FCA for Oct 2022: Nepra to allow KE negative adjustment of Rs2.15/unit

National Electric Power Regulatory Authority (Nepra) is to allow negative adjustment of Rs 2.15 per unit in consumer-end tariff of K-Electric (KE) for October 2022 under monthly Fuel Charges Adjustment (FCA) mechanism amid serious concerns of consumers regarding charging about two times higher tariff by the power utility company as compared to Discos.

The Authority comprising, Chairman Tauseef H Farooqi, Member Sindh, Rafique Ahmad Sheikh and Member KP, Maqsood Anwar Khan officiated public hearing. KE’s team comprising Chief Financial Officer (CFO) Aamir Ghaziani, Director Finance Ayaz Jaffar Ahmed and technical officials responded to the questioned raised by the Authority members and consumer’s representatives Arif Bilwani, Tanveer Barry, Aslam Chura, Usman Ali, Aneel Mumtaz, Shahid and others. KE had sought negative adjustment of Rs 1.88 per unit for October 2022.

The main issues discussed in the hearing were criteria for supply of gas to KE plants, delay in operationalisation of RLNG-fired plants and customer care centres and classification of bills.

KE CFO noted that 35 per cent of KE’s platform is now digitalized but they will expedite it further to facilitate 3.4 million consumers.

During the hearing, Nepra’s Tariff Section stated that average generation cost of KE was Rs 33 per unit in October 2022 whereas generation cost of CPPA-G was Rs 12 per unit. The wide difference in generation cost of KE and CPPA-G provided an opportunity to talk to those who represent different consumers’ groups.

FCA, QTA: KE seeks adjustments

Chairman Nepra argued that FCAs of Discos and KE are calculated on different methodologies, which he suggested, should be uniform across the country.

Responding to a question raised by Tanveer Barry, a representative of business community of Karachi, Chairman Nepra said that since the positive financial impact of QTA was being borne by the federal government through subsidy, negative impact of QTA amounting to Rs 7.833 billion will not be refunded to the consumers.

He said KE consumers have also to pay QTA at par with consumers of Discos as per determination of regulator.

Tanveer Barry maintained that KE’s own generation is 40 per cent of its requirements, fuel cost of which is Rs 32.958 per unit, suggesting that its inefficient power plants should be shut down. He; however, appreciated KE for reducing losses and improving its delivery.

Chairman Nepra further stated that test period of implementation on Competitive Trading Bilateral Market Contract Market (CTBCM) is over from November 30, 2022 and it will be fully applicable from December 1, 2022, adding that CPPA-G will bring their six months’ plan next week if there is any minor change required in their commercial code based on their last six-month experience.

He said the government had to lift a moratorium on implementation of CTBCM which has not yet been done, adding that the government has to do it by April 2023 and if it is not done, moratorium will be lifted automatically.

He urged the business community of Karachi to benefit from this mechanism by purchasing power from any source like they purchase raw material and labour from the private sector.

“I would encourage business community of Karachi to also think about buying and selling of electricity and the power to do so has been given by Nepra to them and benefit from this mechanism,” said Chairman NEPRA.

Member Sindh Rafique Ahmad Shaikh challenged the powers of Nepra Appellate Tribunal (AT) when the issue of BQPS-III related to claims of Rs. 1.4 billion came under discussion.

CFO KE noted that the Tribunal has taken back a decision of Nepra which implies that it has to be decided afresh.

Member Sindh argued that it has also to be studied whether Appellate Tribunal has powers to revert back for fresh decision, adding that according to the law AT can send back the case for re-deliberating. He said Nepra’s decision has not been set aside by the AT.

The Authority has also approved KE’s requested QTA of Rs 7.833 billion for the first quarter of current fiscal year.

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