ISLAMABAD:The consumers of K-Electric brace for another electricity rate surge of Rs2.868 per unit on account of quarterly adjustments for Jan-March 2023.
Notably, K-Electric had sought a substantial increase of Rs5.17/kWh for the quarter ending March 2024. After conducting a public hearing on July 31, 2023, the regulator reserved its decision. Now, following a six-month interval, the regulator on Wednesday released its decision. Interestingly, Nepra has calculated this quarterly adjustment at Rs3.37 per unit. However, with the reversal of the previous quarter amounting to Rs0.5055 per unit, the net impact of the electricity rate increase will be Rs2.868 per unit.
The National Electric Power Regulatory Authority (NEPRA) has communicated this decision to the federal government, awaiting official Gazette notification under Section 31(7) of the Nepra Act.
The power regulator, relying on information, data, and records provided by K-Electric, has scrutinized the quarterly adjustments and discussed pertinent issues. Notably, the regulator observed alignment between the energy claimed by K-Electric, as submitted, and the energy reported by the Central Power Purchasing Agency (CPPA).
Concerning the cost of energy purchased from the national grid, K-Electric has claimed Rs19.646 billion, encompassing capacity charges and variable Operation and Maintenance (O&M) charges. Additionally, a previous adjustment of Rs8.143 billion for the quarter from July 2022 to December 2022 has been approved by the power regulator, attributed to a revision in Market Operator Fee rates.
In the instant quarterly adjustment, K-Electric had claimed Rs1.142 billion due to the impact of negative Fuel Cost Adjustment (FCA) for July 2022, which was previously not passed on to residential consumers up to 300 units. Following Nepra’s decision on March 09, 2023, regarding the staggering of FCAs, this impact has now been applied to such consumers, contrary to the practice of not passing on negative monthly FCAs to residential consumers up to 300 units.
The Federal Government’s motion on February 16, 2023 prompted the Authority to pass on the negative FCA impact to residential consumers. Accordingly, the Authority has approved the Rs1.142 billion claimed by KE as part of the instant quarterly adjustment.
K-Electric has also requested an adjustment for tax on undistributed reserves for FY18 and FY19, totaling Rs686 million and Rs444 million, respectively. In the event of a Supreme Court decision reversal, KE reserves the right to claim back this amount in subsequent periodic/quarterly adjustments. The Authority has adjusted a negative amount of Rs1.130 billion as a previous adjustment in the quarter ending March 2023.
Furthermore, K-Electric sought Nepra’s approval for the cost of Insurance Premium amounting to around Rs9.727 billion, based on its determination on October 9, 2017 as a separate period cost in the next quarterly adjustment.
The premium covers the Chinese and German components, paid to Sinosure and Euler Hermes, respectively. The Authority, after considering KE’s submissions, has condoned the filing delay and allowed the premium in the instant quarterly adjustment, totaling Rs9.146 billion, as a separate cost. Additionally, the Authority has determined that the withholding tax will not be considered adjustable.
In its request, K-Electric projected quarterly adjustments based on anticipated units to be sold (4,881 GWh). However, the actual sent-out units for April to June 2023, adjusted for allowed losses, amounted to 4,458 GWh, and this figure has been utilized in the calculation of the Quarterly Adjustment.
