NEPRA reserves ruling on K-Electric petition

Utility has sought price increase under quarterly, monthly adjustments

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday reserved judgement on a petition filed for revision in power tariff for consumers of Karachi.

Nepra conducted a public hearing on the petition submitted by K-Electric, which sought an increase of Rs1.37 per unit in power tariff under quarterly adjustment for April-June 2019.

The power utility was also seeking tariff hike of Rs1.44 per unit on account of quarterly adjustment for July-September 2019.

Nepra also held public hearing for six-month fuel price adjustment. K-Electric sought an increase of Rs1.13 per unit for July 2019, Rs0.78 per unit for August and Rs0.40 per unit for September.

However, it sought a reduction of Rs0.19 per unit for October, Rs1.90 per unit for November and Rs2.35 per unit for December. K-Electric officials, who were present at the hearing, briefed the regulator about the company’s petition for monthly tariff adjustment due to variation in fuel cost and power purchase price for the period July-December 2019.

Claims for monthly fuel cost adjustment include variation in fuel cost of K-Electric’s own generating plants as well as power purchases, which was to be passed on to consumers.

The power utility also briefed the regulatory authority about the request for quarterly adjustment for the period April-September 2019.

Fuel cost and other variations are claimed as per routine by distribution companies all across Pakistan, including K-Electric, under a mechanism provided in the multi-year tariff.

K-Electric representatives briefed Nepra that tariff variation was due to different factors including increase in furnace oil price, rise in gas price and changes in the generation mix and power purchase cost.

Monthly adjustments, which accumulate to negative Rs1 billion, are expected to provide relief to consumers. Furthermore, the tariff increase due to quarterly adjustments is not expected to impact consumers as the tariff is uniform across the country.

The accumulation of tariff differential claims and outstanding receivables from the government have compelled K-Electric to resort to short- and long-term borrowing to fund investments in the power infrastructure of Karachi as well as to finance routine operations, which is putting more burden on its cash flow.

Published in The Express Tribune, March 5^th, 2020.

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