ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Tuesday approved Rs4.70 per unit reduction in fuel cost adjustment (FCA) for electricity used by K-Electric consumers in September.

Once the approval is formally notified in a couple of days, the KE would be required to refund about Rs7.78 billion to consumers through adjustment in November’s bill.

The decision was reached at a public hearing presided over by Nepra Chairman Tauseef H. Farooqui and members Rafique A. Shaikh and Maqsood Anwar Khan. The regulator said it had worked out a reduction of Rs4.70 per unit in FCA for September but a notification would be issued later on completion of the data verification process based on evidence and invoices.

The KE had sought Rs4.62 per unit reduction in FCA to refund Rs7.74bn overcharged to consumers in September. However, after examination of data, the regulator worked out a reduction of Rs4.70 per unit, with a revenue impact of Rs7.78bn

This is the third month in a row that FCA for KE’s consumers was lower than the reference tariff. This partly reduced the burden of record-breaking increase in FCAs over the past many months going beyond Rs11 per unit. Last month, KE’s FCA was lower by Rs4.89 per unit when compared with reference fuel cost with a revenue impact of Rs8.4bn.

The reduction in FCA is chiefly because of an increase in nationwide uniform base tariff that has gone up by Rs7 per unit in August. According to KE, the fuel cost was lower in September compared to June primarily due to a decrease in fuel prices. The KE said the price of power purchased from the Central Power Purchasing Agency (CPPA) in September fell 36pc from June.

Similarly, for RLNG, the price in September was down by 13pc from June when the reference fuel rates were set. For furnace oil, the price in September slightly increased by 2pc from June.

The reduction in FCA, on notification, would apply to all the consumer categories except lifeline consumers, domestic consumers consuming up to 300 units, agriculture consumers and EVCS (Electric Vehicle Charging Station) consumers.

The impact of monthly FCA adjustment will be passed on to consumers through November bills to be issued by the Karachi-based private power utility.

Under the tariff mechanism, changes in fuel cost are passed on to consumers only on a monthly basis through an automatic mechanism while quarterly tariff adjustments due to variation in the power purchase price, capacity charges, variable operation and maintenance costs, use of system charges and including the impact of transmission and distribution losses are built in the base tariff by the federal government.

Published in Dawn, October 26th, 2022