NEPRA reduces KE tariff by Rs4.70 per unit

The National Electric Power Regulatory Authority (Nepra) on Tuesday indicated a power tariff reduction of Rs4.70 per unit for K-Electric (KE) consumers on account of fuel cost adjustments (FCAs) for the month of September, 2022. KE consumers will enjoy relief of Rs7.8 billion due to the reduction in the power tariff. The electric company had requested the power regulator to cut the power tariff by Rs4.62 per unit on account of FCAs for the month of September, 2022.

A public hearing was conducted by the power regulator on Tuesday, chaired by Nepra Chairman Tauseef H Farooqui to consider the proposed reduction. According to Nepra, the reduction in FCA amounts to Rs4.70 per unit and would be applicable for one month only. However, this will not apply to lifeline customers, domestic customers using up to 300 units, agricultural customers or electric vehicle charging stations. Nepra will issue its detailed decision after further scrutiny of the data, stated the power regulator. During the public hearing, KE officials said that the provision of indigenous gas for KE powerplants was the key issue resulting in the higher cost of electricity generation.

“The Economic Coordination Committee (ECC) and the Cabinet Committee on Energy (CCoE) had approved the supply of 90 mmcfd of indigenous gas for the KE powerplants,” said the KE officials. The Sui Southern Gas Company Limited (SSGC) had been supplying only 60 mmcfd gas which was in violation of the decisions of the high-powered committees. They added that while the KE powerplants had first right, SSGC was supplying gas to captive power plants (CCPs) in violation of the merit policy order. The officials noted that KE powerplants produced electricity at higher rates of Rs37.74 per unit as they were running on furnace oil and diesel due to the non-provision of gas from SSGC.

However, KE received electricity at an average rate of Rs13.12 per unit from external sources, causing a reduction in the electricity rates for its consumers. The KE officials said that they had sought a remedy from legal forums. They had also taken up the matter with the Energy Task Force Chairman, Shahid Khaqan Abbasi, to intervene with regards to the supply of the requisite indigenous gas. Responding to a question, the KE officials said that they did not have a gas sales purchase agreement (GSPA) with SSGC. Regarding the operations of the Bin Qasim powerplant (BQP) 3, the KE officials said that they were taking all possible measures to ensure smooth operations of the said powerplant.

They added that Unit-2 of the Bin Qasim powerplant would start operations, with electricity becoming available in the grid, in the first week of November this year. The Nepra chairman also raised the issue of running the powerplants on a merit order. To this, the KE officials responded that they would direct the supply of RLNG to the second unit of the Bin Qasim powerplant and ensure compliance of the merit order policy in the use of fuel for power generation. A question was raised pertaining to the petition filed by other Discos regarding fuel adjustment for the month of September. The Nepra authorities stated that they were seeking an increase of Rs0.20 per unit in the rate of electricity on account of FCAs.

They added that the reference fuel cost stood at Rs9.9 per unit but the actual cost went up to Rs10.12 per unit. An intervenor also questioned why KE had sought a reduction in the tariff while the other Discos were seeking an increase, indicating that the country did not have a uniform tariff structure. To this, the Nepra officials said that both KE and the other Discos had different mechanisms and therefore, their petitions were different. Intervenors from Karachi also raised questions over Nepra’s decision allowing KE to raise its power tariff to over Rs12 per unit.

They asked whether this tariff increase would be passed on to the consumers or not. The Nepra officials responded that in the past that the government gave subsidies for quarterly adjustments. Therefore, they hoped that the government would pick a subsidy so that the tariff increase would not be passed on to consumers.