KE’s power generation cost exceeds national grid’s by more than 100%: Nepra member

ISLAMABAD: K-Electric is generating costly electricity for its consumers, exceeding the national grid’s generation cost by more than 100 per cent, said Rafique Ahmed Shaikh, the Member (Technical) of the National Electric Power Regulatory Authority (Nepra), in his dissenting note, a copy of which is available with The News.

K-Electric has also less cheaper electricity take-off from the national grid, instead selling its costly electricity to consumers, Rafique Shaikh further said in his dissenting note on Nepra’s verdict on FCA (Fuel Charge Adjustment) for the month of December.

It stated this has led to a decline in overall electricity sales in KEL (K-Electric Limited) jurisdiction by 6.6 per cent year-on-year. Industrial sales in December 2024, in particular, fell by 5.7 per cent compared to December 2023 and experienced a significant 9.7 per cent decrease compared to November 2024, it added. He noted that this sharp decline in industrial demand requires immediate attention from stakeholders.

In December 2024, KEL’s own power plants contributed 19 per cent to its energy mix, while purchases from other Independent Power Producers (IPPs) and Captive Power Plants (CPPs) accounted for 7 per cent, and NTDC supplied 74 per cent of the total electricity.

Notably, the cost of generation within the NTDC system is significantly lower at Rs9.60/kWh, compared to KEL’s own generation cost of Rs18.63/kWh, it said.

With NTDC possessing surplus generation capacity and its facilities situated close to KEL, it is crucial for both KEL and NTDC to prioritise and accelerate the interconnection works and studies between their systems.

This will help optimise cost-efficiency and improve overall system performance. In the current interconnection arrangement, KEL’s power drawl capacity from NTDC is limited to approximately 1,600 MW. However, in December 2024, KEL’s actual drawl from NTDCL averaged 985 MW (62 per cent of the available capacity). This less drawl pushed out-of-merit generation from KEL’s own power fleet, leading to inefficiencies and under-utilisation of the efficient resources and undermining the existing infrastructure capacity utilisation, it said.

In addition to the above, the contractual obligation for RLNG purchases by KEL is also adversely impacting its generation mix. Therefore, it is important that KEL, along with other relevant stakeholders, carefully consider all available primary energy and power resources before entering into any firm contracts.

Member (Technical) in its note further said such contracts should be structured to ensure the optimal utilisation of all available resources, taking into account factors such as cost efficiency, reliability, and sustainability. Furthermore, NTDC, in its role as System Operator (SO) and planner, must adopt a more proactive approach by conducting comprehensive system studies in collaboration with all stakeholders.

NTDC should actively present its assessments during KEL’s monthly Fuel Charge Adjustment (FCA) hearings and propose solutions to enhance the economic efficiency of the power system. As Transmission Network Operator (TNO), NTDC must also prioritise the completion of the K2 and K3 transmission lines.

“This will help maximise the effectiveness and efficiency of the power sector while ensuring optimal operations of generation facilities. Key obstacles—such as the limited transfer capacity between the two systems, the pending grid study required under the Interconnection Agreement between NTDC and KEL, and the delayed construction of the K2 and K3 transmission lines—must be addressed without further delay,” suggested the dissenting note.