Quarterly Tariff Adjustment: Nepra allows K-Electric to charge Rs4.45/unit extra for four months

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) Friday allowed K-Electric to collect up to an additional Rs4.45/unit on account of quarterly tariff adjustments (QTA) for October to Dec 2022, which will be charged in the next four months starting from January to April 2023.

Residential power consumers who use up to 300 units of electricity a month (excluding lifeline consumers) will be charged an additional Rs1.4874/unit, and consumers of over 300 units to be charged Rs3.2116/unit. Likewise, the general supply tariff for commercial consumers of sanctioned loads of less than 5kW will be additionally charged Rs2.6847/unit and for 5kW and above, it will be Rs4.4547/unit. For the time of use (ToU) consumers, electric vehicle charging stations (EVCS), general services, the industrial sector, single point supply, agriculture tube wells, streetlights, and residential colonies attached to industrial premises will all be charged with an additional Rs4.4547/units in the four months. The average increase will be Rs3.2116/unit, and it would be recovered from the consumers in their utility bills for Jan-April 2023, based on the electricity units consumed during October, November, and December 2022.

The Nepra has issued the decision on the federal government motion submitted to it with respect to the recommendation of a consumer-end tariff for K-Electric. As per practice, the government maintains a uniform tariff across the country, and generally the differential is adjusted through subsidy. The Ministry of Energy has therefore requested for application of quarterly adjustments on K-Electric consumers as applicable for XWDISCOs. The federal government has filed a motion to the NEPRA under sections 7 & 31 of the NEPRA Act, 1997 read with rule 17 of NEPRA Tariff (Standards and Procedure) Rules, 1998, for application of Quarterly Adjustment on K-Electric consumers as applicable for XWDISCOs.

The power regulator on December 27, 2022, held a public hearing on the federal government’s motion with respect to the consumer-end tariff recommendations of the K-Electric to adjust the tariff of K-Electric under the head of the Uniform Tariff Policy.

It was informed that the KE-determined cost of electricity is Rs 43/unit and to keep it uniform with the rest of the country the federal government was providing a subsidy of Rs18/unit. Now, the government wants to reduce the subsidy on electricity from Rs18/unit to approximately Rs15/unit to enforce uniform electricity rates and therefore requested the Nepra to pass on a Rs3.21/unit hike in the tariff on account of Quarterly Tariff Adjustments to Karachiites. According to an official of the Power Division, the federal government is providing around Rs283 billion in power subsidies to KE consumers each year.

It is to be noted that on October 14, 2022, the Authority determined the Periodic Adjustment in tariff for the fourth quarter of FY 2021-22 for XWDlSCOs and allowed the positive quarterly adjustment of Rs93.96 billion to be recovered from all categories of consumers except lifeline consumers, in a period of four months with effect from 01.10.2022. In accordance with the National Electricity Policy, 2021, the government may maintain a uniform consumer-end tariff for K-Electric and state-owned distribution companies -- even after privatization -- through the incorporation of direct or indirect subsidies.

The K-Electric said, “For bills already issued in January 2023, the adjustments will be billed in the following month.”

It is to be noted that under the monthly fuel charges adjustments (FCA), NEPRA has allowed substantially high FCA for May and June 2022. For June 2022’s FCA, Nepra had allowed the utility to collect an additional Rs11.102/unit in electricity bills for August and September 2022, with a combined impact of Rs25 billion. For May’s FCA too, it had asked the KE to charge an extra Rs9.518/unit in two months, including Rs2.6322/unit in July and Rs6.886/unit in August bills.

But, now since July 2022, the regulator has instructed to reimburse the consumers’ specified per unit charges and the latest one was for November 2022 FCA, for which NEPRA ruled K-Electric to refund Rs7.43/unit to consumers in January 2023 bills that has a total impact of Rs10.617 billion on the company.