ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Thursday reserved a judgment regarding a potential hike of up to Rs 18.86 per unit on account of fuel charges adjustment (FCA) for the consumers of K-Electric.
The K-Electric (KE) had requested fuel charge adjustments (FCA) for a period spanning nine months, in which the power utility proposed an increase in electricity prices for seven months, with a reduction in power tariffs for the remaining two months, covering the period from July 2023 to March 2024.
According to K-Electric (KE), the proposed Fuel Cost Adjustment (FCA) could impact customers by Rs 1.6 to Rs 2 per unit per month for nine months. This is compared to an average FCA of Rs 2.83 per unit applied by other power distribution companies (DISCOs) during the same period.
KE’s multi-year tariff is currently under NEPRA’s deliberation, the power utility while adopting a proactive approach had earlier filed an FCA based on three scenarios and has requested the approval of any one of the three scenarios for the authority’s consideration and guidance in determining the provisional FCA for above mentioned months to facilitate timely recovery of costs and avoid further accumulation of adjustments to be recovered from customers.
Under the first scenario, KE has proposed that the FCA be calculated as the difference between the actual fuel cost and the reference monthly fuel cost as per the interim tariff, whereas, as per the second scenario, it has been suggested that the difference between the actual and reference monthly fuel cost be considered as per the tariff petition filed by KE and currently under NEPRA’s deliberation.
The third scenario proposes the difference between actual fuel cost vs. annual weighted average fuel reference costs being considered as per the tariff petition filed by KE and currently under NEPRA’s deliberation.
As per details, the consumers of KE will bear a total of Rs 12.94 per unit hike if the NEPRA approves the first scenario (FCA-Ref Interim Tariff-March 2023), while KE’s consumers will face Rs 18.57/unit increase if the regulatory authority (NEPRA) approves second scenario (FCA-Ref Monthly Cost) and Rs 16.9/unit hike if NEPRA allows third scenario (FCA-Ref Yearly Average Cost) for the period from July 2023 to March 2024.
On Thursday, during the NEPRA’s interactive hearing, customers both in-person and online posed inquiries about various aspects of the provisional FCA.
Responding to questions about integrating more cost-effective generation sources, the CEO of K-Electric outlined plans to incorporate 640MW of affordable wind and solar power, aiming to fast-track these projects for commissioning within the next two years.
Additionally, he said that efforts were underway to introduce cheaper indigenous fuel sources to further lower overall costs.
Regarding the power supply to matric examination centers in Karachi, a spokesperson from the power utility when contacted further confirmed the areas where the exemption was possible for centers shared by the education department have been exempted from load-shedding during the examination period.
When queried about the reduction in KE’s losses since privatisation as raised in the hearing by Karachi’s industrialist Arif Bilwani, the information provided indicated a decrease in losses from nearly 40% at the time of privatization to approximately 15% presently.
However, NEPRA intervened when accusations beyond the scope of the hearing were made by Imran Shahid, a representative of Jamat-e-Islami.
Jamaat-e-Islami representative rejected the increase in tariff alleging that K-Electric is dependent on IPPs and NTDC. He claimed that the citizens of Karachi were bearing load shedding from 3 to 18 hours.
“People of Karachi should not be punished for the inefficiency of the power sector.”
Rehan Jawed, an industrialist from Karachi, suggested segregating the collection of the FCA over nine months.
It’s essential to note that FCAs are a routine procedure for power utilities, reflecting changes in the generation mix and global fuel prices used for electricity generation.
Final determinations regarding FCAs are made and notified by NEPRA, preventing individual distribution companies from unilaterally determining or modifying FCAs.
K Electric has taken an injunction against the refund of money to the customers of Karachi, Tanveer Bari, representative of the Karachi Chamber of Commerce.
Unless the fuel price adjustment is approved until the citizens of Karachi get relief, Tanveer Bari said load-shedding should not be done based on feeder losses in Karachi.
The industrialist said that 4000 units in Karachi were facing higher costs of electricity due to cross-subsidy.
He further said that the incentive of incremental revenue was not passed on to the consumers despite a scheme announced by the federal government. He asked the power regulator to intervene.
Industrialists from Karachi further added that industrial units were being shut down due to higher electricity rates.
He asked them to pass on the increase in phases spreading over nine months to ease the burden on the industry.
It’s crucial to note that FCAs are routine procedures reflecting changes in the generation mix and global fuel prices used for electricity generation. Final determinations regarding FCAs are made and notified by NEPRA, preventing individual distribution companies from unilaterally determining or modifying FCAs.
In response to concerns raised by industrialists, NEPRA has reserved judgment, indicating a thorough consideration of all aspects before reaching a decision. The outcome of NEPRA’s judgment will significantly impact electricity rates and consumer bills, warranting close attention from all stakeholders involved.
