K-Electric’s power tariff cut by Rs5.12 per unit

NEPRA finds financial impact of Rs32m due to Economic Merit Order violation

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) on Friday decided to slash power tariff by Rs5.12 per unit for K-Electric (KE) consumers on account of fuel cost adjustment (FCA) for September 2022.

In its petition filed with Nepra, KE had requested a tariff reduction of Rs4.622 per kilowatt-hour (kWh). The regulator conducted a public hearing on October 25, 2022 and approved a reduction of Rs5.1261 per unit.

The FCA for September 2022 will be reflected in the billing month of November 2022. The tariff cut will be applicable to all consumer categories except for lifeline consumers using up to 50 units a month, domestic consumers consuming up to 300 units, agricultural consumers and electric vehicle charging station users.

The regulator clarified that the lower tariff would be applicable to the domestic consumers having Time-of-Use (ToU) meters irrespective of their consumption levels.

In its decision, Nepra said that it had carried out an in-house analysis of the September data provided by KE to assess the financial impact caused by deviation from the Economic Merit Order (EMO).

It observed a financial impact of Rs32 million because of underutilisation of economical plants as unit-I of Bin Qasim Power Station-I (BQPS-I) was operated at a minimum load of 100 megawatts instead of 90MW.

In response, KE told the regulator that the BQPS unit could not be loaded below 100MW since its high-pressure heater was out of service.

However, the response was not accepted as KE was supposed to repair the high-pressure heater when it got damaged in 2019. The regulator noted that KE did not make any effort for the replacement of high-pressure heater after 2019.

It was also of the view that the repair work should have been carried out within the operation and maintenance cost allowed to the power utility in its multiyear tariff (MYT).

Another factor considered was the delay in commissioning of BQPS-III. In case, BQPS-III would have been commissioned as per schedule, ie December 2019, the operation of BQPS-I’s unit-I would have been minimised and the financial impact could have been avoided.

In view of those factors, the regulator deducted an amount of Rs32 million from the FCA claim for September 2022.

Regarding the financial impact due to underutilisation of efficient plants namely Korangi Combined Cycle Power Plant, SITE Gas Turbine Power Station (SGTPS) and Korangi Gas Turbine Power Station (KGTPS) on account of lower gas pressure, a letter was sent to KE on September 16, 2021 in which it was directed to resolve its gas pressure/ lower gas quantity issues within 30 days.

In response, KE said that it was in the process of resolving the low gas pressure issue. However, there were certain meetings with the stakeholders that would take place in due course of time.

Subsequently, KE shared details of communications with Sui Southern Gas Company (SSGC) and the Ministry of Energy (Petroleum Division) about the finalisation of a gas sale agreement (GSA).

During an FCA hearing for January 2022, KE’s representatives submitted that the draft GSA between KE and SSGC did not guarantee gas pressure or gas quantity and gas/ re-gasified liquefied natural gas (RLNG) would be available with the power utility on “as and when” available basis even after the GSA was signed.

So far, no GSA has been finalised despite the directives from the regulatory authority.

In its FCA claim for September 2022, KE requested for the release of Rs700 million, withheld on account of EMO violations, for the period June 2021 to August 2022.

“Before proceeding further, certain deliberations are required,” the regulator said. “Therefore, they (Rs700 million) have been deducted in the instant FCA.”

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

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.