KE consumers to get Rs2.35bn fuel cost benefit

Published March 11, 2021
The combination of monthly FCAs for 11 months came as a blessing in disguise to consumers as increases in tariff costs in certain months were compensated in other months. — AFP/File
The combination of monthly FCAs for 11 months came as a blessing in disguise to consumers as increases in tariff costs in certain months were compensated in other months. — AFP/File

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday notified fuel cost adjustments (FCAs) for K-Electric for 11 months — July 2019 to May 2020 — involving a net relief of Rs2.355bn to consumers.

The regulator had completed the public hearing on KE’s FCAs on Feb 23. The combination of monthly FCAs for 11 months came as a blessing in disguise to consumers as increases in tariff costs in certain months were compensated in other months.

According to Nepra’s determinations, FCAs increased for six out of 11 months to a maximum of Rs1.21 per unit while reduced for five months with a maximum reduction of Rs2.13 per unit. The regulator decided to pass on the impact of these adjustments in three months i.e. March, April and May 2021, in an equalisation manner to ensure tariff stability.

As such, the FCA would be down by about 14 paisa in the billing month of March. This was because of Rs1.21 per unit increase in FCA for July 2019 which was set off against Rs1.35 per unit reduction in May 2020.

Similarly, there would be an average reduction of Rs1.34 per unit in the billing month of April 2021 as increases in three months (August, September 2019 and February 2020) were adjusted against reductions in two months (November 2019 and April 2020).

Likewise, the consumers would get a 72-paisa relief in May as two months FCA was down and up in two other months.

The regulator said the negative FCAs would be applicable to all the consumer categories except lifeline consumers. “Impact of negative FCA shall also not be applicable to domestic consumers consuming up to 300 units and agriculture consumers of K-Electric” as these categories already enjoyed subsidised rates.

Negative adjustment in April to June 2020 was mainly attributable to lower fuel prices which dropped due to Covid-19, followed by gradual increase in second half of the year. Furnace oil prices also dropped from Rs57,000 per tonne in March 2020 to Rs35,000 per tonne in May 2020 and then increased to Rs55,000 per tonne during July to December 2020. Similarly, RLNG prices dropped from Rs1,800 per mmBtu in March 2020 to Rs1,040 per mmBtu in June 2020 and then increased to Rs1,300 per mmBtu in December 2020.

Increase in FCA was also contributed by Gas Infrastructure Development Cess (GIDC) being billed by SSGC with a financial impact of Rs2.9bn as well as increase in fuel prices after Covid-19 period and higher proportion of RLNG being billed due to non-availability of natural gas.

Published in Dawn, March 11th, 2021

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