Rs5.02 tariff cut for KE consumers likely

The consumers of K-Electric (KE) are set to enjoy a tariff relief of Rs5.02 per unit on account of fuel cost adjustment (FCA) for March 2025, which has been requested by the power utility in its petition submitted to the National Electric Power Regulatory Authority (Nepra).

In that regard, Nepra conducted a public hearing on Thursday. If approved, the KE consumers will enjoy a total relief of Rs6.79 billion.

The regulator reviewed various operational and financial matters presented by KE, including cost claims, fuel use, system efficiency and measures against electricity theft in Karachi.

KE CEO Moonis Alvi reiterated the utility's firm commitment to tackling power theft through all necessary measures, but highlighted that the efforts were often met with violent resistance from those engaged in unlawful practices.

He pointed to violent mob attacks against the utility and its staff, including female employees. He said the company infrastructure remained under significant threat and recent incidents in P&T Colony and Nazimabad signalled the gravity of the situation, where even law enforcement agencies found it difficult to safely evacuate KE staff.

There had been instances where employees were unable to leave office premises until the next morning, held hostage by mobs, he added. Alvi requested Nepra to urge citizens to refrain from electricity theft and, at the very least, begin paying their previous month's bills.

The KE management stated that 70% of its feeders were exempt from load-shedding while the remaining network with high levels of theft and non-payment of bills continued to face scheduled outages.

It cited infrastructure damage due to theft as a contributing factor to network faults. Disconnection drives were ongoing in the theft-prone areas amid public backlash including mob attacks.

It clarified that disconnections should not be considered a fault in the system; those were largely disconnections because of non-payment.

Nepra sought a month-wise breakdown of the generation cost claim of Rs14 billion submitted by KE as well as asked for detailed documentation under the partial cost adjustment categories. KE officials assured the regulator that the required breakdown would be provided.

Questions were also raised about KE's furnace oil stock valuing at Rs5 billion for the Bin Qasim Power Station-I (BQPS-I), which had a dependable capacity of 350 megawatts. Nepra asked as to why power generation was still being planned based on residual fuel oil (RFO) if the plant was reportedly not operational.

KE responded that maintaining the fuel stock was in accordance with the regulatory requirements and selling it at a loss would not be economically feasible.

Regarding the generation mix, industrialist Rehan Javed emphasised the need for considering solar power projects in the upcoming Indicative Generation Capacity Expansion Plan (IGCEP) as there had been unofficial media reports about their exclusion; something that would be detrimental to consumers in terms of access to affordable electricity.

Nepra dismissed the hearsay, saying no formal decision had been submitted so far and a public hearing would be conducted regarding the IGCEP. It would be early to share any opinion or judgement, it said.

A consumer highlighted the KE's consecutive negative FCA since September 2024 and asked about its comparison with other power distribution companies (DISCOs).

Nepra officials elaborated that currently the KE's FCA was benchmarked against the reference fuel cost of March 2023 at Rs15.99 and all adjustments were based on that, as per Nepra's approved mechanism.

He pointed out that once the updated tariffs were approved, the difference in FCA rates compared to other DISCOs was expected to narrow.

Responding to a question on fuel mix and the potential impact of natural gas availability, KE officials stated that access to local gas could significantly reduce generation costs. Local gas is priced around Rs9 per unit compared to Rs22-24 per unit for re-gasified liquefied natural gas.

As demand rises during peak summer, both KE and Nepra reiterated the importance of transparency, regulatory compliance and collaborative efforts to improve service delivery.