Tariff adjustment: NEPRA’s differences with K-Electric continue

Wants company to cut rate by Rs0.33 in July bills, firm sees Rs0.16 cut.

KARACHI: The regulator has again disagreed with K-Electric over the adjustment in tariffs for consumers as it has asked the privatised firm to cut power-price by Rs0.33 per unit against its request of Rs0.16 per unit in July billing.

The National Electric Power Regulatory Authority (Nepra), in its ruling on Friday, said that the adjustment shall be shown separately in the consumer bills of July 2016, on the basis of billed units for the month of April.

The adjustment for the month of April shall be applicable to all the consumer categories except lifeline consumers, agriculture consumers and domestic consumers consuming up-to 300 units.

There are three power sources for K-Electric - self-generation, from private producers and that bought externally from NTDC. The difference between the requested adjustment in tariff and the approved one, as per Nepra’s notice, stems from difference in fuel price calculation and lack of agreement over gas price.

The difference in fuel price originates from different calculation mechanism, since K-Electric’s cost component takes into account daily fluctuations, whereas Nepra uses “monthly weighted average method to work out the rate of furnace oil consumed in Bin Qasim Power Station-I and the same has been used in calculation of fuel charges variations of the current month [April].”

Another reason for differences in fuel price calculation is that the K-Electric uses CPPA-G quoted rate to calculate the fuel component for purchase of power from NTDC, however, Nepra uses a different quote of CPPA-G that is approved for the rest of the distribution companies (other than K-Electric).

The difference in calculation of gas price was because the adjustment requested by K-Electric for the “gas price of Bin Qasim Power Station-II… has not been allowed due to non-finalization of its heat rate.”

The cut in power price is provisional and can be subjected to adjustments if it is found that K-Electric, while dispatching power from the generation sources of its system, has not followed the Economic Merit Order or has failed to utilise its power stations prudently, which would have resulted in undue and unauthorized load shedding.

NEPRA on Thursday rejected K-Electric request for an increase of Rs0.14 per unit for the month of May and asked it to reduce the tariff by Rs0.08 per unit. The final decision in this regard is still pending.

Use own resources instead of NTDC

The Authority has noted that K-Electric keeps its resources idle and relies more on National Transmission and Dispatch Company’s (NTDC) supply of 650MW. It has been repeatedly directing K-Electric to prudently utilise the available capacity of its system to eliminate load shedding in its service territory and the whole country.

The K-Electric’s gas-based power plants can be utilised to their full load capacity with the availability of imported Regasified Liquefied Natural Gas (RLNG).

“Explanation notices have been issued to K-Electric and NTDC for continual purchase/ sale of 650MW even after expiry of Power Purchase Agreement between aforesaid parties, matter which is under proceedings with the Authority,” the notification added.

Published in The Express Tribune, July 2^nd, 2016.

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