Negative FCA: Aptma asks Nepra to be neutral regulator in hearing KE’s plea today

ISLAMABAD: The textile industry from Sindh has asked the National Electric Power Regulatory Authority (Nepra) to prove itself as a neutral regulator in the hearing scheduled for Thursday (today) on the petition of K Electric (KE) seeking negative FCA (Fuel Charge Adjustment) of Rs4.48 per unit for the month of January 2025 with an impact of Rs4.695 billion in favour of consumers. In pursuant to the determination of general tariff of KE power plants for the period post June, 2023, the power utility has also sought the required partial load, open cycle and degradation curves along with startup cost for approval and an amount of Rs13.5 billion for the period from July 2023 to January 2025 was accordingly pending for adjustment, of which Nepra had set aside Rs5.4 billion in KE’s FCA decision for November 2024.

KE has requested the regulator to also consider the said adjustment of accumulated actualisation of fuel cost so that the recovery can be made from the negative fuel cost variation of December 2024 and January 2025 to ensure consumers were not burdened at a later stage.

All Pakistan Textile Mills Association (APTMA), in its communication to the registrar of the regulator, submitted its plea as intervener mentioning that the Nepra’s handling of KE’s FCA raises serious concerns about its impartiality, regulatory priorities and commitment to consumer protection. “The latest FCA decision once again demonstrates a clear bias toward KE’s financial interests at the direct expense of Karachi’s consumers and industries.”

APTMA said KE had submitted a claim of Rs13.5 billion for partial load, open cycle, degradation curves, and startup costs for the period from July 2023 to January 2025, requesting that Rs5.4 billion be deducted from the negative FCA of November 2024. However, it argued, these costs remained unverified and, in many cases, unverifiable.

APTMA also raised critical questions, like: “On what legal or regulatory basis is Nepra allowing KE to recover unverified costs while denying Karachi’s consumers their rightful FCA relief? “How can Nepra justify cutting consumer benefits before even determining and verifying KE’s claimed costs? “If Nepra’s mandate under Section 7(6) of the Nepra Act is to protect both consumer and industry interests with transparency and impartiality, why is it prioritising KE’s financial claims over consumer relief?”

APTMA also placed the question asking why was Nepra supporting KE but refusing to release the verified Rs33 billion Covid incremental subsidy? “Nepra has failed to release Rs33 billion in undisputed Covid incremental subsidy that has been pending for over three years.” KE lost its appeal at the Nepra tribunal but managed to obtain a stay order from the Islamabad High Court to further delay the payment.

APTMA said Karachi’s industries suffered a cumulative competitive loss of Rs300 billion against industries in the rest of the country that received this subsidy. When Nepra was asked during the pendency of the case that KE did not have a stay from the tribunal and subsidy should be released, the request was ignored and not acted upon.

APTMA asked: “If Nepra can approve FCA adjustments for KE without verification, why hasn’t it ordered the release of the Rs33 billion Covid subsidy, which has already been verified?

“If Nepra is willing to cut consumer benefits to favour KE’s financial stability, why won’t it balance the scales by issuing a notification to provisionally release at least Rs30 billion of the Rs33 billion subsidy for Karachi’s consumers?”

APTMA stressed that Nepra and the Power Division must set a defined margin for open cycle and startup fuel costs in multi-year tariff (MYT).

“The lack of a predefined margin for open cycle, startup fuel costs, and other similar expenses in MYT has allowed KE to repeatedly recover such costs through discretionary FCA adjustments,” it said, adding: “Nepra’s failure to incorporate these costs under a structured tariff framework has led to financial unpredictability and room for manipulation.”

It further said Karachi’s consumers and industries deserved a fair, transparent, and accountable regulatory framework -- “not the one that is designed to benefit KE at their expense”.