Nepra approves 12.2 paisas/kWh reduction for KEL consumers

KARACHI: The National Electric Power Regulatory Authority (Nepra) has approved a deduction of 12.207 paisas in the electricity unit price for the consumers of K-Electric Limited (KEL) under fuel cost adjustment (FCA).

This reduction for the month of March 2016 would be adjusted in the billing month of June 2016. KEL had proposed a reduction of 3.863 paisas in the rate of one electricity unit stating that its own generation per unit weighted average fuel cost in March 2016 declined to Rs5.462/kWh from Rs6.877/kWh in the reference month of December, 2015 due to reduction in weighted average price of furnace oil.

However, per unit fuel cost of the Central Power Purchasing Agency Guarantee Limited (CPPA-G) surged to Rs5.542 in March 2016 from Rs4.268/KWh in the reference month of December, 2015.

Nepra calculated the fuel cost variation of K-Electric's own power generation and power purchases from external sources for the month of March 2016 works to be around minus Rs163.078 million or minus Rs0.122/kWh.

The Regulator attributed the difference between proposed and approved variation in fuel cost of own generation to inconsistency in the working of furnace oil rate (Rs/metric ton) by K-Electric. The Authority consistently uses monthly weighted average method to work out the furnace oil rate and the same has been used in calculation of fuel charges variations of March 2016.

Nepra in the decision notes K-Electric has used the fuel component invoiced by CPPA-G whereas the allowed variation in power purchase has been worked out using the fuel cost component of CPPA-G approved by the authority.

Nepra has decided to pass on Rs0. 122/kWh to the consumers of K-Electric as FCA for the month of March 2016, which will be charged by K-Electric in the prospective billing month of June 2016.

The power regulatory authority notes the FCA is being allowed on the provisional basis and can be subjected to adjustments if it is found that K-Electric, while dispatching power from the generation sources of its system, has not followed the economic merit order or has failed to utilise its power stations prudently, which would have resulted in undue and unauthorised load shedding.