K-Electric increased its tariff by Rs4.8 per unit

KARACHI: The National Electric Power Regulatory Authority (NEPRA) gave permission to the K-Electric to increase its power tariff by Rs4.8269 per unit for the month of March 2022 on account of fuel cost adjustment.

The residents of metropolitan city will bear the burden of Rs7.86 billion. The electricity bills of June 2022 will recover the tariff adjustment by K-Electric.

Previously, K-Electric asked for the fuel adjustment of Rs5.275/kWh with a total impact of Rs8.59 billion.

On April 27 2022, the power sector regulator held a public hearing on the petition that was filed by the private power utility.

NEPRA said in a statement that fuel cost adjustment of Rs4.8269 per unit have been approved for the month of March 2022 that will result in a total amount of Rs7.86 billion and recovered in the bills of June 2022.

Excluding the lifeline customers the fuel adjustment will be applied on all the consumers.

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The company made the request to increase the tariff in the backdrop of furnace oil and re-gasified liquefied natural gas (RLNG) costs rise, which increased from December 2021 to March 2022 by 10% and 40% respectively.

Alongside the increase in fuel costs, the Central Power Purchasing Agency-Guarantee (CPPA-G) increased the cost of energy purchased by 9% during the four-month period.

The fuel cost of utilities differs due to the global variation in the rates of fuel used to produce electricity and the variation in power generation mix. These costs are approved on to the consumers following Nepra’s inspection and approval.

On the other hand, the users receive the advantage when fuel prices decrease in the international market.

In the hearing, K-Electric highlighted that at the time of proposal of its fuel cost adjustment request, the regulators accepted fuel rate for ex-Wapda distribution firms for March 2022 was not available. Therefore, K-Electric used the fuel cost amount of CPPA-G for the month.

Thus, the rates claimed on account of energy bought from CPPA-G was subject to the fuel cost decision of the regulator in the case of distribution firms.

Read More: K-Electric apologises to citizens of Karachi for rise in load-shedding

Nepra highlighted that a power purchase contract was signed for five years for the sale and purchase of 650MW between National Transmission and Despatch Company (NTDC) and K-Electric on January 26, 2010 at basket rates.

Afterward, the Council of Common Interests (CCI) made a decided in the meeting held on November 8, 2012 with respect to the modalities for the withdrawal of electric power from NTDC by the petitioner, wherein the decision was made to reduce the supply of energy by 300MW.

On the other hand, the decision of CCI was questioned through the suits/ petitions by K-Electric in the Sindh High Court.

No new contract has been signed between K-Electric and NTDC so far, and K-Electric is still drawing energy from the national grid, which now stands at around 1,100MW.

A member of the Karachi Chamber of Commerce and Industry (KCCI) argued that the high fuel cost adjustment had a harmful impact on the industrial users of K-Electric.

In an intervener, Arif Bilwani, said that many plants in the ownership of K-Electric were being run on the old provisional heat rates, which required to be updated.

He stressed that the power utility should purchase more electricity from CPPA-G, which was low-priced than its own generation.

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