KE allowed Rs2.73 hike, no impact on consumers

Published March 13, 2021
The impact of quarterly adjustments would be adjusted in the Tariff Differential Subsidy (TDS) of K-Electric, thus may not have any impact on consumers, says Nepra. —AFP/File
The impact of quarterly adjustments would be adjusted in the Tariff Differential Subsidy (TDS) of K-Electric, thus may not have any impact on consumers, says Nepra. —AFP/File

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday approved an aggregate Rs2.73 per unit increase in K-Electric’s power rates for four quarterly adjustments (April 2019 to March 2020) but this will not affect the consumers.

“Since the federal government has a uniform tariff policy across the country including K-Electric consumers, therefore, the impact of quarterly adjustments would be adjusted in the Tariff Differential Subsidy (TDS) of K-Electric, thus may not have any impact on consumers,” the power regulator announced.

An official said tariff adjustments would, however, add about Rs35bn TDS to the budget. The KE and Finance Division are already in dispute over Rs217bn subsidy claims that also includes a major chunk of interest/late payment surcharge claim unacceptable to Finance Division.

The KE had claimed a quarterly tariff adjustment (QTA) of Rs1.38 per unit increase in tariff for April-June 2017 but after certain disallowances, Nepra allowed 77-paisa per unit increase for the said quarter. Likewise, the power utility had demanded about Rs1.44 per unit increase in QTA for July-September 2019 but the regulator allowed a higher increase of Rs1.97 per unit because of some amounts deferred in previous quarter.

For third quarter of October-December 2019, KE had suggested a reduction of about 12-paisa per unit but the regulator allowed a smaller reduction of about two-paisa per unit. On the other hand, the regulator allowed an increase of 61-paisa per unit higher tariff adjustment for January-March 2020 against 23-paisa increase demanded by KE.

As such in total, KE had demanded an increase of Rs2.93 per unit increase for four quarters involving about Rs39bn but the regulator allowed an increase of Rs2.73 per unit or about Rs35bn.

Under the mechanism provided in the determination, impact of change in KE’s own generation fuel cost component due to variation in fuel prices, generation mix and volume has to be passed on to the consumers directly in their monthly bills in the form of fuel charges adjustment (FCA).

Similarly, impact of change in the fuel component of Power Purchase Price (PPP) due to variation in fuel prices and energy mix has also to be passed on to the consumers through monthly FCA.

However, the impact of monthly variations in KE’s own generations fuel cost component as well power purchase price to the extent of targeted T&D losses, not taken into account in the monthly FCA, has to be adjusted on quarterly basis. In addition, the monthly variations in the variable operation and maintenance and fixed costs of the PPP, as allowed by the regulator are required to be adjusted on quarterly basis.

The impact of these variations is to be worked out based on targeted units to be sold in the next quarter and to be adjusted in the schedule of tariff.

The QTA for the said period could not be made in the tariff because of the federal cabinet decision that prices of electricity and gas would remain unchanged till June 2020 because of Covid-19.

Published in Dawn, March 13th, 2021

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