Rs4.98 tariff cut for Karachi likely

K-Electric files Nov fuel charges adjustment petition for price reduction

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ISLAMABAD:

Consumers of Karachi are set to enjoy a reduction of up to Rs4.98 per unit in electricity tariffs on account of fuel charges adjustment for the month of November 2024.

The reduction in electricity prices is due to a fall in prices of energy used in power plants. Consumers of K-Electric (KE) will enjoy an overall relief of Rs7.17 billion in electricity bills for the coming month.

KE has filed a petition with the National Electric Power Regulatory Authority (Nepra) to pass on a relief of Rs4.98 per unit to the consumers of Karachi totaling Rs7.17 billion.

The power-sector regulator will conduct a public hearing on January 15 to review the KE petition pertaining to fuel charges adjustment.

During the hearing, the regulator will examine whether the requested tariff adjustment is justified, and whether KE has followed economic merit order while giving dispatch to its power plants as well as making power purchases from existing sources.

Nepra has sought comments from all interested parties regarding the reduction in power rates.

KE generates electricity from its own plants in addition to getting supplies from external sources. KE also receives electricity from the national grid.

Electricity is generated from power plants using liquefied natural gas (LNG), indigenous gas, local and imported coal and nuclear plants in addition to solar and bagasse-based plants.

Earlier, KE had submitted its request for a Rs0.27 per unit relief to be passed on to customers in their bills on account of fuel charges adjustment for October 2024.

Nepra also issued its decision to offer a negative adjustment of Rs1.14 per unit for ex-Wapda distribution companies (DISCOs) for October 2024, to be applicable to the customer bills for December 2024.

KE has filed a provisional fuel charges adjustment request for Rs4.98 per unit for November 2024, which will be passed on to the consumers.

This is the third consecutive negative fuel cost adjustment application filed with the power regulator. For September, KE requested an adjustment of negative Rs0.16 per unit and for October it sought a reduction of Rs0.27 per unit.

During KE's last fuel cost adjustment hearing, a Nepra member shared comparative data of the past three years, indicating that KE customers had generally paid lower rates than those served by other power distribution companies.

Fuel charges adjustment is sought by power utilities due to variations in prices of fuel used to generate electricity, and changes in generation mix.

These costs are passed through to the consumers following Nepra's scrutiny and approval. Consumers receive the benefit when the cost of fuel decreases.

Since KE's current multiyear tariff (MYT) is yet to be determined, it has filed the fuel charges adjustment request on a provisional basis, following the practice established in previous decisions for the period from July 2023 to September 2024.

The negative FCA for November 2024 is due to the utilisation of fuel sources based on the economic merit order and a decrease in generation from furnace oil.

As per Nepra guidelines, the submission will be discussed at a public hearing. The regulator will approve the request, after scrutiny, and issue instructions on the period during which these costs can be applied to consumer bills.