STAFF REPORT
ISLAMABAD: The delay in determining the tariff by the power regulator is going to cost the consumers of K-Electric by increase of around Rs 19 per unit on account of fuel adjustment.
The national electric power regulatory authority (Nepra) has failed to decide the power tariff of KE for nine months that piled up to Rs 19 per unit increase.
National Electric Power regulatory authority (NEPRA) has announced a public hearing on May 9,2024 for the petition submitted by K-Electric on provisional monthly fuel charges adjustments (FCA) for the period July 2023 to March 2024.
KE’s multi-year tariff is currently under NEPRA’s review. The consumers of other power distribution companies (Discos) have already paid their part in their monthly adjustments granted by NEPRA to the CPPA-G at around PKR 27 per unit while CPPA-G’s request for March FCA at Rs 2.94 per unit is also under review with NEPRA.
The K-Electric has proposed three scenarios of increasing power tariff to the power regulator to rescue the consumers of accumulative effect of increase in electricity rates.
Under the first scenario, KE has proposed that the FCA be calculated as the difference between actual fuel cost and the reference monthly fuel cost as per the interim tariff, whereas, as per the second scenario it has been suggested that the difference between the actual and reference monthly fuel cost be considered as per the tariff petition filed by KE and currently under NEPRA’s deliberation.
The third scenario proposes that the difference between actual fuel cost vs. annual weighted average fuel reference costs being considered as per the tariff petition filed by KE and currently under NEPRA’s deliberation.
The power consumers of KE will bear total Rs 18.57 per unit hike if the NEPRA approves first scenario, while KE’s consumers will face Rs 18.57/unit increase if the regulatory authority (NEPRA) approves second scenario and Rs 16.9/unit hike if NEPRA allows third scenario for the period from July 2023 to March 2024.
As the situation emerges, the delay due to extended time taken in determining KE’s tariff for the reference period by NEPRA, the power utility serving Karachi’s 3.5 million customers has suggested three scenarios for the consideration of the regulator and guidance in determining the provisional FCA for above mentioned months to facilitate timely recovery of costs and avoid further accumulation of adjustments to be recovered from consumers.
Since the NEPRA notification and final determination has been pending, KE’s bills dispatched to its customers carry a notice every month.
The notice that explains monthly bills usually mentions, “KE’s Investment Plan and Multi Year Tariff (MYT) for the period starting from July 01, 2023 is under process.
Accordingly, no amount in respect of FCA for the month of July 2023 or onwards is presently included in the current electricity bill and the same will be applied/recovered with future bills in accordance with regulatory approval. All consumers are therefore notified accordingly,” KE has been warning in electricity bills despatched to the consumers.
K-Electric (KE) has requested fuel charge adjustments (FCA) for a period spanning nine months in which KE proposed an increase in electricity prices for seven months, with a reduction in power tariffs for the remaining two months, covering the period from July 2023 to March 2024.
The NEPRA will hear the plea of K-Electric on May 9 and following the hearing, NEPRA will issue a notification determining how the FCA will be calculated and instructions highlighting the method through which they will be applied on customer bills.
NEPRA, in a public hearing notice, has invited all the interested/affected parties to raise written or oral comments as permissible under the law at the hearing.
It is pertinent to mention that Fuel Charge Adjustment (FCA) are incurred by utilities due to global variation in fuel prices used to generate electricity and change in the generation mix.
These costs are passed through to customers following NEPRA’s scrutiny and approval. The request for FCA is due to utilization of fuel sources based on economic merit order and changes in fuel prices.
