K-Electric tariff rises Rs5.27 per unit

Consumers will pay Rs10.16b to utility under fuel cost adjustment for April

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) has approved an increase of Rs5.27 per unit in the electricity tariff of K-Electric on account of fuel cost adjustment for April 2022.

K-Electric had requested for a tariff increase of Rs5.307 per kilowatt-hour (kWh), which would have put a burden of Rs10.216 billion on the
power consumers.

The power sector regulator held a public hearing on the company’s petition on June 14, 2022. It approved an increase of Rs5.2718 per kWh in the power tariff for April 2022.

The tariff hike will force the power consumers to pay a total of Rs10.157 billion to the private power utility.

K-Electric will recover the increase in electricity price in the bills of July 2022. The fuel cost adjustment will be applicable to all consumer categories except for lifeline consumers, who consume up to 50 units in a month.

The regulator noted that the power purchase agreement was signed between National Transmission and Despatch Company (NTDC) and K-Electric on January 26, 2010 for five years for the sale and purchase of 650 megawatts at basket rates.

Subsequently, the Council of Common Interests (CCI) – an inter-provincial body – in its meeting on November 8, 2012 with respect to modalities for the withdrawal of electric power from NTDC decided to reduce the energy supply to K-Electric
by 300MW.

However, the CCI decision was impugned by way of suits/ petitions filed by K-Electric in the Sindh
High Court.

No new agreement has so far been signed between NTDC and K-Electric, and the latter is continuing to draw energy from the national grid, which at present stands at around 1,100MW.

K-Electric, in its tariff adjustment requests, said that it dispatched electricity as per the economic merit order from its own generation units (with the available fuel resources) and imports from the external sources.

Earlier, K-Electric requested Nepra to increase its power tariff by Rs11.33 per unit on account of fuel cost adjustment for May 2022.

The major impact on the fuel cost adjustment for May came from the increase in the price of furnace oil and electricity purchased from the Central Power Purchasing Agency-Guarantee (CPPA-G).

The price of furnace oil increased 38% in May compared to March while the price of re-gasified liquefied natural gas (RLNG) rose 50% in the same time period.

The price of electricity bought from CPPA-G swelled 53% to Rs13.897 per kWh in May as compared to Rs9.387 per kWh in March.

The fuel cost adjustment is reviewed every month and is applicable to the consumer bills for only one month.

It is incurred by the utilities due to the global variation in the prices of fuel used to generate electricity and the change in energy
generation mix.

These costs are passed on to the consumers following Nepra’s scrutiny and approval. The consumers also receive some benefit when the cost of fuel decreases.

As per Nepra guidelines, K-Electric’s petition will be discussed at a public hearing on July 4. The regulator may approve the request after scrutiny and issue instructions for the period during which the fuel cost adjustment will be applied to the consumer bills.

Meanwhile, the federal government has assured the K-Electric administration that its issues would be resolved.

In a meeting with K-Electric’s foreign investors, Federal Minister for Power Khurram Dastgir Khan committed to resolving the power utility’s financial and contractual issues at the earliest.

The minister assured them that his preference was to put K-Electric on firm foundations in the years to come. “The government is focused on long-term policymaking for the betterment of the country rather than myopic decision-making,”
he remarked.

Published in The Express Tribune, June 25^th, 2022.

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