KE makes demand for additional Rs40bn

ISLAMABAD: K-Electric has sought increase in electricity rates on account of fuel cost adjustments for seven months and quarterly adjustments for nine months involving an additional revenue generation of about Rs40 billion.

According to tariff petitions filed before the National Electric Power Regulatory Authority (Nepra), the Karachi-based private power utility has demanded fuel cost adjustments (FCAs) for seven months from June to December 2020. Of these, consumers have to pay higher adjustments for four months and get relief on account of lower fuel cost in three months.

This is on the basis of KE’s claims that its FCA for four months cost an additional about of Rs6.116bn (Rs3.24 per unit) and saved about Rs2.2bn (at the rate of Rs1.53 per unit) in three months due to lower cost than it had actually charged to consumers. The net impact all the seven months works out to be about Rs4bn or an additional charge of Rs1.71 per unit.

Separately, the K-Electric has also sought another revenue requirement of about Rs35-38bn for three quarters starting April 2020 to December 2020. These adjustments are on account of variation in power purchase price (other than fuel), impact of transmission and distribution losses on fuel charges variation under the multi-year tariff (MYT) mechanism.

For first quarter of April-June 2020, the KE has worked out a reduction of Rs3.9 per unit while it has sought an increase of Rs1.93 per unit for July-September 2020 and Rs1.874 per unit for Oct-Dec 2020.

These adjustments have been sought on the basis of a previous petitions on which the regulator in September conducted public hearings for a period up to March 2020 but a final determination is still pending.

The KE has reminded the power regulator that its previous adjustments of over Rs119bn were still outstanding, causing cash flow problems to power utility which needed to be settled at the earliest.

Nepra will be conducting a public hearing on Feb 23 to determine if the fuel price variations and quarterly price adjustments were justified. The regulator would also examine if the KE had followed economic merit order while giving despatch to its power plants as well as power purchases from external sources including the national grid.

Earlier, the KE had sought Rs1.54 per unit increase under mid-term tariff review. The regulator had challenged KE over its unmet investment targets and has yet to come up with a determination.

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