KE consumers face a whopping Rs19 tariff hike

Nepra to hear request on May 9 for nine months FCA

ISLAMABAD:

A delay in determining the electricity tariff by the National Electric Power Regulatory Authority (Nepra) may burden the K-Electric consumers around Rs19 per unit more on account of fuel charges adjustment (FCA) for nine months.

Currently, the K-Electric’s multi-year tariff is under Nepra’s review. The power regulator has announced a public hearing on May 9, 2024 for a petition submitted by the K-Electric on provisional monthly FCA for the period from July 2023 to March 2024.

Consumers of other power distribution companies (DISCOs) have already paid their part in the monthly adjustments granted by Nepra to the government’s Central Power Purchasing Agency (CPPA-G) at around Rs27 per unit, while CPPA-G’s request for March FCA of Rs2.94 per unit is also under review.

The utility has sent three proposals to save consumers from the effect of cumulative increase in the tariff. Under the first scenario, the K-Electric has proposed that the FCA be calculated as the difference between actual fuel cost and the reference monthly fuel cost as per the interim tariff.

As per the second scenario, it has been suggested that the difference between the actual and reference monthly fuel cost be considered as per the tariff petition filed by -Electric and currently under Nepra’s deliberation.

The third scenario proposes that the difference between actual fuel cost against an annual weighted average fuel reference costs should be considered as per the tariff petition filed by the K-Electric and currently under Nepra’s deliberation.

The K-Electric consumers will bear the burden of a cumulative hike of Rs18.57 per unit, if Nepra approved the first scenario or the second scenario for the period from July 2023 to March 2024. If Nepra allowed the third scenario, the impact would be Rs16.9 per unit hike.

Since the Nepra notification and final determination has been pending for nine months, the power utility bills dispatched to Karachi’s 3.5 million customers carry a notice every month. It says: "KE’s Investment Plan and Multi Year Tariff (MYT) for the period starting from July 01, 2023 is under process.”

Accordingly, “no amount in respect of the FCA for the month of July 2023 or onwards is presently included in the current electricity bill and the same will be applied to future bills in accordance with approval from the regulator”, KE has been warning in the electricity bills.

The K-Electric has requested FCA for a period of nine months from July 2023 to March 2024, but had proposed an increase in tariff for seven months, with a reduction in tariffs for the remaining two months. Nepra will hear the plea on May 9, inviting comments from the interested parties.

The FCA is incurred by the utilities due to variation in global fuel prices used to generate electricity and change in the generation mix. These costs are passed on to customers following Nepra’s scrutiny and approval.