ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has accused the K-Electric (KE) of concealing facts and charging since 2006 its consumers bank charges twice.

In an order issued on Friday, the regulator directed the KE to “immediately stop charging of Rs8 as bank collection charges from its consumers, being illegal, unlawful and unjustified”. It asked the company to submit details of amounts it had collected over the past 10 years so that it could be refunded to consumers.

“At present, K-Electric is charging bank collection charges in duplication i.e. through tariff as cost of O&M which was Rs2 per bill in multi-year tariff determination...increasing to Rs6.23 (in 2013-14) and through electricity bills at Rs8 per bill per month”, the regulator noted.

Know more: Nepra fines K-Electric for charging meter rent

Nepra said the KE had been charging bank collection charges since 2002 under a multi-year tariff approved by the regulator at Rs2 per bill as part of operation and maintenance expense, rising to Rs6.23 per bill in 2013-14 due to its indexation with inflation and reached Rs8 per bill per month now.

Separately, the distribution companies requested Nepra to allow bank charges recovery from consumers as the State Bank of Pakistan increased collection charges from Rs2 to Rs8 in 2006. The regulator after hearing the case allowed such charges.

It said the KE instead of seeking regulator’s approval unilaterally started collecting bank charges at Rs8 per bill. When questioned by Nepra, the utility applied afresh for bank charges but “concealed the fact from the authority regarding presence of bank collection charges in its multi-year tariff”.

It said a number of hearings were held where the KE repeatedly stated that bank collection charges were not part of its operation and maintenance cost in the multi-year tariff. A number of letters were exchanged between 2006 and 2014 but despite Nepra’s orders to stop collecting bank charges twice, the KE went on with the illegal activity.

The regulator noted that the record revealed that ‘bank collection charges’ of the Karachi-based power utility stood at Rs24 million in 1999 gradually increasing to Rs33.6 million in 2001. The company’s financial statements for 2002 noted Rs44.2 million as ‘service and billing expense. Subsequent financial statements also showed bill collection charges at Rs2 per bill were part of the overall O&M cost and the collection amount reached Rs100 million in 2013-14.

The regulator said the KE was granted multi-year tariff whose spirit required that tariff was locked for certain a period of time. “During that locked period, KE cannot claim any other expense or charge, any other cost in any head to the consumer and it can only claim certain pre-determined adjustments and variations as expressly provided in the multi-year tariff determinations and its adjustment mechanisms”.

K-ELECTRIC VERSION: The KE criticised Nepra’s decision on bank charges and termed it illegal and in violation of Nepra rules and regulations.

KE spokesman Usama Qureshi said in a statement the regulator had itself directed KE to collect these charges from consumers.

He said that on May 27, 2010, Nepra had clearly termed such collections as ‘lawful’. “This was further approved by Nepra in tariff terms and conditions to be collected separately,” he said, adding that again on July 2013 Nepra confirmed that such charges were in accordance with its approval.

He said all DISCOs have included these bank charges in their tariffs while the KE kept them separately on its bill to show transparency.

The KE spokesman said there was confusion among Nepra officials on the issue and they should try to understand it before contradicting their own earlier decisions. He claimed there was no sort of duplication of such charges as claimed by Nepra.

Published in Dawn, March 14th, 2015

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