ISLAMABAD: K-Electric has sought about Rs5.50 per unit increase in its tariff on account of monthly fuel cost adjustment (FCA) for November and quarterly tariff adjustment (QTA) for July-September 2021 to raise about Rs16 billion from consumers over the next three months.

The National Electric Power Regulatory Authority (Nepra) has decided to hold a public hearing on Jan 3 to examine whether the Karachi-based utility’s request for 32 paisa per unit additional FCA for November (Rs446 million) and Rs5.18 per unit (about Rs15.5bn) under the QTA was justified and if the company had followed economic merit order for power generation.

KE had originally demanded an increase of Rs4.94 per unit under the QTA but later raised it to Rs5.18 on the grounds that its original request was based on the latest FCA for the Central Power Purchasing Agency (CPPA) approved by Nepra for October available at the time of the request. However, this was subject to adjustments and had now been revised on the basis of CPPA’s November FCA now approved by Nepra.

The company also claimed about Rs762m additional QTA on account of Gas Infrastructure Development Cess (GIDC). The additional QTA involves overall operation and management and capacity costs worth about Rs6bn and about Rs9.4bn on account of fuel costs and power purchase price. These include O&M (operation & maintenance), PPP (power purchase price), capacity costs, uncovered cost of previous FCA due to non-adjustment of system losses, etc.

During the current billing month, KE consumers are already paying an additional FCA of Rs3.76 per unit on account of electricity they consumed in October. The upcoming FCA and QTA on approval by Nepra will be charged to consumers in January bill.

Under the tariff mechanism, changes in fuel cost are passed on to consumers only on a monthly basis through automatic mechanism and the QTA on account of variation in power purchase price, capacity charges, variable operation and maintenance costs, use of system charges and including impact of transmission and distribution losses are built in the base tariff by the federal government.

Published in Dawn, December 24th, 2021

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