You must be asking yourself, what is FPA in the electricity bill? Well, the answer to this is quite simple. FPA stands for Fuel Price Adjustment. In Pakistan, there are a lot of taxes that we pay on the electricity bill. So, if you are a newbie, reading the bill can be quite a difficult task because of these technical terms. But do not worry as we will turn all of these confusions into clarity. In this article, we will tell you all about FPA in the electricity bill in detail. So if you want to learn more about it, do not miss this article.
Note: Check your September MEPCO Bill.
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What is FPA in the Electricity Bill?
When reading an electricity bill, there are two different types of charges that you will have to read. First is the money that is payable to the electricity distribution company. And the second is the one that is payable to the government of Pakistan. Fuel price adjustment is the price that you will have to pay to the company that is distributing electricity to your city or area. The price of FPA changes for each month and is determined by the country’s economic gasoline costs.
So what exactly is this Fuel Price Adjustment? FPA costs in energy bills are related directly to fuel costs and partly to the government’s currency rate. As a result, anytime fuel prices rise, so then would the FPA charge. Similarly, if the value of the dollar varies, the cost of purchasing gasoline will rise or fall. These swings will affect your electric bill.
Fuel is a substance that is employed to generate power. If you generate electricity using a hydroelectric plant, then your fuel will be water, however, if you generate electricity via the sun, your source will be sunshine. This is also true for crude oil and coal if you use both to generate energy.
We all know that the government didn’t have dams from the get-go. Dams generate renewable energy, that is hydroelectricity. But we still needed energy before the dams were made. So how did we do that? Well, the government used to hire IPPs. These companies used crude oil to make electricity. Now, crude oil or fuel is not a cheap resource. Prices of fossil fuels also change all over the world. So, it is not always easy for IPPs to bear the cost.
So they put the cost on the people who use the electricity. And they did that in form of FPA. FPA fluctuated each month depending on the fuel prices all over the world. Hence, this is not a stable way to fulfill a country’s energy demands, if we speak in terms of the economy.
This FPA additionally includes the GST you must pay, as well as the ED (Electricity Duty) on the overall price of the FPA
How to Calculate FPA?
Now, let’s come to how you can calculate the FPA. The government announces any changes in taxes from time to time. FPA is one of them. They have to announce it whatsoever. And they cannot announce the FPA without approval from the Parliament.
For calculating the rate, you first need to know what is the current FPA rate. When you know that, then you just have to multiply that with the total number of units consumed. FPA may be different depending upon the number of units consumed. If you cross a certain limit, FPA will change. This tax is also different for consumers in residential areas and those that are using the energy for commercial purposes.
When you have calculated this, then you also need to add the electricity duty and the 17 percent general sales tax on the total amount of the bill. Only then will you be able to calculate the FPA correctly.
Of course, FPA is a burden on the general public. Not all of us can bear it. Most of the time, FPA is more than the total cost of electricity you have consumed per month. So, the government has to control this at all costs. But what are the permanent solutions for it? Government must invest in renewable sources of energy. They have to set up new hydroelectric power plants and solar energy. You should also use solar panels at home if you can afford them. This way, we can save the public from the extra burden of FPA.