ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday cleared a Rs2.15 per unit cut in monthly fuel cost adjustment (FCA) and Rs7.83 per unit in quarterly tariff adjustment (QTA) for K-Electric consumers.

While Nepra would notify next week the adjustment to refund Rs3.59 billion to KE consumers in December bills, it would separately forward its QTA determination to the federal government for a final decision including adjustments in tariff differential subsidy.

The decisions were reached at a public hearing presided over by Nepra Chairman Tauseef H. Farooqui. The FCA adjustment pertains to electricity consumed in October while QTA is related to the first quarter (July-September) of FY23.

The KE had filed two separate petitions. It sought a reduction in FCA by about Rs1.9 per unit to refund through tariff adjustment about Rs3.16bn to consumers on account of cheaper electricity produced in October. After examination of data, the regulator worked out a negative adjustment of Rs2.15 per unit with a revenue impact of Rs3.59bn.

Cuts tariff by Rs2.15 for October and Rs7.83 for 1st quarter

In its second petition, KE sought about Rs7.8 per unit negative quarterly tariff adjustment for July-September. The regulator worked out the reduction at Rs7.83per unit. Normally, the impact of quarterly adjustments is not immediately passed on to consumers under the uniform tariff policy applicable across the country.

This is the fourth month in a row that FCA for KE’s consumers was lower than the reference tariff. This partly reduced the burden of record-breaking increase in FCAs over the past many months going beyond Rs11 per unit.

The reduction in FCA is chiefly because of an increase in nationwide uniform base tariff that had gone up by Rs7 per unit in August and about 91 paise per unit in October. The KE representatives told the hearing that the negative FCA for October was primarily due to a decrease in prices of RLNG, furnace oil, and power purchased from the Central Power Purchasing Agency (CPPA). It said the price of RLNG and furnace oil in October decreased by 16pc and 6pc when compared to September.

It was reported that KE produced electricity from its power plants at the rate of about Rs33 per unit while the cost of electricity it purchased from national grid — National Transmission and Despatch Company — stood at just Rs12 per unit.

On formal notification next week, KE would be required to refund about Rs3.59bn to consumers through adjustment in the current billing month — December. The revised rate would apply to all the consumer categories except lifeline domestic consumers using up to 300 units, agriculture consumers and electric vehicle charging station (EVCS) consumers of K-Electric.

The negative adjustment on account of monthly FCA is also applicable to domestic consumers having Time-of-Use (ToU) meters irrespective of their consumption level. K-Electric shall reflect the fuel charges adjustment in December bills.

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

Published in Dawn, December 1st, 2022