ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) allowed on Thursday 45 paisa per unit refund to K-Electric consumers under monthly fuel price adjustment (FPA) for overcharging in February.

Under the FPA mechanism, consumers are charged at a pre-determined reference fuel cost. On the basis of actual cost of power supply, consumers are subsequently given tariff adjustment, normally with a gap of two to three months, with the approval of the regulator.

Nepra decided to reduce the fuel-based tariff at the request of K-Electric, which reported at a public hearing that its actual fuel generation cost was around 28 paisa per unit cheaper than it had charged its consumers in February whereas its power purchase price from the national grid was around 17 paisa per unit cheaper.

Therefore, KE’s adviser Abdul Rauf Yousaf Quettawala asked Nepra to pass on the benefit of lower fuel cost of power generation to consumers at the rate of 45 paisa per unit.

The hearing, presided over by Nepra Vice Chairman retired Major Haroonur Rasheed, allowed the refund, but expressed displeasure over utilisation of expensive plants despite availability of cheaper plants, in violation of the merit order.

The Nepra deputy chief said that KE consumers could have availed financial relief worth million of rupees had KE utilised plants running on cheaper fuel. He asked the KE management to strictly follow approved merit order of all power sources and ordered a detailed report on utilisation of power plants.

Later talking to Dawn, Mr Quettawala said that he did not agree with the observation that KE had opted for expensive fuel or plants.

He said three or four smaller plants might have been run on expensive fuel for sometime in the season of peak demand but their impact on overall tariff was negligible.

There were different merit orders for different periods in a day, he said, adding that a report to this effect would be provided to Nepra.

In its petition, K-Electric reported that it faced a fuel cost variation of Rs462.542 million in electricity generation from external and internal resources. It includes a lower cost of Rs283.992m on account of its own power generation resources. In power production from external resources, the fuel cost variation is Rs178.549m, resulting in total reduction of 44.919 paisa per unit in February.

Published in Dawn, April 15th, 2016