ISLAMABAD: The National Ele­c­tric Power Regulatory Authority (Nepra) on Tuesday allowed K-Electric to charge Rs3.76 per unit additional cost to its consumers in December bills under monthly fuel cost adjustment (FCA) for electricity consumed in September to generate about Rs7.22bn.

The regulator had conducted on Nov 3 a public hearing on KE’s request for an increase of Rs3.454 per unit for September. In a petition submitted to Nepra under Multi-Year Tariff 2017-23, KE had requested the regulator to allow the company to pass on the burden of Rs6.639bn to the power consumers in its service area under monthly FCA for September.

Nepra chairman Tauseef H. Farooqui had then observed that such an additional charge “is huge and will be shocking for consumers”. However, in a notification issued on Tuesday, the regulator allowed KE to charge Rs3.757 per unit additional FCA to all consumers categories except lifeline consumers in December billing. The additional FCA would be shown separately in the consumers’ bills on the basis of units billed to the consumers in September.

KE procures 53pc electricity at cheaper rates from national grid

In its determination, the regulator explained that KE had used the cost of energy purchased from national grid at rates approved by regulator for other ex-Wapda distribution companies (Discos) for August because the September rates were not available at the time.

However, as the energy cost for Discos for September was later notified by the regulator, these were also incorporated for the energy purchased by KE from Central Power Purchasing Agency (CPPA). “This has resulted in increase in total fuel cost by around Rs659.9 million,” the regulator said. This took the total demand to Rs7.29bn. After certain minor deductions, Nepra allowed KE to charge Rs7.22bn to consumers at the rate of Rs3.76 per unit.

The regulator pointed out that the power purchase agreement (PPA) was signed between National Transmission and Despatch Company (NTDC) and K-Electric on Jan 26, 2010 for five years for sale/purchase of 650MW on basket rates. Subsequently, a decision was made by the Council of Common Interests (CCI) on Nov 8, 2012 for withdrawal of about 300MW from KE.

However, the said decision of the CCI had been impugned through suits and petitions by KE in Sindh High Court. No new agreement had been signed between K-Electric and NTDC till date, and KE continues to draw about 1,100MW energy from the national grid.

The regulator also highlighted that KE did not operate Korangi and Site Gas Turbine Power Stations) to their full capacities, and drew less energy from efficient sources. Similarly, another plant Korangi Combined Cycle Power Plant was also operated on expensive high-speed diesel.

Nepra also noted that according to KE, it was in discussions with the federal government and CPPA for around 2,050MW firm capacity from the national grid, and work on interconnection grids were being carried out. However, in case the required capacity is not provided by national grid and at the same time, KE has not installed its own power plants, this may result in loadshedding.

KE had generated 47pc electricity from its own power plants and procured 53pc from the national grid. The regulator noted that it was clear that the federal government was providing cheaper electricity to KE.

Published in Dawn, December 8th, 2021