Electric shock for K-Electric consumers as power price surge

KE had requested for increase of Rs5.170/kWh for the quarter ending March 2023

ISLAMABAD:

K-Electric consumers are bracing for yet another jolt in their electricity bills following the approval from the National Electric Power Regulatory Authority (Nepra) for an increase in power rates, set to surge up to Rs2.87 per unit.

Nepra's decision to greenlight the hike in power tariffs stems from the quarterly adjustment considerations. K-Electric had formally petitioned for a substantial increase of Rs5.170/kWh for the quarter ending March 2023.

The power regulator has worked out quarterly adjustment of Rs3.37 per unit. However, with the reversal of previous quarter amounting to Rs0.5055 per unit, the net impact of increase in electricity rates will be Rs2.8680 per unit.

The power regulator had conducted a public hearing on May 31, 2023.

K-Electric, in its adjustment requests, has certified that it dispatches as per economic merit order from its own generation units with the available in 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.

Read also: NEPRA considers hike of Rs4.66/unit

The power regulator based on the information, data and record provided by K-Electric, has analysed the quarterly adjustments of K-Electric and accordingly discussion on the issues pertaining to quarterly adjustment.

The power regulator noted that as per the information submitted by CPPA-G, the energy claimed by K-Electric, is in reconciliation with the energy reported by CPPA-G.

Regarding cost for the energy purchased from national grid, K-Electric has claimed an amount of Rs19,646.42 million including capacity charges and variable O&M.

K-Electric had requested an amount of Rs8.143 million as previous adjustment for the quarter July 2022 to December 2022.

The power regulator has decided to allow the amount of Rs8.143 million due to revision in market operator fee rates.

K-Electric, in the instant quarterly adjustment claimed an amount of Rs1,142 million due to the fact that impact of negative FCA for July 2022 earlier not passed on to the residential consumers up-to 300 units, has now been passed on to such consumers in light of NEPRA's decision dated March 09, 2023 regarding staggering of FCAs of KE.

Here it is pertinent to mention that as per practice, the amount of negative monthly FCAs is not passed on to the residential consumers consuming upto 300 units.

However, the federal government in its motion on February 16, 2023 requested the authority to pass on the impact of negative FCA to residential consumers as well.

Read: Hearing on KE tariff adjustment on Dec 20

The authority has made an amount of Rs1,142 million claimed by KE as part of the instant quarterly adjustment.

KE had requested adjustment of tax on undistributed reserves for the FY 18 and FY 19 amounting to Rs686 million and Rs444 million respectively, through quarterly adjustment for the quarter ended March 2023.

KE further submitted that in case of reversal of decision by the Supreme Court, KE will have the right to claim back this amount in subsequent periodic/quarterly adjustment. Based on the above, a negative amount of Rs1,130 million has been adjusted as previous adjustment in the quarter ending March 2023.

K-Electric had requested NEPRA to allow cost of insurance premium of around Rs9.727 billion, in light of the KE's determination October 9, 2017, as a separate period cost in the next quarterly adjustment.

The amount claimed by KE includes decision of the authority in the matter of quarterly adjustment of K-Electric limited for the quarter ending March 2023 premium paid to Sinosure to provide coverage for Chinese component and to Euler Hermes for providing coverage for German component.

The authority after considering the submissions of K-Electric, has decided to condone the delay in filing of the request by KE and has decided to allow the premium paid to Sinosure for coverage of the Chinese component and to Euler Hermes for providing coverage for the German component of financing.

The authority has further decided not to allow the withholding tax being adjustable.

Accordingly, the authority has decided to allow an amount of Rs9.146 billion, to K-Electric, as cost of debt-insurance premium as a separate cost in the instant quarterly adjustment i.e. quarter ending March 2023.

K-Electric in its request has requested its quarterly adjustment based on the projected units to be sold in the next quarter of 4,881 GWh. Now KE has provided its actual sent out units for the months of April — June 2023, which after adjusting for allowed losses works out as 4,458 GWh.

Accordingly, the same have been used in the calculation of quarterly adjustment.