K-Electric seeks tariff hike for nine months under FCAs

ISLAMABAD: K-Electric has filed a petition with the National Electric Power Regulatory Authority (Nepra) seeking approval for Fuel Cost Adjustments (FCAs) spanning from July 2023 to March 2024.

These adjustments, pending for several months, constitute a significant sum owed by Karachiites, who paid lower electricity bills during a period of elevated electricity costs, primarily attributed to higher fuel expenses.

The Karachi-based utility has formally presented its petition to Nepra, outlining three distinct scenarios and seeking authorisation for one of them. The company asserts that the prolonged delay in recovering these costs not only burdens consumers but also adversely impacts the financial stability of the utility itself.

The nine-month combined net FCA recoveries of these three scenarios range from Rs12.94 to Rs18.57/unit. Nepra has scheduled a public hearing for May 9, 2024 to address the petition. The provisionally approved FCA will remain subject to adjustment, including any related working capital impacts, based on the Authority’s final determination.

As Nepra deliberates on KE’s multi-year tariff 2024-30, the utility has requested the authority for provisional FCAs based on three distinct scenarios. It has requested Nepra’s approval of any one of these scenarios for consideration and guidance in determining the provisional FCA for these months.

These scenarios include FCA – Ref Interim Tariff – March 2023: Under this scenario, FCA calculations are based on the variance between actual monthly costs and the fuel cost of March 2023, which Nepra has approved as interim tariff until the MYT 2024-30 is determined. KE has requested Rs12.94 as the net FCA for the nine months.

FCA – Ref Monthly Cost: This scenario involves FCA calculations based on the variation between actual fuel costs and the monthly fuel cost references submitted by KE in its tariff petition. Although the tariff petition is still under Nepra’s determination, KE has included this scenario in FCA calculations to prevent the accumulation of costs for consumers. The net FCA requested by KE for July-March 2023-24 is Rs18.55.

FCA – Ref Yearly Avg Cost: In this scenario, FCA calculations are based on the variation between actual fuel costs and the weighted average of references submitted by KE in its tariff petition. KE included this scenario for the authority’s deliberation to avoid systematic under/over recovery of costs or additional working capital implications. The net FCA requested by KE for the 9 months is Rs16.9.