A monthly electricity bill is a sum of different taxes/charges such as FC Surcharge, FPA, TV Fee, GST, and TR Surcharge. Usually, FPA or Fuel Price Adjustment Charges are the most conspicuous of all costing higher rates. However, its rate varies depending on consumed electricity units as well as fuel charges. Have you ever wondered what is FPA in the electricity bill? This article will elaborate on its detailed description, calculation method, and the key factors responsible for the fluctuations.
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What is Meant by FPA in the Electricity Bill?
FPA stands for ‘Fuel Price Adjustment’, which applies to all electricity consumers in Pakistan as the charges payable to the electricity company.
All electricity supplying companies in Pakistan such as LESCO, MEPCO, FESCO, IESCO, etc., add two types of charges to your monthly electrical energy consumption bills. One is payable to the government of Pakistan and the other to the electricity-providing companies of your area. The FPA charges are paid to the electricity-producing and distributing companies.
Why Do Electricity Consumers Pay FPA Tax in Pakistan?
Pakistan is a developing country with fewer resources and a low economy. That’s why it has to manage its electricity supply system with fewer reserves. So far, Pakistan hasn’t built enough dams; therefore, can’t manage its energy generation fuel itself. Consequently, it needs to buy fuel from other countries, which puts pressure on the economy. Therefore, WAPDA electricity consumers have to pay extra taxes on their monthly bills.
Besides that, the government has to hire different private companies (IPPs) to use crude oil for power generation. As crude oil is costly all over the world; therefore, IPPs can’t bear this cost, and it is added as FPA in the electricity bill.
So, fuel price adjustment charges are actually the amount that consumers pay to borrow crude oil for power generation and to use electricity. For a deep understanding of the whole process involved, let’s uncover the basic steps of energy production and distribution:
1. Power Generation
This step explains the method of electricity production, i.e., whether, generates through water (hydropower), sun energy (solar), coal (thermal), wind, or oil. The applied charge of FPA in the electricity bill directly depends on the way or method used for electricity generation.
The next step after energy generation is to transmit it across different regions of the country. For this purpose, different transmission lines, also called power lines, transmit electricity to different distribution grids and power plants.
After successfully transmitting energy to different transmission grids, the next step is appropriately distributing it to end-users such as residential or industry supply. Therefore, NEPRA assigns this task to other energy supply companies in Pakistan, such as MEPCO, LESCO, FESCO, PESCO, etc.
4. Electricity Consumption
Finally, the energy generation and distribution processes are completed. The users may utilize this electricity for different domestic or commercial purposes.
What Factors Determine FPA in Electricity Bill?
The monthly rate of FPA in the electricity bill varies with the change in the dollar rate, fuel price, and the country’s economic state. Out of these, fuel price is the most crucial factor determining the cost of FPA for a specific month.
In Pakistan, coal, gas (natural gas and LNG), oil, water, and solar energy are usually used fuels for power generation. The rise in these fuel prices increases the FPA price per unit of energy consumed.
Similarly, the economic stability of a country is also a critical factor that indirectly affects the FPA price of the WAPDA bill. If a nation depends on others for fuels to generate power, the current dollar rate will also affect its buying cost. Ultimately, the FPA rate increases in each month’s electricity bill.
How to Calculate FPA in the Electricity Bill?
FPA adjustment value changes from time to time, and the government has to take the parliament’s approval before announcing the recent month’s FPA charges. To calculate the charges of FPA in the electricity bill, you must know the current FPA rate. Then, you can multiply this rate by your total electricity units consumed.
Tax on FPA in electricity bills varies depending on your consumed electricity units, current tariff, and the type of meter connection. When your consumed electrical units cross a specific limit, FPA charges will rise. Similarly, the type of your meter connection (domestic or commercial) also plays a massive role in determining the cost of FPA in the electricity bill. Electricity Duty and the General Sales Tax charges are also considered while calculating FPA in your power consumption bill.
Also Read: MEPCO Online Bill Calculator
Most of the time, additional charges are included as FPA in the electricity bill that is higher than the actual bill amount for consumed units. So, it may become unbearable for consumers. Therefore, the government must make investments in renewable energy sources. Additionally, the construction of new solar energy and hydroelectric power plants must be planned properly.