KE wants to charge consumers Rs3.9bln in backdated bills

KARACHI: K-Electric has sought the government’s permission to charge an additional Rs3.9 billion from its consumers on account of fuel cost adjustment (FCA) for the months of June to December 2020, it was learnt on Tuesday.

K-Electric sought permission from the National Electric Power Regulatory Authority (Nepra) to collect the amount. Nepra will conduct a hearing on February 23 to determine whether the requested fuel price variations and quarterly variations are justified.

K-Electric proposed to recover a total of Rs6.1 billion as cost of fuel was higher in the months of July, August, September and October and proposed to return/adjust Rs2.21 billion as fuel costs were lower in the months of June, November and December, translating into net recoverable amount of Rs3.9 billion. “We have filed the petition with the regulator, and it would determine the process of recovering this amount as well as the period during which the outstanding amounts would be recovered from the consumers,” a company spokesperson said.

“Last time, Nepra spread FCA recoveries of 36 months into 9 months i.e. the outstanding amount was recovered in 9 monthly installments.” K-Electric also filed its requests for quarterly adjustments in tariff on account of variation in power purchase price (other than fuel), impact of transmission and distribution losses as per mechanism provided in the multiyear tariff. K-Electric proposed a reduction of Rs3.92/kilowatt-hour kWh for April-June 2020, and increase of Rs1.93/kWh for July-September and Rs1.87 for October-December. The net impact is a deduction of 11.5 paisas/kWh to be adjusted in addition to fuel cost adjustment.

The proposed reduction of Rs3.92/kWh for April-June quarter is despite writing off Rs7.49 billion as bad debts.

“If there had been no bad debts and write-offs, the proposed reduction for the quarter would have been significantly higher,” the spokesperson said.

As per the mechanism provided in the determination, impact of change in KE's own generation fuel cost component due to variation in fuel prices, generation mix and volume is passed on to the consumers directly in their monthly bills in the form of fuel charges adjustment. Similarly, impact of change in the fuel component of power purchase price due to variation in fuel prices and energy mix is also passed on to the consumers through monthly FCA.

K-Electric mentioned the write-off claims of Rs13.6 billion for FY2017 to FY2019, which have been pending for approval before the authority.

K-Electric mentioned the delay in determination of monthly and quarterly tariff variations was significantly impacting the working capital position of the company, as payments to fuel suppliers and independent power producers were to be made timely and the differential had to be covered through borrowings which had already reached to unsustainable levels.