Due to a lot of FPA charges added to the Electricity Bill, Everyone is concerned about What is FPA in Electricity Bill? Each electricity bill is divided into different charges such as cost of electricity, F.C surcharge, T.R surcharge, TV Fee, GST on FPA, and GST.
But one of the charges FPA is something that everyone wants to know about because these charges are mostly too high. Sometimes those charges are 200 times higher than the total electricity cost.
Hence, you should want to know What is FPA in Electric Bill? Well, the FPA means in electricity bill is Fuel Price Adjustment Charges. These charges are added to every electricity bill whether you have fewer or more units. Even if you use more units per month, the FPA charges will be high.
Moreover, the cost of FPA varies from month to month and it all depends upon the current fuel prices in the country.
What Exactly is FPA in Electricity Bill?
Actually, the FPA charges in electricity bills are directly linked to fuel prices and indirectly to the dollar rate in the country. So whenever the fuel prices increase, it will impact the FPA cost. Similar when the dollar price fluctuates, the buying of fuel price will increase or decrease. These fluctuations will impact your electric bill.
Now let’s understand the bill charges in more detail so you can better understand the FPA. The electricity we use Any electric bill mainly there are two different of charges in the electricity bill.
Supply Company Charges:
The supply company charges the power distribution company responsible for transmitting the electricity to end-users. Each customer should have to pay these charges to a relative company.
The Government charges are those that you have to pay in form of taxes on the usage of electricity. It also includes the TV Fee and GST.
How Electricity Transmit at our Home?
Moving further and to understand the calculation of charges section (Supply & Govt Charges), we first need to know how the electricity reaches our homes.
In order to understand the calculation of the entire section of charges within the electricity bill, we must first know how this electricity reaches our homes. So this whole journey of electricity has four stages which we call as following
Let’s talk a little about each one to understand it in a better way.
The generation is how electricity is generated inside the powerhouse which can be a hydel power plant where electricity is generated from water. Similar, the power plants can be thermal where electricity is generated through coal or oil. Besides, there can be solar panels where electricity is generated from Sunlight. In addition, there may be air where electricity is generated from wind.
The transmission lines are also called power lines. It uses to transmit the electricity into a distribution grid that can be located in a remote area of the country. The transmission system is combined with power plants and distribution systems.
The distribution grid is the final stage of the electricity and from there it is further transmitted to the end-users such as homes or industry. So, the area within which the electricity is to be used is the supply company of the city such as MEPCO, FESCO, LESCO, and K Electric in Pakistan, etc. responsible to pass this electricity to end consumers.
Finally, the electricity is in our homes and we can use it. Electricity is used by both industrial and domestic consumers. People use electricity for lighting, cooling, heating, and for operating home appliances such as electric equipment, computer, or machinery.
How to calculate FPA in Electricity Bill
When any customer uses the electricity then the total cost of the electricity is extracted by defining how many units of electricity are used by a particular customer. And for this purpose, each supply company has made its own university rate list. In electrical language, we will its tariff.
As you can see in this below the bill, a total of 115 units have been used and out of the first 100 units is priced at 5.7900 rupees and above 15 units are priced at 8.1100. So the cost of electricity is Rs. 700 is the total amount of money that we used for electricity.
Now on the cost of electricity, there are two kinds of government charges. The first one is E.D (Electricity Duty) which is 1.5% of the consumption of electricity. Next is the television fix fee of Rs. 35 rupees for all consumers. Now the next tax is GST (General Sells Tax) which is 17% on the cost of electricity.
Now those are the charges we should need to pay. So let’s talk about the FPA bill charges and understand how those charges were calculated.
Fuel Adjustment Charges in Electricity Bill
Before we do the calculation let’s understand Fuel Adjustment Charges deeply. The first thing Fuel is something which is used to make electricity. If you are making electricity through hydel then your fuel will be waster and if you are making electricity from solar then your fuel will be sunlight. Similar this goes with oil and coal if you are making electricity using them.
Now if you stop and ask a madman on the way, he will tell you that the cheaper the fuel, the cheaper it became.
A Story Behind FPA
Now let me tell you a little story here 32 years ago from today in 1909 the Government of that time did not generate electricity from cheap or natural resources to full fill electricity needs in the country. They hired some private companies to generate electricity and sell it to the government and the government will pay them that money. Now, these private companies are called IPPS.
Now IPPS is the creature of the world that generates electricity from the world’s most expensive cured oil. It is the oil that comes out of the earth directly. The Pakistani government borrows this oil and then gives it to the IPPs to make electricity for us from it and that electricity then goes to the government.
When the prices of cured oil go up in the world, it also makes electricity more expensive. When the price of cured oil goes down, then the price of electricity also goes down.
So the fuel adjustment prices are the money that you are taking cured oil to make electricity. That means, the FPA is the money of this cured oil, so it means that you are paying for the electricity that you are using but with that, you are also paying for the oil that is being used to make electricity.
How’s that? Isn’t something funny?
But this is the unfortunate reality. All over the world, electricity is produced using natural resources which is the cheapest way to make electricity.
Wait the story isn’t ending yet. This FPA also applies GST that you have to pay and not only this but you also need to pay ED (Electricity Duty) on the total cost of fuel price adjustment.
How’s that? I am sure you are surprised by this. Anyway, this is what is FPA in the electricity bill. Hope you understand. Let me know if you have any questions.