K-Electric tariff raised by Rs11.10

Power utility to recover high fuel cost in consumer bills of August and September

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) has allowed Rs11.10 per unit increase in electricity prices for the consumers of K-Electric (KE) on account of fuel cost adjustment for June 2022.

In a statement, Nepra said that KE would collect the increase in electricity tariffs from the consumers in two months.

It will charge Rs3.01 per unit in electricity bills of August and Rs8.09 per unit in electricity bills of September. KE had requested an increase of Rs11.39 per unit.

“Macroeconomic conditions are causing prices of fuel to increase as well. We appreciate Nepra for its approval of splitting the recovery of this amount over bills of two months, which enables KE to pass on some relief to its consumers,” said a KE spokesperson.

“It is pertinent to mention that if fuel prices decrease, all consumers also receive a benefit in their bills. Amid these unprecedented circumstances, we reiterate our request to consumers to reduce personal energy consumption by at least 20% to conserve this valuable resource,” the spokesperson added.

Nepra conducted a public hearing on July 28, 2022, during which it announced that the increase would be applicable only to August and September bills. However, the increase will not apply to lifeline consumers.

The major impact on the fuel cost adjustment for June 2022 came from the increase in prices of furnace oil and power purchased from the Central Power Purchasing Agency-Guarantee (CPPA-G).

The price of re-gasified liquefied natural gas (RLNG), which is also used as a fuel in power production besides furnace oil, increased 50% in June 2022 as compared to the March level.

The RLNG price stood at Rs4,627 per million British thermal units (mmbtu) as compared to the price of Rs3,083 per unit in March 2022.

The price of electricity purchased from CPPA-G increased 74% in June 2022 as compared to the price in March. The price was Rs15.844 per kWh in June as compared to Rs9.098 per unit in March 2022.

KE, in its request, submitted that the calculation for June 2022 be based on CPPA-G’s requested rate for the month and it was subject to adjustment based on the determination to be issued by Nepra.

The authority noted that a power purchase agreement was signed between National Transmission and Despatch Company (NTDC) and KE on January 26, 2010. The agreement was for five years and included the sale/ purchase of 650 megawatts at basket rates.

Subsequently, a decision was made by the Council of Common Interests (CCI) on November 8, 2012 with respect to the modalities for withdrawal of electric power from NTDC by the petitioner.

It was decided to reduce the supply of energy by 300MW from NTDC. However, the decision of the CCI was impugned by way of petitions filed by KE in the Sindh High Court.

No new agreement has been signed between KE and NTDC to date and KE is continuing to draw energy from the national grid, which at present amounts to around 1,100MW.

KE certified that the cost of fuel and power purchase did not include any amount of late payment surcharge or interest. It provided the plant-wise generation statistics, except for BQPS III.

The statistics provide information in terms of plant capacity, units generated, auxiliary consumption, net generation, heat rates, fuel consumption, cost of fuel and generation cost per unit.

In addition, KE also provided copies of invoices raised by fuel suppliers and copies of invoices raised by IPPs.

The authority observed that KE had requested an amount of Rs718 million for the operation of KCCPP on high-speed diesel (HSD) during June 2022.

The authority for the purpose of instant adjustment provisionally considered the same amount of Rs718 million as requested by KE, based on heat rate of 7,950.183 btu/kWh with the same calorific value (CV) of HSD and auxiliaries as reported by KE.

Once the authority approves the heat rate of KCCPP on HSD and the value of CV, an adjustment would be made subsequently along with the cost allowed previously.

 

Published in The Express Tribune, August 12^th, 2022.

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