Thursday September 28, 2023

For KE consumers: Nepra asked for over Rs10/unit power rate increase

This development is expected to lead to a significant increase in electricity rates, surpassing 10 rupees per unit

September 05, 2023
Power transmission lines can be seen in this picture. — APP/File
Power transmission lines can be seen in this picture. — APP/File

ISLAMABAD: Residents of Karachi are set to face heightened financial pressure in the months ahead, as the federal government has officially petitioned the National Electric Power Regulatory Authority (Nepra) to authorise the transfer of three quarterly adjustments accrued during FY2022-23 to consumers of K-Electric.

This development is expected to lead to a significant increase in electricity rates, surpassing 10 rupees per unit.

The Ministry of Energy (Power Division) has applied to Nepra, seeking approval for the transfer of three quarterly tariff adjustments (QTAs) pertaining to the fiscal year 2022-23. These adjustments encompass charges of up to Rs4.45 per unit for the first quarter, Rs0.4689 per unit for the second quarter, and Rs5.41 per unit for the fourth quarter. Consequently, consumers of K-Electric will face a collective surge of Rs10.32 per unit in their electricity bills, payable in the months ahead.

A public hearing regarding the government’s petition is scheduled to be conducted by the power regulator on September 11.

The federal government has filed this application under the provisions of sections 7 and 31 of the Nepra Act, 1997, in conjunction with rule 17 of the Nepra Tariff (Standards and Procedure) Rules, 1998.

The ministry is advocating for the applicability of periodic adjustments for the second quarter (Oct-Dec) of FY 2022-23, amounting to Rs0.4689 per unit, on K-Electric consumers. This measure is aimed at maintaining uniform tariff rates across the country.

Concurrently, the request for the recovery of Rs4.45 per unit is attributed to the first quarterly adjustment spanning from July to September 2022. Additionally, a request has been made to enhance the quarterly adjustment for April-June 2023 (fourth quarter) by up to Rs5.40 per unit. These three distinct adjustment recoveries are anticipated to be implemented from September to December 2023.

The government seeks the application of the second QTA of Rs0.4689 per unit to the power consumption of April, May, and June 2023, with the recovery scheduled for September, October, and November of the same year, respectively. Furthermore, the regulator has been urged to issue separate Schedules of Tariffs (SoT) for K-Electric, incorporating prospective uniform rates following tariff rationalization.

In addition to this, the Energy Ministry has put forth policy guidelines outlining the uniform application of quarterly adjustments for both state-run DISCOs and K-Electric consumers. Based on these guidelines, the Ministry has urged NEPRA to reconsider its decision, issued on May 22, 2023, pertaining to the first QTA. The Ministry seeks the issuance of separate SoT for K-Electric, encompassing the prospective application of applicable uniform rates, following the tariff rationalization requested on March 17, 2023 (ranging from Rs.1.4874 to Rs.4.4547 per kWh for different consumer categories). This adjustment is set to apply to the consumption of February and March 2023, with recovery from consumers scheduled for September and October 2023, respectively.

As for the fourth QTA of FY2022-23 concerning K-Electric, the federal government, in a recent NEPRA public hearing, had sought an increase of Rs5.41 per unit for the quarter spanning April-June 2022-23, with recovery slated for October-December 2023. However, in light of concerns regarding public affordability and potential reductions in DISCOs’ revenue recovery, the Power Division has requested the authority to extend the recovery period to six months, with a rate of Rs2.31 per unit. Nepar conditionally approved the extension of the recovery period, provided that the Power Division ensures that the impact on cash flow will not be passed on to consumers, as this may potentially hamper DISCOs’ cash flow.

Notably, during the hearing, the Power Division also proposed the application of the same conditions to K-Electric consumers, with an expectation that Rs2.31 per unit will be applicable and recoverable over six months.