Nepra allows Re0.36 per unit raise in K-Electric tariff

ISLAMABAD - National Electric Power Regulatory Authority (NEPRA) Tuesday allowed, under its monthly tariff adjustment formula, an increase of Re0.36 per unit in power tariff for the K-Electric consumers for the month of June.

In its notification issued here, NEPRA rejected K-Electric’s request for an increase of Re0.452 per unit for the month of June. There are three power sources for K-Electric – self-generation, from private producers and that bought externally from NTDC.

K Electric submitted its FCA request for the month of June, 2016 based on the provisional power purchase rate of Central Power Purchasing Agency Guarantee Limited (CPPA-G). Subsequently, K-Electric submitted its revised FCA request based on the invoice rate of CPPA-G.

On K-Electric petition for tariff increase of 45 paisas per unit, NEPRA conducted a public hearing on August 18, 2016. During the hearing, K-Electric submitted that in its own its generation, the claimed variation is due to the increase in per unit weighted average fuel cost of generation in Bin Qasim Power Station-I (“BOPS-I”) from Rs5.446/kWh in reference month of March, 2016 to Rs7.059/kWh in June, 2016.

The aforesaid variation in fuel price per unit occurred due to escalation in weighted average price of furnace oil from Rs19,376/ metric ton in March, 2016 to Rs27,658/ metric ton in June.

Further the company claimed, that according to notification dated April 28, 2016 by Oil and Gas Regulatory Authority, gas price has also increased from Rs. 600/M MI3Tu to Rs613/ MMBTu; applicable from April 01, 2016. The said increase in gas price has also contributed to an increased fuel price variation not only in BQPS-I but all the other power stations in K-Electric’s own generation fleet as well. In the fuel component of power purchase cost, major reason of the claimed variation is the decrease in per unit cost of CPPA-G from Rs. 5.261/KWh in the reference month of March, 2016 to Rs. 4.330/kWh in June, 2016.

In its tariff adjustment summary K-Electric variation in fuel charges claimed were Rs740.132 million or 45.271 paisas.

But according NEPRA the fuel cost variation of K-Electric’s own power generation and power purchases from external sources for the month of June, 2016 works out to be around Rs583.697 million or Ps. 35.703/ kWh. The Authority has decided to pass on 36 paisas per unit to the consumers of K-Electric as FCA for the month of June, 2016.

According to NEPRA the above adjustment of Ps.36.00/kWh shall be applicable to all the consumer categories except lifeline consumers of K-Electric billed for the month of June 2016. The said adjustment 2016 on the basis of unit shall be shown separately in the consumer bills of September

The difference in fuel price originates from different calculation mechanism, since K-Electric’s cost component takes into account daily fluctuations, whereas Nepra uses “monthly weighted average method to work out the rate of furnace oil consumed in Bin Qasim Power Station-I and the same has been used in calculation of fuel charges variations of the current month(June].”

Another reason for differences in fuel price calculation is that the K-Electric uses CPPA-G quoted rate to calculate the fuel component for purchase of power from NTDC, however, Nepra uses a different quote of CPPA-G that is approved for the rest of the distribution companies (other than K-Electric).

The difference in calculation of gas price was because the adjustment claimed by K-Electric for the gas price variation on the units generated from BQPS-ll, which has not been allowed as the heat rate of BQPS-I1 has not been finalized.

It is to be noted that the aforementioned FCA is being allowed on the provisional basis and can be subjected to adjustments if it is found that K-Electric, while dispatching power from the generation sources of its system, has failed to utilize its power stations prudently.

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