consumption in winter sometimes came down to about 5,000MW.