K-Electric says ready to pay Rs4.21 per unit back to consumers

ISLAMABAD: The K-Electric has shown its willingness to the National Electric Power Regulatory Authority (Nepra) that it is ready to pay Rs4.211/unit back to power consumers in October 2022 bills after the facility charged Karachi consumers a higher price in their August electricity bills.

The company has submitted its application to the power regulator, which would hold a public hearing on it on September 29, 2022, to know if the requested fuel charges variation was justified and whether the company had followed the economic merit order (EMO) while giving dispatch to its power plants and power purchases from private power suppliers.

August’s fuel charges adjustment (FCA) is lower compared to the previous month primarily due to a decrease in fuel prices. The price of power purchased from the Central Power Purchasing Agency (CPPA) in August 2022 has decreased by 33 per cent as compared to June 2022. Similarly, for RLNG, the price in August 2022 decreased by 16 per cent from June 2022. For furnace oil, the price in August increased by 3 per cent from June.

Interestingly, in its earlier decision for July’s FCA, Nepra had decided to refund Rs4.117 per unit to consumers in their September bills and it was being paid back and had a total impact of Rs7.4 billion on the company.

If the regulator accepts the plea of K-Electric, then this adjustment/ relief would be available to all user categories of KE except lifeline power consumers, domestic consumers consuming up to 300 units, and agricultural consumers and electric vehicle charging stations (EVCS).

KE’s spokesperson said that fuel adjustment is reviewed every month and is applicable on consumer bills for only one particular month per applicable tariff across the country. The FCA is incurred by utilities due to global variations in fuel prices used to generate electricity and change in the generation mix. Furthermore, consumers also get benefits when fuel prices decline as compared to the reference month.

The FCAs are applied after Nepra’s scrutiny & public hearings, which are conducted independently for KE and state-owned entities (XWDISCOs). Alongside final approval on the FCA to be charged to consumers, the Nepra also specifies the period during which these FCA can be applied to consumer bills, he added.

It may be noted that on August 12, NEPRA had allowed the K-Electric to collect an additional Rs11.102/ unit as monthly FCA for June 2022 from consumers in their electricity bills for August and September 2022, which has a combined impact of Rs25 billion to be collected.

Additionally, on August 10, Nepra allowed the K-Electric to collect an additional Rs0.5715 per unit on account of quarterly tariff adjustments for three months from June-August 2022 that will be charged in the next three months starting from August to October 2022.

Nepra under the FCA for May had also allowed the K-Electric to charge an extra Rs9.518/unit in two months, including Rs2.6322/unit in July and Rs6.886/unit in August bills from the consumers.

In June 2022, Nepra raised the base power tariff by Rs7.9078/unit for the fiscal year 2022-23. Later in July, the regulator approved the federal government’s request to charge the end-consumers of all Discos, including the K-Electric, a uniform tariff and collect the increased base power tariff from the consumers in the FY2022-23. The federal government has also notified an Rs3.50 per unit increase (out of Rs7.9078/unit) in the national base electricity tariff.