K-Electric to reimburse Re0.759 per unit to consumers in Feb bills

January 21, 2022

ISLAMABAD: The National Electric Power Regulatory Authority on Thursday directed the K-Electric to reimburse Rs0.7591 per unit cost of electricity to the power consumers in their bills of February...

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ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday directed the K-Electric to reimburse Rs0.7591 per unit cost of electricity to the power consumers in their bills of February 2022, as the company in November 2021 had charged higher than what was the actual fuel cost for power generation.

It is to be noted that in line with the mechanism given in the KE’s Multi-Year Tariff, changes in fuel prices, generation, and power purchase mix are passed through along with certain annual adjustments. According to a notification issued by the regulator, the K-Electric will return this amount to its power consumers on account of the monthly fuel cost adjustment (FCA).

The regulator said that the decision shall be applicable to all the consumer categories except the lifeline consumers, domestic consumers consuming up to 300 units and the agricultural consumers of K-Electric, as they are already getting subsidy on power consumption.

The notification also said: “It is hereby clarified that negative adjustment on account of monthly FCA is also applicable to the domestic consumers having Time of Use (ToU) meters irrespective of their consumption level.”

It further said that in case, the incremental industrial and winter incentive package becomes applicable in the K-Electric, the amount of negative FCA allowed to such consumers would be adjusted in the subsequent adjustments of the K-Electric.

The Nepra took this decision after holding a public hearing on January 3, 2022. During the hearing, the K-Electric apprised that it has initiated the Power Purchase Agency Agreement (PPAA) with CPPA-G for 2050 MW, however, the National Transmission and Despatch Company (NTDC) is not willing to give firm commitment of 2050 MW, and the matter would be decided in the Cabinet Committee on Energy (CCoE).

Upon inquiry about the Bin Qasim Power Station 3 (BQPS-III), the K-Electric submitted that the first unit will be online in the month of January and the second unit of BQPS-III would be operational in the month of June.

The regulator noted that the power purchase agreement was signed between the National Transmission and Despatch Company Ltd (NTDCL) and K-Electric on January 26, 2010 for five years for the sale and purchase of 650MW on basket rates.

Subsequently, a decision was made by the Council of Common Interest (CCI) in its meeting held on November 8, 2012 with respect to the modalities for the withdrawal of electric power from the NTDCL by the petitioner, wherein it was decided to reduce the supply of energy by 300MW from the NTDCL to the K-Electric. However, the aforementioned decision of the CCI has been impugned by way of suits and petitions by the K-Electric in the Sindh High Court in Karachi. No new agreement has been signed between the K-Electric and the NTDCL till date, and the K-Electric is continuously drawing the energy from the national grid, which at present is around 1100 MW.

When inquired by the regulator regarding the signing of Gas Supply Agreement (GSA) with the Sui Southern Gas Company (SSGC), the K-Electric submitted that a meeting in this regard was held with the Ministry of Energy (Petroleum Division) in the presence of SSGC, which was followed by another meeting with the SSGC.

The K-Electric further submitted that they have suggested to park the legacy issues and move forward, however, the SSGC wants to resolve all the issues, including the previous matters, together.

The K-Electric also referred to the minutes of meeting held in the month of October 2020, in this regard. In response to the regulator’s query regarding the impact on consumers due to the non-signing of GSA, the K-Electric stated that there is no impact on the consumers as the available gas is being fully utilised. The regulator observed that had there been a GSA, the SSGC would have been bound to provide the committed quantity as per the required gas pressure, and in case of failure, the liquidated damages (LDs) would have been imposed on the SSGC.

Regarding the terms of GSA, the K-Electric submitted that the SSGC is not committing any specific quantity, and that it would supply the gas only on the availability basis, adding unless the SSGC makes the required investment in its network, there will be no improvement in the gas pressure. The Nepra directed the K-Electric to share the submissions in written of the SSGC regarding the GSA.

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