K-Electric’s clients, who paid higher rates for electricity they had consumed in July 2022, will be getting refunds of Rs4.117 per unit in their September bills after the power regulator Friday issued its decision that maintained that the power generation cost was low during the month under review while the users were overcharged.
The National Electric Power Regulatory Authority (NEPRA) issued its decision and directed K-Electric to reimburse the overcharged amount to power consumers in their electricity bills for September 2022, as they had been charged at a higher rate in July 2022. The decision was taken under NEPRA’s monthly fuel charges adjustment (FCA) formula. Now, after this decision, the company would refund Rs7.4 billion to its clients.
It must be noted that K-Electric had filed a petition with NEPRA, seeking a reduction of Rs3.476/unit on account of fuel adjustment. The power regulator had conducted a public hearing on Aug 31. Now, the regulator has provided an extra release of Rs0.641 per unit to the consumers and reduced the tariff by Rs4.117 per unit.
This adjustment/relief will be available to all user categories of KE except lifeline power consumers, domestic consumers consuming up to 300 units, and agricultural consumers, and electric vehicle charging stations (EVCS).
The decision said: “It is hereby 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.”
It is be noted that Aug 12, NEPRA had allowed K-Electric to collect an additional Rs11.1023/unit as monthly FCA for June 2022 from consumers in their electricity bills for August and September 2022, which had a combined impact of Rs25 billion to be collected.
Additionally, Aug 10, NEPRA had allowed K-Electric to collect an additional Rs0.5715 per unit on account of quarterly tariff adjustments for three months from June-August 2022 that would be charged in the next three months starting from August to October 2022.
The authority under the FCA for May 2022 had also allowed K-Electric to charge an extra Rs9.518/unit in two months, including Rs2.6322/unit in July and Rs6.886/unit in August 2022, bills from consumers.
In June 2022, NEPRA had raised the base power tariff by Rs7.9078/unit for the fiscal year 2022-23. Later in July, the regulator had approved the federal government’s request to charge the end-consumers of all Discos, including K-Electric, a uniform tariff and collect the increased base power tariff from the consumers in FY2022-23. The federal government had also notified a Rs3.50 per unit increase (out of Rs7.9078/unit) in the national base electricity tariff.
According to the NEPRA decision, during the hearing, issues were raised whether the requested fuel price variation was justified and whether K-Electric had followed the merit order while giving dispatch to its power plants as well as power purchases from external sources.
KE in its FCA request had submitted that calculation for the month of July 2022 was based on CPPA-G’s requested fuel cost component for the month of July 2022 and it was subject to adjustment based on the determination of XWDISCOs FCA for July 2022 by NEPRA.
The regulator noted that the power purchase agreement had been signed between NTDCL and K-Electric Jan 26, 2010, for five years for sale/purchase of 650MW at basket rates. Subsequently, a decision had been made by the Council of Common Interest (CCI) in its meeting Nov 08, 2012, with respect to the modalities for withdrawal of electric power from NTDCL by the petitioner, wherein it was decided to reduce the supply of energy by 300MW from NTDCL to K-Electric.
However, the CCI decision had been impugned by way of suits /petitions by K-Electric in the Sindh High Court at Karachi. No new agreement has been signed between K-Electric and NTDCL till date, and K-Electric is continuing to draw energy from the National Grid.
K-Electric, in its adjustment requests, certified that it dispatches as per Economic Merit Order from its own generation units (with the available fuel resources) and imports from external sources. It also certified that the cost of fuel and power purchase claims do not include any amount of the late payment surcharge/markup/interest.
K-Electric provided the plant-wise generation statistics sheet, signed by K-Electric except for BQPS III. In addition, K-Electric also provided copies of invoices raised by fuel suppliers and copies of invoices raised by IPPs.
The power regulator directed K-Electric to ensure submission of BQPS-III generation data sheet for the previous months as well for future periods along with its subsequent monthly FCA requests.
On the point of consumption of indigenous gas in units 5 & 6 of BQPS-I instead of BQPSII, which is more efficient, K-Electric submitted that during July 2022, it was provided with an indigenous gas supply of 10 mmcfd out of the total gas quota. This gas quota was fully utilised at BQPS-II as per its availability and limitation of available gas pressure and only excess gas supply was diverted to BQPS-I due to the limitation of gas pressure at KPC, SGTPS, and KGTPS plants.
Moreover, SSGC increased its gas supply to K-Electric during Eid holidays i.e. from July 8 to July 12, which was increased up to 200 mmcfd. During these days, BQPS-II was fully utilised as per its availability and additional gas supply was diverted to remaining plants as per EMO, subject to the availability of gas pressure.
On the issue of fully utilising available LNG in BQPS-III, and only the rest should have been consumed in BQPS-II, K-Electric submitted that it is getting RLNG from two sources, including SSGC and Pakistan LNG Limited (PLL). SSGC provides gas to KE for power plants other than BQPS-III and SSGC gas cannot be consumed at BQPS-III for which PLL supply has been dedicated.
Technically, SSGC gas at 4-6 bar pressure cannot be utilised at BQPS-III which requires high-pressure gas at 45 bar, a KE official said. Regarding details of the disputed amount of Rs2,119 million claimed by PLL, K-Electric submitted that PLL in its invoice for the billing cycle for the period from July 21, 2022 to July 31, 2022, had included an amount of Rs2,116 million on account of take or pay and Rs3 million on account of LPS.
As per the agreement, in case K-Electric is unable to off-take the delivery of gas, PLL shall make reasonable efforts to sell such gas to a third party and adjust the cost charged to K-Electric on a net proceeds basis as recovered from the alternate buyer. Accordingly, PLL was already able to sell the said quantity to SNGPL at OGRA notified RLNG price, as applicable and therefore the amount on account of take or pay has been disputed currently.