KE, Discos allowed to recover deferred FCA up to Rs14.24

KARACHI: The National Electric Power Regulatory Authority (NEPRA) has allowed power distribution companies (Discos) and K-Electric to recover deferred fuel adjustment surcharges up to Rs 14.24 per unit from consumers in eight months, from March to October 2023.

According to the NEPRA decision, Discos will recover Rs10.34/unit from domestic protected consumers using 0-200 units/month, Rs14.24/unit from non-protected consumers using 0-200 units, Rs14.24/unit from those consuming 201-300 units/month, and Rs9.90/unit from private agricultural consumers. The entire amount would be recovered from the electricity consumers in monthly installments from March to October 2023.

The power companies will recover a staggered FCA amount from the consumers in eight months, from March to October 2023.

In its decision, the authority has also allowed K-Electric to recover the deferred fuel adjustment surcharge from the consumers up to Rs 13.87 per unit. The K-Electric will recover Rs9.97/unit from domestic protected consumers using 0-200 units/month, Rs13.87/unit from non-protected consumers using 0-200 units, Rs13.87/unit from those consuming 201-300 units/month, and Rs9.90/unit from private agricultural consumers. The private lender will also recover the amount during the months from March to October 2023.

The energy ministry had taken the plea about the rebasing of the uniform tariff determined by Neprs and notified the federal government not to burden the consumers disproportionately in a sequence of Rs3.5 per unit in July 2022 and Rs3.5 per unit in August 2022.

Consumers were hit by Rs 9.8972/unit of FCA plus Rs 7/unit of rebasing simultaneously in the August billing.

This was an average increase of Rs 16.90 per unit over and above the July rates. The above adjustments in tariff significantly increased the electricity bills for the months of August and September 2022.

Moreover, the extensive flooding due to abnormally heavy monsoon rains also affected consumers across the country. Under this scenario, the prime minister had decided to stagger the recovery of FCA applicable in August and September 2022.

During the hearing, the consumers had opposed the decision to recover the deferred FCA from them and requested the power regulator not to burden them with such a high increase in electricity.

The staggered FCA by both Discos and K-Electric will be charged from March 1 to October 31, the decision said.

The relevant FCAs were determined by Nepra as prudently incurred costs and were required to be passed onto the consumers; however, the federal government had decided not to do that on the basis that passing on FCA would significantly increase consumers’ bills in the relevant month, combined with the impact of extreme floods on consumers across Pakistan.

The authority was however cognizant of the fact that further delaying the recovery of these FCAs would lead to an increase in the financial burden on the Discos, and non-recovery would contribute to circular debt, which was not in the interest of the power sector or the country.