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NEPRA allows KE to remove power subsidies for protected consumers exporters

By Our Correspondent
July 19, 2022

KARACHI: National Electric Power Regulatory Authority (NEPRA) has allowed K-Electric to increase the number of unprotected consumers, remove power subsidies given to exporting industries, charge commercial peak hours and to recover May fuel adjustment in July and August.

Speaking about the changes, KE spokesperson said, “We understand that our consumers may have a number of questions about these revisions. To assist them during this time, we have updated our website with frequently asked questions.”

To reiterate, these changes were introduced under the governing laws of the government of Pakistan and the rules of the regulatory authority NEPRA and were applicable across the country, he added.

Various changes have been made to the rates of electricity and tariff structure that would be effective from July and applicable nationwide, including on consumers in K-Electric’s service territory.

These changes include the non-extension of relief for zero-rated industries as well as the relief on peak-hour electricity consumption for industrial consumers, a statement issued by the KE said.

NEPRA has also allowed retailer tax with revised slabs for commercial consumers. Non-time of use residential consumers would also see a revision in their applicable tariff along with a change in the methodology for their calculation.

“As per SRO 1004 dated July 7, 2022, the tariff rates and slab structure for tariff of unprotected non-ToU residential consumers (ie consumers with sanctioned load below 5kW) has changed,” it said.

“Protected” consumers, as per tariff terms proposed by the government under its power subsidy rationalisation plan and by NEPRA as those non-ToU residential consumers with monthly electricity usage of 200 units or less, consistently for the past 6 months.

Consumers in the unprotected category would now only be charged on one slab in which their units fall. Accordingly, tariff rates have also been adjusted downwards to minimise impact on consumers.

Government has also removed the allowance given to industrial consumers of utilising electricity during peak hours at the same rates as off-peak hours. That relief was allowed until June 2022 and accordingly with no further extension.

Peak rates would now be applicable on industrial consumers as well. Similarly, zero-rated (or export-oriented) industries were being provided electricity at a fixed rate of 9 cents/unit, which was applicable till June 2022, has now been removed. Now, these industries would be charged as per applicable tariff rates to normal industrial consumers.

“In addition to the above charges, it must also be noted that routine charges under FCA will be applicable in July bills within KE’s service territory,” KE said. Government has also revised applicable retailer tax on unregistered retailers across the country on July 1, 2022 under Finance Act 2022.

For consumers on commercial tariff, a minimum fixed tax of Rs3,000 will be charged for bills between Rs0 and Rs30,000, it said. Monthly bills between Rs30,001 and Rs50,000 will be taxed Rs5,000, while those with monthly bills above Rs50,0001 will be taxed Rs10,000.

Important to note that inactive income taxpayers will be charged twice the taxable amounts. Further, these taxes will apply even if the consumer’s premises are not in use. Unprecedented hikes in the price of furnace oil and RLNG were translating into higher costs of electricity production for utilities, and higher costs of electricity for consumers as well.

Under the tariff mechanism determined by NEPRA, incremental costs of fuel are recovered from consumers in their bills via Fuel Charges Adjustments (FCA) after the regulator’s scrutiny and approval. Within the decision for FCA, regulator also states that in which month FCA is to be charged.

For example, FCA of March 2022 was charged in the month of June 2022. Accordingly, in its determination for the month of April 2022, NEPRA has allowed KE to charge Rs5.2718 per unit for units consumed in April 2022 to be billed in the month of July 2022.

Further, NEPRA has allowed the FCA for May 2022 be recovered in two parts with Rs2.6322 per unit charged in July and the remaining Rs6.8860 per unit in the bills of August 2022.

This means customers will see two entries for FCA in their July bills ie, FCAs for April and May, respectively.

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