ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday allowed applicability of cheaper fixed electricity rate of Rs12.96 per unit on incremental consumption to domestic, commercial and general services in current winter months to K-Electric and until Oct 31, 2023 to all industrial consumers of the utility while missing out industrial (B1) consumers of other distribution companies (Discos).

It may be recalled that the normal tariff for non-protected consumers varies between Rs16 and Rs22 per unit.

In two determinations on Wednesday, the regulator allowed these rates to KE as an extension of the federal government’s similar packages for consumers of ex-Wapda distribution companies (Discos) approved in August 2021.

Nepra had conducted public hearing on two petitions of the federal government to provide ‘Winter incentive package for electricity consumers on incremental consumption’ to domestic, commercial and general service consumers of both Discos and KE throughout the country from November 2021 to February 2022 and extension of similar package for KE’s industrial consumers until October 2023.

Utility’s normal tariff for non-protected consumers ranges from Rs16-22

The regulator released its judgement about the consumers in Karachi as KE claimed organic growth in its electricity consumption because of expansion of its network and improved monitoring of system losses and regularisation of illegal connections. The regulator had at the time questioned the government’s request for Rs12.96 per unit marginal cost that stood in 2018-19 and had increased overtime.

In its determination, the regulator noted that as per the multi-year tariff (MYT) for KE, a certain percentage of sales growth had been incorporated in the MYT, impact of which has been already been built in the MYT of K-Electric. Therefore, it would be unfair with KE if the entire growth of industrial consumption over and above the reference months, i.e. March 2019 to February 2020, is taken away from KE.

Therefore, Nepra worked out benchmark sales by applying annual growth built in the MYT of KE on monthly basis on the total actual industrial sales (excluding temporary) for the reference months from March 2019 to February 2020 (after adjusting for sales shifted to other categories).

It said the KE shall only be allowed marginal cost on sales above the benchmarked units and no other adjustment as un-recovered cost (operation & maintenance, return on rate base, depreciation, base rate and bad debt etc) will be provided. In case KE recovers any amount over and above the Marginal Cost on the incremental units either through tariff or through subsidy etc, the same would be adjusted from the utility subsequently.

Published in Dawn, January 13th, 2022

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