ISLAMABAD-National Electric Power Regulatory Authority (NEPRA) has reserved the judgment on the petition of K-Electric for a hike of Rs3.217/unit in power tariff on account of quarterly tariff adjustment for the April-June quarter of the ongoing year.
NEPRA on Thursday conducted a public hearing on KE’s petition for additional quarterly tariff adjustment for the quarter ending on June 2023 under MYT FY 2017 to 2023. K-Electric had sought additional quarterly tariff adjustment Rs3.02/unit on account of revision in price settings at Rs2.57/unit during April-June, followed by an annual inflationary impact of Rs0.87/unit on operations and maintenance on top of already covered expenses in base tariff, and some other previous adjustments. KE had also sought Rs13.2 billion write-off against unrecovered bills for the quarter. However, later, KE had upward revised Rs16.254 billion write-off for the FY 2022-23.
According to KE, variation in O&M and capacity cost of power purchases were in negative Rs1,243 million, unrecovered cost of FCA due to non-adjustment of T&D losses were Rs1,069 million, net impact of life-line 300 units and agricultural units were negative Rs2 million, and additional write-off were Rs16.254 billion for FY 2023. Other adjustments were in negative Rs180 million. According the NEPRA calculations, O&M and capacity cost of power purchases were in negative Rs357 million. Regarding the write-off of Rs16.254 billion, the official was of the view that previously it was denied and they have to see whether it can be allowed in this quarter or not.
The regulator noted that the multi-year tariff of K-Electric has not yet been approved yet by NEPRA. It was informed that the authority determined K-Electric’s MYT for seven years period starting from July 2016 till June 2023. It was further noted that the said tariff was notified by the federal government on May 22, 2019.
The MYT prescribed mechanism for the monthly and quarterly/annual adjustments. The MYT also prescribed mechanism for Profit Claw Back, in case KE’s actual profit exceeds a certain threshold. Pursuant thereto, K-Electric has filed adjustment requests for quarterly adjustment for the quarter ending on June 2023. The official said that the adjustment on account of quarterly adjustment will be applicable only after the approval of the MYT by NEPRA. The amount will recover from the consumers after the new tariff for electricity.
NEPRA has reserved the judgement and will announce it later. It is also noteworthy that NEPRA has already allowed a hike of Rs3.28/unit last month for K-Electric consumers as part of a uniform national tariff increase on account of quarterly adjustments. The increase is being charged across the country for six months (Oct 2023 to March 2024). Meanwhile, NEPRA also concluded a public hearing on K-Electric’s Power Acquisition Programme (PAP) for FY 2024 to FY 2030. The key objective of the Power Acquisition Programme is to develop a long-term capacity expansion plan for KE’s service territory and meet the energy demand in a reliable and sustainable manner, while maximising the use of renewable and indigenous resources.
The Power Acquisition Programme was submitted with the regulator in early 2023 and complements KE’s Rs484 billion Investment Plan to bolster KE’s transmission and distribution infrastructure. Focused on enabling access to affordable energy for all, the PAP prioritises a gradual integration of renewable and indigenous power sources upto 2,200 MW. This includes solar, wind and also hydel projects which will channel electricity towards Karachi under the wheeling regulations prescribed by the NEPRA and Government of Pakistan. It is anticipated that with a sustained growth of 2 percent per year, Karachi’s peak demand could touch 5,000 MW by 2030 and will cater to the power needs of 5 million customers. The company’s efforts are to make the share of renewable energy comprise 30 percent of its generation mix. To actualise these power projects, KE is engaged with various stakeholders including the World Bank, Sindh Energy Department, Government of Balochistan, and other large scale power sector developers.