ISLAMABAD-National Electric Power Regulatory Authority has allowed reduction of Rs4.87/unit in K-Electric’s electricity tariff on account of fuel charges adjustment (FCA) for month of August 2022.

In a public hearing, on the KE’s petition, presided over by Chairman NEPRA Tauseef.H.Farooqi, the regulator has reduced the tariff by Rs 4.87/unit against the KE demand of Rs 4.211/unit. 

Chairman Nepra observed a major variation in figures presented by KE and CPPA regarding the generation cost of electricity. He said that the government is bearing the burden of about Rs 15 per unit. Chairman Nepra also noted that the government also has to collect this burden from the consumers.

During public hearing, NEPRA has noted that KE is generating very expensive electricity at the average rate of Rs 37.68/unit from its own generation plants. The regulator further noted that K-Electric is taking electricity from the national grid at the rate of Rs 13.61/unit, which is far cheaper than KE’s own generation cost. Despite privatization KE is still heavily relying on the supply of electricity from the national grid and imported 39pc of electricity from the national grid. 

It is worth mentioning here that during the past 17 years KE has failed to invest in renewable energy and is heavily relying on thermal generation. The share of thermal based power generation is more than 97pc of the KE’s total generation.

In a petition submitted to NEPRA, K-Electric had requested the regulator to allow the company to reduce the power tariff by Rs 4.211/unit on account of monthly FCA for August.

However, the regulator, after making few adjustments, has allowed the negative FCA of Rs 4.87/unit. The decision will provide a relief of around Rs8b to the KE’s consumers.

It was also noted that customers had to bear a burden of Rs 1.21 billion due to violation of the merit order in August.

K-Electric representative said that consumption of LNG and furnace oil declined in August. They also added that lower fuel prices had reduced the cost of power generation.

The KE’s official informed that the company had already submitted a plan to Nepra regarding increasing the production of electricity from alternative sources. “How will electricity tariff be reduced by adding new power plants?” chairman Nepra questioned. The Nepra Authority has sought a detailed plan from K-Electric.

During the hearing, the interveners grilled the K-Electric over unscheduled loadshedding and higher prices of electricity from its own resources. They said that KE should also switch its power generation from expensive fuel to solar and wind based power to generate cheaper electricity. They also raised the question regarding delay in operation of Bin Qasim-3 power plants. They said that KE was supposed to start commercial production from this power plant in December 2019.However, it had been delayed now.

KE officials said that first unit of Bin Qasim Power plant had faced technical fault and team of experts was working on it. He said that first unit would start production soon.

They said that second unit of Bin Qasim Power plant had been operating on test run and was generating 30-40 MW electricity. The official said that this unit had been connected to national grid. Nepra has reserved the judgment on monthly FCA and will issue its detailed decision later.