ISLAMABAD - The National Electric Power Regulatory Authority (Nepra) on Thursday has turned down a plea of power division to make substantial increase in multi-year tariff of K Electric and raised it by Rs0. 05 per unit. The regulator set multi-year tariff for K-Electric at Rs12.82 per unit instead of Rs12.77 per unit it had allowed in October 2017. The term of the Multi Year Tariff is for seven years starting July 1, 2016 and expires on June 30, 2023.

It is pertinent to mention here that on expiry of the previous multi-year tariff, allowing Rs15.57 per unit, the KE had filed petition for increasing tariff to Rs16.10 per unit to get higher return and facilitate fresh investments into the power sector network and higher returns.

Nepra had set tariff at Rs12. 07 per unit on March 20, 2017. The K Electric had filed review petition to increase tariff further. In its decision, in October 2017 Nepra had increased tariff by Rs 0.70 per unit to Rs 12.77 per unit.

On the request of the K-Electric Ministry of Energy (power division) had written the power regulator to increase it further as low tariff would be a challenge for financial viability of the company.

K Electric had filed a review petition then and sought increase in tariff by Rs16.10 per unit. However regulator did not agree with it and raised only Rs0. 05 per unit to Rs12.82 per unit.

The KE had pleaded in the fresh letter through the power division that significant essential costs of recovery had not been appropriately accounted for in the revised determination. Supported by power division, KE suggested recognition of recovery as performance measure in the base tariff and allow realistic improved trajectory so that tariff remain cost reflective and doesn't lead to insolvency. It was contended that performance based regime should continue in tariff as was allowed previously wherein onus to invest and make return was on KE. The KE also pleaded that assessment of Regulatory Asset Base (RAB) should be worked out from equity side including the impact of operational losses. Actual debt-equity ration be allowed instead of 70:30 assumed in the fresh MYT and the return component be increased in addition to allowing US dollar indexation on transmission and distribution business, pleaded by KE.

The regulator rejected all the grounds presented by KE for tariff increase for being against the industry practice except for allowing US dollar indexation on transmission and distribution segment of KE considering the expected decline in the value of rupee against dollar.

This indexation resulted in increase in the tariff by about Rs5 per unit to Rs12.82 per KWh.

In its decision, Nepra authorities had also turned down a plea to recover Rs16 billion of losses against doubtful debt, treated efficiency levels at actual 37percent instead of previous 30 percent and transmission and distribution losses at actual 20.9 percent instead of previous 35 percent.