Package for power consumers okayed

Published November 4, 2021
A technician from K-Electric fixes new electricity meters at a residential building in Karachi. — AFP/File
A technician from K-Electric fixes new electricity meters at a residential building in Karachi. — AFP/File

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday approved for implementation a flat rate of Rs12.96 per unit as winter incentive package for residential, commercial and general services consumers on incremental consumption for four months across the country and reserved its judgement on Rs3.45 per unit additional fuel cost charges to the consumers of K-Electric (KE).

While presiding over the public hearing on KE’s request for Rs3.45 per unit additional fuel cost to consumers for electricity they consumed in September, Nepra Chairman Tauseef H Farooqui observed that such an additional charge “is huge and will be shocking for consumers”. He directed KE to post all the record of electricity costs and sale prices on their website.

Flat rate of Rs12.96 per unit fixed for four months; regulator notes centre providing cheaper electricity to KE

KE had sought an increase of Rs 3.454 per unit in power tariff under fuel charges adjustments (FCA) for the month of September 2021. In a petition submitted to Nepra under Multi-Year Tariff 2017-23, KE had requested the regulator to allow the company to pass on the burden of Rs6.639 billion to the power consumers in its service area under monthly FCA for September 2021.

It is also worth mentioning here that for the month of August also the KE had sought an increase of Re0.978 per unit in power tariff under FCA which had an impact of Rs1.765b. Nepra held a public hearing on KE petition, mainly focusing on whether the requested fuel price variation was justified and whether the power utility had followed merit order while giving dispatch to its power plants as well as power purchases from external sources.

The Nepra case officers said the Karachi Chamber of Commerce & Industry (KCCI) had requested the closure of expensive power generation plants of KE and the power utility had provided misleading generation figures and tried to misguide the regulator and its consumers. Chairman Nepra asked KE to provide all information and also directed to upload the said data regarding cost and sale of electricity on the company’s website.

The case officers said KE had generated 47 per cent electricity from its own power plants and procured 53pc from the national grid. The Nepra chairman said one thing was clear now that the federal government was providing cheaper electricity to KE.

In a written comment, KCCI had said that the KE plants were generating expensive electricity and it had added Rs1.16bn in consumer tariff in violation of merit order. Similarly, another Rs980.9 million were added to the cost due to low pressure of gas.

Chairman Nepra asked if the utility had signed Gas Sale Agreement with the Sui Southern Gas Company Limited (SSGCL). The KE officials reported that they had meetings with SSGCL in this regard and the gas company had promised to follow up with another meeting after seeking advice from the Ministry of Energy (MoE) but the agreement had yet to be signed.

KE official said that the hike in electricity price was due to increase in the cost of RLNG and Furnace Oil. KE’s CFO informed the hearing that they had also written to the MoE to resolve the gas issues.

Meanwhile, the Nepra approved the federal government’s winter incentive package for fixing the electricity tariff at Rs12.96 per unit for the incremental consumption of four winter months starting from Nov 1, 2021 to Feb 28, 2022.

In its decision, Nepra said it had no objection in approving the winter incentive package for residential, commercial and general services consumers of Discos. For KE, the regulator said it also approved the winter incentive package in principle, but since the mechanism for verification of marginal cost and adjustment in tariff of KE for incremental sales required detailed workings/calculations and discussions with the MoE, therefore, a separate decision in this regard will be issued.

As per the decision, the package shall be applicable for winter months i.e. from Nov 1, 2021 till Feb 28, 2022. The reference period for incremental consumption will be November 2020 to February 2021.

Published in Dawn, November 4th, 2021

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