K-Electric seeks over Rs10 per unit per unit hike in base tariff

Newly requested tariff adjustments are for period from FY2023-24 to FY 2029-30

ISLAMABAD   -   The K-Electric has sought a hike of over Rs10 per unit in base tariff due to high energy purchase price of the company, which is almost hundred percent higher than the state owned Ex-Wapda Distribution Companies (Discos).

The total base tariff has been requested by K-Electric at Rs44.69 per unit, on account of multi-year tariff, reflecting hike of Rs10.69 per unit from the previous multi-year tariff when the base tariff was Rs 34 per unit. Major cost component of the base tariff is of energy purchase price (EPP) that amounts to Rs 18.88 per unit, adjusted monthly and quarterly based on the cost of power. It is worth noting that the Discos have also sought base tariff revision for the next fiscal 2024-25, and said under maximum scenario energy purchase price has been calculated at Rs 9.69 per unit. The KE has also claimed cost of power on account of capacity payment (CPP) component amounts to Rs 12.54 per unit, with quarterly adjustments. Transmission charge has been claimed at Rs 3.48 per unit, varies quarterly based on transmission costs. Distribution charge has been calculated at Rs 3.84 per unit, varies based on distribution costs, O&M (operation and maintenance) Rs 0.42 per unit, indexed annually with the Pakistan Consumer Price Index (CPI). Retail Margin has been worked out at Rs 0.59 per unit, adjusted yearly based on revenue recovery. Recovery loss allowance has been calculated at Rs 2.88 per unit, includes a cap and floor mechanism for under/over recovery. In the petition, working capital has been calculated at Rs 2.07 per unit, adjusted annually for over/under recovery scenarios.

Despite the request for adjustments in the tariff components, the actual price charged to customers on monthly bills is controlled by the government’s uniform tariff policy, ensuring consistent charges across customer categories. The newly requested tariff adjustments are for the period from FY 2023-24 to FY 2029-30. NEPRA has invited all interested or affected parties to provide comments within 7 days from the notice, as permissible under the law.

Meanwhile, KE in a statement said that there will be no impact of the increase on the consumers. Interestly KE didn’t clarify that the government of Pakistan will pay subsidies worth hundreds of billions of rupees to offset the expensive generation of the KE. The spokesman said that K-Electric reiterates that the company’s supply tariff petition to NEPRA will not impact customer bills. The request has been submitted under KE’s Multi-Year Tariff for the period from FY 2023-24 to FY 2029-30.

This petition outlines the various cost components necessary to ensure the reliable and efficient supply of electricity to a growing number of customers. The price of electricity charged to customers in their monthly bills remains governed by the uniform tariff policy set by the government, which ensures the same charges for each customer category across the country.

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