Quarterly Adjustment: KE wants to collect additional Rs14.53 per unit from consumers

ISLAMABAD: The K-Electric has pleaded with the National Electric Power Regulatory Authority (Nepra) to allow it a huge Rs14.533/unit additional collection from power consumers on account of quarterly fuel price variation for April-June 2022.

Similarly, the company also told the power regulator that it was ready to pay Rs3.476/unit back to power consumers, as it had charged a higher price from consumers in their electricity bills of July 2022 while the per unit cost of generation was lower in that month.

In July 2022, the monthly fuel charges adjustment (FCA) is lower compared to the previous month due to a decrease in fuel prices. The price of power purchased from CPPA-G in July 2022 has decreased by 31 percent as compared to June 2022. Similarly, for RLNG, the price in July 2022 decreased by 16 percent from June 2022. For furnace oil, the price in July 2022 increased by four percent over June 2022.

A spokesman of K-Electric meanwhile said, “The impact of quarterly adjustments is usually not passed to consumers under the uniform tariff policy applicable across the country. However, the final decision rests with the Federal Ministry of Energy, the Government of Pakistan, and the NEPRA.”

Under the tariff mechanism, changes in fuel cost are passed on to consumers only on a monthly basis through an automatic mechanism while quarterly tariff adjustments on account of variation in the power purchase price, capacity charges, variable operation and maintenance costs, use of system charges, including the impact transmission and distribution losses, are built in the base tariff by the federal government.

The K-Electric has filed two petitions with the power regulator and asked for its permission to charge these amounts from its clients to meet its fuel costs which the company did not charge in January-March 2022, while reimbursing consumers for charging high in July 2022. Once the petitions are approved, the K-Electric will be able to reimburse Rs6.25 billion to consumers under negative fuel charges adjustments (FCA) for the month.

It may be noted that in line with the mechanism given in the KE’s Multi-Year Tariff, changes in fuel prices, generation, and power purchase mix are passed along with certain annual adjustments. The Nepra is likely to hold a public hearing on these petitions on Aug 31. The regulator will discuss whether the monthly and quarterly fuel price variation is justified and whether it has followed the economic merit order while giving dispatches to its power plants and power purchases from external sources.