KE consumers to get tariff relief of Rs4.98/unit

NEPRA conducts hearing on fuel cost adjustment that will provide Rs7.17b relief

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ISLAMABAD:

K-Electric (KE) customers are set to receive a third consecutive relief of up to Rs4.98 per unit on account of fuel charges adjustment (FCA) for November 2024.

The National Electric Power Regulatory Authority (Nepra) conducted a public hearing on KE's FCA for November 2024, which is expected to be passed on in February 2025 bills.

The tariff reduction of Rs4.98 per kilowatt-hour (kWh) will translate into a relief of Rs7.179 billion for consumers. This is the third consecutive FCA relief being passed on to the consumers, starting with September FCA of Rs0.16/kWh and October FCA of Rs0.27/kWh.

The November FCA is driven by an increase in National Transmission and Despatch Company (NTDC) offtake starting from November 4 as the quantum rose to 67% compared to the reference volume of 52%.

It was further backed by the commissioning of KKI grid, which was completed in the same month. This took place 2 to 2.5 months from the originally planned July/August timeline due to complications with a 500-kilovolt transmission line, and the commissioning was allowed through an interim connection with NTDC, as explained by KE.

During the hearing, KE representatives reported that average electricity demand had increased to 2,300 megawatts in November 2024 compared with 2,000MW in the same month of last year, with residential consumption being the primary driver.

Average demand declined up to 14% as compared to October 2024. The company explained that the decline was primarily seasonal as winter months resulted in suppressed demand.

They further mentioned that peak demand in summer was in the range of 3,300MW to 3,400MW. Meanwhile, the capacity cost of KE plants equals Rs6 to Rs7 per unit as compared to NTDC's Rs26 to Rs27 per unit.

Responding to a question from Nepra, the KE leadership apprised the authority that it anticipated future growth of 2-2.5%, supported by industrial demand shifts and economic recovery in the next five years.

The 2% growth observed in the past was driven by market conditions. It added that the growth was projected to continue, influenced by the government's decision on shifting captive power plants (CPPs) and its impact on the industrial sector.

Economic growth is also expected, with the World Bank and IMF forecasting a 3% growth in 2025 or potentially better, which will positively affect GDP and, in turn, amplify power demand.

The utility expects that as NTDC completes critical circuits by March-April, capacity utilisation will improve and offtake will potentially reach 2,000MW. One of the interconnection circuits will be completed before summer.

Currently, the limitation with NTDC is set at a maximum of 1,600MW, with the minimum capacity depending on fluctuations as per the economic merit order.

In response to a question from an intervener, Arif Bilwani, about the interconnection from NTDC and when KE would start receiving full supply, KE officials stated that work on their end had been completed. NTDC has provided a commissioning date of March/April for the finalisation of interconnections.

KE also mentioned that regular meetings were held every 15 days to ensure progress and coordination with NTDC.

Following questions raised by the participants, Nepra asked for KE's detailed response regarding load-shedding in its service territory. The KE leadership clarified that the load-shedding schedule was available on KE's website and the industrial sector continued to be 100% exempt from load-shedding. Meanwhile, 70% of KE's service territory receives uninterrupted power.

The company explained that disconnections on the commercial or residential side occurred due to non-payment of bills. It mentioned that planned maintenance outages were scheduled with prior notice.

Another issue being raised was KE's request for a revenue cap, which it justified by citing various external factors, including government policies that impact demand fluctuations. KE's management expressed concern that without such a cap, its financial health could be severely impacted, ultimately affecting consumers.