Regulator orders KE to refund 76-paisa per unit in February bills

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The National Electric Power Regulatory Authority (Nepra) on Wednesday directed K-Electric (KE) to refund about 76 paisa per unit to its consumers in the billing month of February on account of lower fuel cost in November 2021.

In a determination, the regulator said KE had demanded about 32 paisa per unit increase in fuel cost adjustment (FCA) for November 2021. However, after examination of electric and financial data, public hearing, verification of documents, and cross-questioning, Nepra reached the conclusion that KE’s consumers had already been charged higher than actual fuel cost. Hence, the regulator decided that FCA for November should be cut by 76 paisa per unit.

Therefore, it asked the KE to refund 76 paisa per unit to consumers in February bills. “The Authority hereby directs KE that the negative FCA of November 2021 as worked out at Rs0.7591 per unit shall be applicable to all the consumer categories except lifeline consumers, domestic consumers consuming up to 300 units and agriculture consumers of K-Electric”.

The regulator clarified that negative adjustment on account of monthly FCA is also applicable to the domestic consumers having Time of Use (ToU) meters irrespective of their consumption level. The revised FCA shall be shown separately in the consumers’ bills on the basis of units billed to the consumers in the respective month i.e. November 2021.

KE shall reflect the fuel charges adjustment in respect of November 2021, in the billing month of February 2022. In case, the incremental industrial and winter incentive package becomes applicable on KE, the amount of negative FCA allowed to such consumers would be adjusted in the subsequent adjustments of KE.

The regulator noted that KE had been asked to provide calorific value (CV) test reports for both Tapal and Gul Ahmed, reportedly inefficient plants, for each month from their fuel suppliers, third party and also from their own labs. However, despite repeated directions, consignment-wise CV reports of residual fuel oil (RFO) were not being provided for Tapal and Gul Ahmed.

In view thereof, for the purpose of FCA for November 2021, the highest CVs reported by both Tapal and Gul Ahmed, as per the submitted test reports for November 2021, were considered for the entire fuel consumed during the month to work out their fuel costs for November 2021. This has resulted in a provisional negative adjustment of Rs3.55 million and Rs.5.31m for Tapal and Gul Ahmed, respectively.

The regulator warned that unless complete CV reports for both plants were made available, adjustments for previous months would be made in the upcoming adjustment requests of KE.

Nepra also put on record that KE had used the cost of energy purchased from the national grid in November 2021 at Rs9.92 per unit instead of Nepra’s approved fuel cost component of Rs8.04 per unit for the ex-Wapda distribution companies. Therefore, the application of the approved rate in the case of KE for the energy purchased from the national grid resulted in a decrease in total fuel cost by around Rs1.38bn.

The regulator also observed that prima facie, certain, efficient power plants were not fully utilised and instead energy from inefficient sources was generated. Nepra observed that both Korangi and Site plants – KGTPS and SGTPS – were not operated by KE to their full capacities and also less energy was drawn from the National Transmission & Despatch Company during certain hours without reducing generation from expensive plants connected to its network.

KE failed to justify these merit violations resulting in a financial impact of Rs124.86m. Accordingly, the regulator withheld an amount of Rs124.86m only against KE’s claims.

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