NEPRA finds discrepancy in K-Electric’s cost estimate

Allows tariff increase of Rs0.25 per unit against requested Rs0.60

KARACHI: The power-sector regulator has found inconsistency in calculating the cost of power production and purchase by K-Electric for November 2016 and has restricted additional collection from consumers at Rs303.09 million with a tariff increase of Rs0.25 per unit, lower than the hike of Rs0.60 sought by the utility.

In stark contrast to that, the regulator had cut November’s tariff by Rs3.60 per unit for the consumers of state-owned power distribution companies.



K-Electric, a Karachi-based integrated power generation, distribution and transmission company, had requested the National Electric Power Regulatory Authority (Nepra) to allow it an additional collection of Rs726.56 million or Rs0.60 per unit because of higher cost of power production and purchase.



However, Nepra in its decision said, “the difference between the requested and approved variation in the fuel cost of own generation is due to inconsistency in the working of furnace oil rate by K-Electric.”

The regulator uses the monthly weighted average method to determine the price of furnace oil consumed at the Bin Qasim Power Station-I and the same has been used in calculating the fuel cost variation for November.

It also said the difference between the requested and approved variation in the cost of power purchase from external sources was due to the reason that K-Electric used the provisional fuel cost component of the Central Power Purchasing Agency Guarantee Limited (CPPA-G) whereas Nepra took into account the CPPA-G’s fuel cost approved for the distribution companies.

The tariff revision of Rs0.25 per kilowatt-hour will be applicable to all consumer categories, except for lifeline consumers that consume up to 50 units per month.

The revision will be shown separately in the consumer bills of January 2017 on the basis of units billed in November 2016.

“This adjustment is on a provisional basis and will be adjusted/refunded once the new tariff of K-Electric is determined and notified,” Nepra said.

K-Electric’s previous Multi-year Tariff (MYT) expired in June 2016. A petition for the new MYT has been filed which is being reviewed by Nepra.



During the hearing, K-Electric submitted that the cost of power generation had increased to Rs8.612 per kilowatt-hour at the Bin Qasim Power Station-I in November 2016 compared to Rs7.553 in September 2016.

“The increase came due to a rise in the weighted average price of furnace oil from Rs30,520 per ton in September to Rs34,571 per ton in November.”

K-Electric further said it paid a higher tariff of Rs5.335 per unit for electricity purchase from the national grid station in November 2016 compared to Rs4.458 in September.

Published in The Express Tribune, January 4^th, 2017.

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