Time of use – more than just a Whatsapp message | Pakistan Press Foundation (PPF)

Pakistan Press Foundation

Time of use – more than just a Whatsapp message

Pakistan Press Foundation

In the age of social media, rumours and misinformation spread at an alarming rate. And when the information pertains to electricity rates, a subject that almost everyone has an opinion on, this is often doubly true. Over the past few weeks, a message attributed to an anonymous person’s equally anonymous friend working at a power utility has been making the rounds advising people to minimize usage of air-conditioners between peak hours as the rate of electricity is 50% higher compared to the off-peak rate.

Peak hours are from 6:30PM to 10:30PM. But that is not important. What is more important is the lack of context and credibility and the resultant confusion that needs to be addressed. Let us get some background first. When discussing electricity tariffs, people immediately think of slabs. And the automatic response is to focus on keeping consumption low. But what many consumers don’t know is that this reality is a relic of the past. For a lot of consumers across the country, industrial as well as residential, the latest dynamic is Time of Use (ToU).

This has already been in place across the country for industrial consumers as well as eligible residential users and is now applicable to eligible residential consumers in Karachi as well. According to the latest notification issued by the Ministry of Energy the rates of electricity for the residents of Karachi have been brought at par with the rest of the country under a uniform tariff policy which dictates that there should be no discrimination in the cost of electricity for consumers living anywhere in Pakistan. No individual Distribution Company (Disco) can unilaterally change the rates for consumers within its operational territory, and the National Electric Power Regulatory Authority (Nepra) is responsible for ensuring this and maintaining parity.

So this should put to rest all of the conspiracy theories which say that Karachiites pay more than the rest of the country. There are no hidden charges and no secret multipliers. The new tariff – like every tariff before it – is freely accessible and customers can go and see the rates as well as the tariff category that applies to them. An important aspect of the latest notification that is being overlooked is that there is no change in the rate for customers consuming up to 300 units of electricity. This should put to rest the social media furor that there is no compassion for the under-privileged.

This brings us to the issue at hand, ToU and what it means for consumers. Residential consumers who come under tariff A-1 have been bifurcated into two categories, those with a sanctioned load below 5 kW, and those with sanctioned load of 5 kW or above. While consumers with sanctioned load below 5 kW have seen an upward revision in the price of electricity they will continue to be billed under the slab-based mechanism. So there is a change for them, but only in the rate they will be charged.

Consumers with a sanctioned load of 5 kW or above, however, will now be billed under the Time of Use (ToU) mechanism. According to this, four hours in a day are designated as peak hours, while the remaining 20 hours are designated as off-peak. All units consumed during peak hours will be charged at 20.70 rupees, whereas the off-peak consumption will be charged at 14.38 rupees per unit.

From April to October (inclusive), peak hours are between 6:30 and 10:30 PM. From November to March (inclusive), they are from 6:00 PM to 10:00 PM. This is a major shift and will take some getting used to. Consumers will not only have to be mindful of the number of units they consume but also of when those units are consumed. The second variable will actually have a bigger impact on the bill than the first.

And in case you are wondering, the difference between peak and off-peak rate varies based on consumer category, as the WhatsApp message would have you believe.

Again, this is in line with the uniform tariff policy across Pakistan, and these rates and times have been determined by Nepra and the Ministry of Energy. This billing is independent of the individual slab rates and the peak and off-peak will remain constant throughout the year.

ToU billing appears confusing at first but is actually a simpler policy which gives consumers greater leverage over their power bill. Knowing the hours during which higher rates are applicable deters you from using high-load appliances such as air conditioners, irons, water pumps, dishwashers, washing machines during them. You therefore, have a greater opportunity to reduce your overall cost of consumption compared to before. With 20 out of 24 hours being charged at only 14 rupees, consumers in this category can potentially save on their utility bills through judicious usage.

Industrial consumers who are eligible for ToU billing have already been doing this by rearranging their shift schedules to take advantage of the reduced rates during off-peak hours while retaining their productivity.

Of course, there will be an adjustment period while consumers get used to the new rates and the ToU billing mechanism. However in the long-term these consumers stand to benefit more than an unclear WhatsApp message will have them believe!

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