KE seeks up to 62.04pc increase in distribution margin

Islamabad  -  K-Electric has sought up to 62.04 percent increase in Distribution Margin, within next seven years, taking its margin from the existing Rs3.10 per unit (national uniform margin) to up to Rs5.02 per unit.

In a Multi Year Tariff (MYT) petition submitted to the National Electric Power Regulatory Authority (NEPRA), by K-Electric for determination of its Distribution Tariff for the period from July 01, 2023 to June 30, 2030, the company has sought distribution margin of Rs3.8357 per unit for the fiscal year 2024.

For the FY25, the company has sought distribution margin of Rs4.1212/unit, FY26 4.3657/unit, FY27 Rs 4.5512 per unit, FY28 Rs4.7726 /unit, FY29 Rs4.9086/unit, and for FY30 Rs5.0232/unit has been sought. However, it has yet to be determined that how much burden of the KE’s distribution margin will be passed on to the company’s consumers in the next base tariff.

The distribution margin of the distribution companies is being calculated as part of the base tariff.

It is worth to note that K-Electric was not part of the base tariff-setting exercise for DISCOs, however, the DISCOs rate would be applicable to the KE’s consumers owing to a uniform base rate applicable across the country.

The future load of KE’s consumers, on account of distribution margin, depends on the base tariff, to be determined by NEPRA, for the DISCOs for FY 2024-25 and the amount of government subsidy provided to the company during next fiscal. Currently the uniform distribution margin is Rs3.1/unit. In its petition, as a part of distribution margin, KE has sought the total amount of O&M Rs30,845 million which translates into Rs1.9274/unit based on projected units billed for FY 2024.

Based on projected RAB movement, Return on Regulatory Asset Base — Cost of Debt (RoRBCoD) has been calculated for every year as per the approved Investment Plan. Accordingly, Return on Regulatory Asset Base — Cost of Debt (RoRBCoD) comes out to Rs0.9949/unit including RoRBCoD local of Rs0.8646/unit and RoRBCoD foreign of Rs0.1303/unit for FY 2024. Return on Regulatory Asset Base — Cost of Equity (RoRBCoE) comes out to Rs0.5535/unit for FY 2024. The depreciation amount is computed on average of opening and closing cost of assets which comes out to Rs0.4669/unit for FY 2024.

According the petition, amortised revenue base component based on additions till FY23 comes out to Rs0.1890/unit for FY 2024, while working capital base component comes out to Rs0.0821/unit for FY 2024. The NEPRA has sought the comments of the stakeholders on KE’s petition.

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