Nepra allows KE to transfer additional Rs10.01 per unit burden to Karachiites

Regulator has approved hike in tariff for nine-month fuel charges adjustment to be recovered from Karachiites over four months starting in June 2024

ISLAMABAD   -   The National Electric Power Regulatory Authority (NEPRA) Friday allowed K-Electric to transfer an additional Rs10.01 per unit burden to Karachiites on account of nine-month fuel charges adjustment (FCAs).

In its decision on KE’s petition, NEPRA has approved Rs10.01 per unit hike in tariff for nine-month fuel charges adjustment (FCAs) to be recovered from Karachiites over four months starting in June 2024.

For the provisional FCA, K-Electric had proposed to NEPRA three difference scenarios calculated a hike of Rs 12.84 per unit, Rs 18.57 per unit and Rs 16.90 per unit respectively under scenario-I-II and III.

“KE although has requested FCAs under three different scenarios, however, it is pertinent to highlight that as per Section 31(7) (iv) of the Act, the Authority may, on a monthly basis and not later than a period of seven days, make adjustments in the approved tariff on account of any variations in the fuel charges and policy guidelines as the federal government may issue and, notify the tariff so adjusted in the official Gazette. Since, the MYT petition of KE for the period from FY 2023-24 to FY 2029-30 have not yet been determined by the Authority, therefore, for the purpose of determining the instant provisional FCAs, the reference fuel cost number as allowed in the interim tariff for the quarter Jan. to March 2023, has been considered,” the NEPRA decision said.

In scenario-I, FCA was calculated as the difference between actual fuel cost vs the reference monthly fuel cost as given in interim tariff (FCA— Ref Interim Tariff). Under this scenario, KE had claimed FCA of Rs 15.7 per unit for seven months, from July 2023 to January 2024, while for two months of February and March 2024 negative FCA of Rs2.86 per unit has been claimed. Under this scenario, the consumers will be burdened by Rs12.84 per unit. However, after various adjustments, NEPRA has allowed recovery of Rs 10.01 per unit under scenario-I.

The FCAs cover the period from July 2023 to March 2024. According to NEPRA, the FCAs for each month are as follows: Rs1.711 per unit for July 2023, Re0.6608 per unit for August, Rs1.3946 per unit for September, Rs4.4941 per unit for October, Rs1.7704 per unit for November, Re0.793 per unit for December, and Rs2.9696 per unit for January 2024. For February and March 2024, the FCAs were set at negative Rs1.818 per unit and negative Rs1.9716 per unit, respectively, meaning that the utility will reimburse these charges to its clients. NEPRA decided to stagger the recovery of these FCAs over four months and will be collected from June to September 2024.

In June 2024 bills, K-Electric consumers will pay an additional Rs2.6761 per unit, covering the FCAs for October 2023 (Rs4.4941 per unit and negative Rs1.818 per unit for February 2024). In July 2024, an additional Rs3.1057 per unit will be recovered (for July 2023 Rs1.711 per unit and Rs1.3946 per unit for September 2023).

In August 2024, Karachiites will pay an additional Rs3.224 per unit to K-Electric (for the FCAs of August 2023 Rs0.6608 per unit, November 2023 Rs1.7704 per unit, and December 2023 Rs0.793 per unit. Similarly, in September 2024, an additional Rs0.998 per unit will be recovered from consumers for January 2024 (Rs2.9696 per unit and March 2024 negative Rs1.9716 per unit).

As Nepra deliberates on KE’s multi-year tariff 2024-30, the decision has been given on a provisional basis. The provisionally approved FCA will remain subject to adjustment, including any related working capital impacts, based on the Authority’s final determination.

Meanwhile, K-Electric in a statement said that the mechanism governing the calculations for FCA is outlined in the Multi-Year Tariff (MYT) for Distribution Companies. Since K-Electric’s MYT petition for control period FY24 to FY30 is currently under deliberation, KE requested NEPRA for directions on passing on the FCA costs for the period from July 2023 to March 2024 to customers in their bills.

On May 9, the regulator held a public hearing on the petition and included detailed discussions on the variations in fuel costs incurred by KE during the specified period. “These adjustments account for global changes in fuel prices and KE’s energy mix.” During the first nine months of FY24, customers of other DISCOs in the country have already undergone a similar process of paying FCA on a monthly basis, with an average rate of approximately Rs2.89/ unit. In comparison, KE’s provisional FCA during the same period is approximately Rs1.26/unit on average.

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