K-Electric tariff goes up on fuel cost variation

NEPRA allows increase of Rs0.48 per unit in stark contrast to tariff cut for state power distribution firms

ISLAMABAD: Despite sharply lower global crude prices, the National Electric Power Regulatory Authority (Nepra) has agreed to an increase of Rs0.48 per unit in K-Electric’s tariff in the face of higher fuel cost for October 2016.

The decision comes in sharp contrast to the tariff reduction being enjoyed by consumers of state-owned power distribution companies under the fuel cost adjustment mechanism for the past several months following more than 50% plunge in the international crude oil prices.



Nepra took the decision at a public hearing on Tuesday while reviewing a petition filed by the K-Electric management that had sought approval for a tariff increase of 47.86 paisa per unit for October because of variation in its fuel cost.

The tariff revision, however, will not be applicable to lifeline consumers who use up to 300 units of electricity in a month.

In the petition, K-Electric pointed out that it had faced a fuel cost variation of Rs723.206 million in electricity production from external and internal resources in October.



In power generation from external fuel sources, the company recorded a cost variation of Rs526.420 million while from internal resources, the fuel cost variation was estimated at Rs196.786 million.

K-Electric supplied 1,510.943 million units of electricity to the consumers in October.

In response to the application, Nepra had said about a week ago that K-Electric had submitted a request for additional collection and an upward revision in tariff, citing a surge in its fuel cost and rise in the cost of power purchase from external sources, including the National Transmission and Despatch Company and independent power producers.

Nepra said the tariff increase would be provisional as it was in the process of approving a multi-year tariff for the integrated power company since its previous multi-year tariff had expired on June 30, 2016.



“K-Electric has submitted a petition for the determination of its new MYT (multi-year tariff), which is under process before the authority. Pursuant to the mechanism prescribed in the previous determination, K-Electric has requested to allow FCA (fuel cost adjustment) for October 2016 on a provisional basis,” it said.

K-Electric added in the application that the cost adjustment request was submitted as per the multi-year tariff petition filed by the company for the period July 1, 2016 to June 30, 2026.

Last week, Nepra also reduced the power tariff by Rs2.60 per unit for the consumers of state-owned distribution companies on account of fuel cost adjustment for October 2016.

This would give a cumulative relief of Rs20 billion to the consumers in their electricity bills for December.

Published in The Express Tribune, November 30^th, 2016.

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