KE consumers brace for Rs3.2 per unit hike

Company asks for increase in electricity price under quarterly adjustment

ISLAMABAD:

Consumers of K-Electric are likely to face another hike in electricity rates on account of quarterly tariff adjustment.

The National Electric Power Regulatory Authority (Nepra) has reserved its judegment on a petition filed by KE, which sought a tariff increase of Rs3.217 per unit on account of quarterly adjustment for April-June 2023.

KE sought additional quarterly adjustment of Rs3.02 per unit due to revision in price settings at Rs2.57 per unit in the April-June period, followed by annual inflationary impact of Rs0.87 per unit on operations and maintenance (O&M) on top of already covered expenses in base tariff and some other previous adjustments.

KE also asked for Rs13.2 billion write-off against the unrecovered bills for the quarter. Later, the company revised it upwards to Rs16.254 billion for financial year 2022-23.

According to KE, the variation in O&M and capacity cost of power purchases were negative Rs1,243 million, the unrecovered costs of fuel charges adjustment (FCA) due to non-adjustment of transmission and distribution (T&D) losses were Rs1,069 million, the net impact of lifeline, 300 units and agricultural units was negative Rs2 million and additional write-offs were Rs16.254 billion for FY23. Other adjustments were negative Rs180 million.

According to Nepra’s calculations, the O&M and capacity cost of power purchases were negative Rs357 million. Regarding write-off, an official pointed out that previously it was denied and they had to see whether it could be allowed for the April-June quarter or not.

The regulator noted that KE’s multi-year tariff (MYT) had not yet been approved. Earlier, the regulator had determined KE’s MYT for seven years from July 2016 to June 2023.

Read KE hikes power tariff by Rs4.45 per unit

The MYT prescribed a mechanism for monthly, quarterly and annual adjustments. It also established a mechanism for profit claw-back, in case KE’s actual profit exceeded a certain threshold. The official said that quarterly adjustment would be applicable only after the approval of MYT and the amount would be recovered from consumers.

It is noteworthy that Nepra has already allowed a hike of Rs3.28 per unit last month for KE consumers as part of a uniform national tariff increase on account of quarterly adjustment. The increase is being applied across the country for six months (October 2023 to March 2024). Meanwhile, Nepra concluded a public hearing on KE’s power acquisition programme (PAP) for FY24 to FY30.

The key objective of the programme is to develop a long-term capacity expansion plan for KE’s service territory and meet energy demand in a reliable and sustainable manner, while maximising the use of renewable and indigenous resources.

The programme, which was submitted to the regulator in early 2023, complements KE’s Rs484 billion investment plan to bolster the T&D infrastructure.

Focused on enabling access to affordable energy for all, the PAP prioritises gradual integration of renewable and indigenous power sources up to 2,200 megawatts. This includes solar, wind and hydel projects, which will channel electricity towards Karachi under the wheeling regulations prescribed by Nepra and the government. It is anticipated that with a sustained growth of 2% per year, Karachi’s peak demand could touch 5,000MW by 2030. The company’s efforts are aimed at increasing the share of renewable energy to 30% of its generation mix.

To actualise these projects, KE is engaged with various stakeholders including the World Bank, Sindh Energy Department, government of Balochistan and other large-scale power sector developers.

CPPA-G seeks Rs0.547 tariff rise

The Central Power Purchasing Agency-Guarantee (CPPA-G) has filed an application to Nepra seeking a tariff increase of Rs0.5471 per kilowatt-hour (kWh), it was learnt on Thursday.

CPPA-G, on behalf of power distribution companies (DISCOs) except for KE, asked Nepra to approve a hike of Rs0.5471 per unit in power tariff on account of FCA for September 2023. Nepra will conduct a hearing on November 1, 2023.

CPPA-G submitted that 13,339 gigawatt-hours (GWh) of electricity was generated with various fuels in September at a price of Rs7.4170 per unit. The total energy cost was calculated at Rs98,938 million.

Hydel power generation stood at 5,009 GWh, constituting 37.55% of total production while coal-fired power plants produced 2,123 GWh, or 15.91%, at a price of Rs23.4119 per unit.

Power generation with the help of residual fuel oil (RFO) came in at 241 GWh, or 1.80% of total generation, costing Rs37.0491 per unit.

Published in The Express Tribune, October 20^th, 2023.

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