NEPRA concludes hearing on K-Electric’s Rs58 billion tariff claims

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Tuesday concluded a public hearing on K-Electric’s tariff adjustment claims exceeding Rs58 billion under its FY2017–2023 Multi-Year Tariff framework, including end-of-term adjustments, tax pass-through claims and pending power purchase costs.

The hearing was conducted on K-Electric’s petition regarding End-of-Term Adjustments (EoTA) under the approved Multi-Year Tariff (MYT) framework for the control period FY2017–2023.

According to details presented during the proceedings, the utility sought cumulative End-of-Term Adjustment claims amounting to Rs43.6 billion. The claim includes adjustments relating to exchange rate impact on the allowed Return on Equity (RoE), investment-related actualization and working capital adjustments under mechanisms already approved by NEPRA in its MYT and Mid-Term Review determinations.

K-Electric informed the Authority that the MYT framework for FY2017–2023 had specifically envisaged certain components to be reviewed at the end of the control period through a prescribed regulatory mechanism.

During the hearing, KE apprised the Authority that the cumulative EoT adjustment claim amounts to PKR 43.6 billion and includes components relating to the impact of exchange rate variations on the allowed Return on Equity (RoE), investment-related adjustments, and working capital actualization based on actual balances versus projected benchmarks approved under the MYT framework.

The utility further informed the Authority that it had also sought approval of pass-through claims of Rs 15.3 billion relating to taxes paid and claimed strictly in compliance with NEPRA’s MYT determination.

KE maintained during the hearing that all submitted claims are fully aligned with the provisions, methodologies, and mechanisms already approved by NEPRA under the MYT framework for FY2017– FY2023.

The tax-related claims include Rs7.5 billion for taxes paid during 2023, Rs3 billion as additional tax liability for 2022 and Rs4.1 billion relating to minimum tax adjustments for the period 2018–2021.

The utility also sought recovery of Rs461 million under Workers’ Welfare Fund (WWF) and Workers’ Profit Participation Fund (WPPF) adjustments, along with Rs261 million in pending power purchase adjustments related to electricity procurement from independent power producers.

During the hearing, K-Electric maintained that all submitted claims were fully aligned with provisions and methodologies already approved by NEPRA under the MYT determination for FY2017–2023.

The company argued that the tariff framework had already incorporated mechanisms for adjustment of uncontrollable factors, including exchange rate fluctuations, working capital actualization and investment-related variations.

K-Electric also referred to its earlier correspondence with the regulator submitted in 2023, stating that auditors had completed verification of write-off claims for FY2023. The utility had subsequently sought revision of quarterly tariff variation claims for the April–June 2023 period.

The utility informed NEPRA that the MYT for FY2017–2023 remained applicable until June 30, 2023, and noted that tariffs for generation, transmission, distribution and supply segments had earlier been determined after approval of its investment plan.

K-Electric also requested the regulator to incorporate unrecovered costs, end-of-term adjustments and verified write-off claims into tariff schedules to be determined under the new MYT effective from July 1, 2023.

Separately, on July 7, 2025, the company submitted additional claims amounting to Rs10.963 billion related to pending tax and WPPF pass-through adjustments under the MYT 2017–2023 framework, along with pending power purchase cost adjustments.

Following detailed arguments from the utility and stakeholders, NEPRA concluded the hearing and reserved its decision on the matter.