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Thursday July 18, 2024

KE seeks Rs10.69 per unit tariff hike for multi-year period

Karachi-based utility’s proposal, aiming to establish a multi-year tariff from 2023 to 2030, includes various cost components

By Israr Khan
May 25, 2024
A view of the K-Electric head office, with solar panels at the parking area, in Karachi on January 24, 2023. — AFP
A view of the K-Electric head office, with solar panels at the parking area, in Karachi on January 24, 2023. — AFP

ISLAMABAD: K-Electric has sought Rs10.69 per unit increase from the National Electric Power Regulatory Authority (Nepra) in the base tariff, transitioning from the previous rate of Rs34 to Rs44.69 per unit, citing a multi-year tariff spanning seven years.

The Karachi-based utility’s proposal, aiming to establish a multi-year tariff from 2023 to 2030, includes various cost components.

K-Electric has urged Nepra to endorse the cost of power EPP components at Rs18.88 per kWh, subject to monthly and quarterly adjustments based on power costs.

The Cost of Power CPP component amounts to Rs12.54 per kWh, with quarterly revisions. Additionally, the Transmission Charge is set at Rs3.48 per kWh, while the Distribution Charge is calculated at Rs3.84 per kWh. The Operation and Maintenance (O&M) charges are sought at Rs0.42 per kWh, indexed annually to the Pakistan Consumer Price Index (CPI), and Retail Margin is estimated at Rs0.59 per kWh, adjusted yearly based on revenue recovery.

The Recovery Loss Allowance, including a cap and floor mechanism for under/over recovery, is calculated at Rs2.88 per kWh. The Working Capital is set at Rs2.07 per kWh, annually adjusted for over/under recovery scenarios. Despite the requested adjustments, the actual price charged to the customers on monthly bills remains under the government’s control through a uniform tariff policy, ensuring consistency across customer categories. Nepra has invited all interested or affected parties to provide comments within seven days from the notice, as part of the regulatory process to ensure transparency and stakeholder engagement before final decisions on tariff adjustments are made. In a statement, K-Electric emphasized that its request for supply tariff adjustment would not impact the customer bills. This petition falls under the KE’s Multi-Year Tariff for the period from FY2023-24 to FY2029-30. The utility company highlighted that the price of electricity charged to customers in their monthly bills remains governed by the government’s uniform tariff policy, ensuring consistent charges across customer categories nationwide. As a vertically integrated utility responsible for managing generation, transmission, and distribution of electricity, these costs constitute almost 90 percent of KE’s request. They are essential to ensure a steady and reliable supply of electricity to homes and businesses, with minimal disruption and efficient service. K-Electric’s Multi-Year Tariff petition is currently under deliberation by Nepra, with the company reaffirming its commitment to driving efficiency and improvement in its business through innovative technologies and targeted investments.