NEPRA increases KE tariff by Rs12.68

Regulatory Authority (Nepra) has allowed K-Electric (KE) to increase its electricity rates by Rs12.68 per unit on account of quarterly adjustments. Based on KE’s petition for the quarterly adjustments for April to June 2022, Nepra determined a Rs12.6818 /kWh quarterly tariff variation for the period applicable from July 2022 to September 2022. The determinations were made in accordance with the mechanism given in the KE’s Multi Year Tariff (MYT), whereby changes in fuel prices, generation and power purchase mix are passed through along with certain annual adjustments.

As per practice, the power regulator said, the government maintains a uniform tariff across the country and the differential is generally adjusted through subsidies. During the hearing, the issue of whether the requested quarterly variations are justified was raised. The hearing also discussed whether the existing fixed charges applicable to different consumer categories needed to be revised. The final decision, however, will be based upon the government’s notification. The power regulator, in a statement, said that KE initially requested a quarterly adjustment of Rs14.852/kWh for the fourth quarter of FY 2021-22. Subsequently, however, KE revised its request to Rs14.533/kWh. In its decision, issued on October 24, 2022, Nepra allowed a quarterly adjustment of Rs12.6818/kWh.

Earlier, KE, in its adjustment requests, had certified that its despatches were as per the Economic Merit Order generated from its own generation units (with the available fuel resources) and import from external sources. It also certified that the cost of fuel and power purchase claims do not include any amount of late payment surcharge/mark-up/interest. While going through the data and information provided by KE, the power regulator observed that as per the information submitted by the Central Power Purchasing Agency (CPPA-G), the energy claimed by KE was in reconciliation with the energy reported by the CPPA-G.

Regarding the cost billed by the CPPA-G for the energy purchased from the national grid, KE had claimed an amount of Rs14,229.26 million for capacity payment and Rs.813.32 million for variable operation and maintenance (O&M). “The capacity charges and variable O&M claimed by KE have been verified from the DISCO wise settl ment information provided by the CPPA-G and has been considered as part of the current quarterly adjustment,” Nepra said. As per the authority’s decision on July 05, 2018, KE had not been allowed any provisions for the doubtful debts in the tariff. However, bad debts written-off at 1.69% of KE’s assessed sales revenue has been allowed in the base tariff case. In its instant adjustment, KE claimed actual write-offs amounting to Rs15 billion (Gross) for the FY 2021-22. The net amount claimed by KE, after accounting for the recovery made through the write-off component built in the MYT tariff 2017, is Rs 11.455 billion.

KE had claimed that the write-off amount recovered through tariff for the FY 2021-22 i.e., Rs3.545 billion, had been worked out by multiplying the write-off component of Rs0.213/kWh built in the MYT 2017. Together with the units billed during FY 2021-22 (based on Nepra allowed transmission and distribution (T&D) loss target). The write-off request was subsequently revised to Rs14.489 billion by KE via a letter dated October 13, 2022. KE further submitted that the verification of an auditor, as required under the criteria for writeoff claims under the MYT, would be submitted to Nepra in due course.

During the preliminary analysis of the provided consumer-wise details of write-offs and the response submitted by the auditors, the authority was of the view that the write-off claim required further deliberation and analysis. Therefore, for the purpose of the instant quarterly adjustments, the Rs14.489 billion write-offs claimed by KE, including the amount already built in the tariff, had not been included in the instant workings. Further, the amount already built in the tariff i.e., Rs4.040 billion had also been deducted. The authority would decide the matter accordingly