Electricity consumers in for another shock

The consumers of power distribution companies (DISCOs) as well as the people of the country’s economic hub—Karachi—are in for another shock as the power regulator may further raise the prices of per unit electricity.

K-Electric, the power utility that supplies electricity to Karachi, has requested Nepra for an increase of Rs5.45 per unit in the price of electricity on account of fuel cost adjustment.

In the application, an increase has been sought for the monthly fuel cost adjustment for May and June, requesting an approval of Rs2.53 for May and Rs2.92 for June.

Nepra will hold a public hearing on K-Electric’s request on July 30, and make a final decision regarding the further increase in electricity prices after the hearing.

Meanwhile, the Central Power Purchasing Agency (CPPA) has also filed a request with NEPRA requesting for an increase of Rs2.10 per unit for one month under the head of monthly fuel cost adjustment.

NEPRA will hold a hearing on the request on July 31. If the request is approved, a notification to increase electricity prices will be issued.

Fuel cost adjustment is a mechanism used by power companies to adjust the cost of electricity based on fluctuations in the price of fuel.

The main purpose of fuel cost adjustment is to ensure that the electricity tariff reflects the actual cost of fuel used in electricity generation. This helps power companies recover the additional costs incurred due to changes in fuel prices.

The adjustment is calculated based on the difference between the actual fuel cost incurred during a specific period (usually a month) and the fuel cost that was originally factored into the electricity tariff.

If the actual fuel cost is higher than the estimated cost, the electricity tariff is increased to cover the additional expense. Conversely, if the actual fuel cost is lower, the tariff may be reduced.

Fuel cost adjustment includes costs associated with various types of fuel used in electricity generation, such as natural gas, coal, oil, or any other relevant fuels.

In Pakistan, Nepra oversees and approves the adjustments to ensure they are fair and justified.

Fuel cost adjustment is passed on to consumers as an additional charge on their electricity bills. It is usually itemized separately so that consumers can see the specific amount attributed to fuel cost adjustments.