ISLAMABAD-The National Electric Power Regulatory Authority (Nepra) Friday allowed K-Electric Limited to increase power tariff by average Rs 1.40 per unit under fuel charges adjustments (FCA) for the period from July 2016 to June 2019. In its decision in the matter of fuel charges adjustments for the period from July 2016 to June 2019 for K-Electric Limited, NEPRA has reduced the tariff for 15 months while it has been increased for 21 months. The decision will allow K-Electric Limited to transfer burden of Rs 18 billion to the company’s consumers and it will be recovered within nine months starting January 2020. The average increase for all the 36 months is Rs 1.40 per unit. The increase shall be applicable to all the consumer categories except lifeline consumers, domestic consumers consuming up-to 300 units and agriculture consumers of K-Electric. 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.

Hearing on the adjustment was conducted by NEPRA in August 2019, where some participants opposed the raise. One of the commentators raised the issue of non-implementation of TOU during the MYT 2009-2016 and unless the previous accounts are settled, the instant adjustment requests should be deferred. The commentator further requested for K-Electric response on issues regarding interest on security deposits, bill collection charges, meter rent and application of ToU rates. The Authority noted that as per the plant wise generation statistic sheets, the actual auxiliary and actual sent out heat rates of KCCPP (220 MW) are lower than the Authority’s allowed auxiliary/heat rates in the MYT 2017 determination of K-Electric. However, since the heat rate test of KCCPP has already been conducted by K-Electric in June 2019 as required in the MYT 2017 determination, therefore, any variation in this regard would be adjusted, once the Authority approves the heat rates of KCCPP based on the heat rate tests. Similarly, for the other power plants, the heat rates approved by the Authority in the MYT 2017 have been considered while working out the instant adjustments, and any variation in this regard would be adjusted, once the Authority approves the heat rate tests of the respective power plants.

The rates of gas & RLNG used by K-Electric are as per the rates approved by OGRA and charged by SSGCL to K-Electric for the relevant period. The Authority also noted that no Gas Infrastructure Development Cess (GIDC) has been charged by SSGCL to K-Electric, accordingly no amount on account of GIDC has been included while working out the adjustments of K-Electric. Here it is pertinent to mention that the Authority allowed K-Electric immediate application of RLNG as an alternate fuel vide decision dated June 19, 2018. K-Electric in its adjustment claims, however, claimed fuel cost of RLNG as an alternative fuel with effect from April 24, 2018 and accordingly claimed an amount of Rs.423.16 million for the month of April 2018, Rs.2,598.94 million for the month of May 2018, and Rs.1,610.97 for 18 days of June 2018 (worked out proportionately) (total cost of R.s.4,633.07 million).

The Authority observed that although K-Electric was allowed immediate application of RLNG as an alternate fuel vide decision dated June 19, 2018, however, K-Electric started utilizing RLNG as an alternate fuel w.e.f. April 24, 2018 in pursuance of the Cabinet Committee on Energy’s (CCoE) directives dated April 23, 2018. In view thereof, and considering the fact that SSGCL has also billed K-Electric for the cost of RLNG during the said period and being a pass through item, the Authority has decided to allow the same w.e.f. April 24, 2018 as claimed by K-Electric being legitimate cost.

While going through the data/information provided by K-Electric regarding fuel cost of energy purchased from external sources, regarding KANUPP, the Authority observed that as per Clause 6, Billing and Payments, sub clause 6.01 of the PPA executed by K-Electric with KANUPP, for the energy supplied / purchased by KANUPP of KESC, as the case may be, bills shall be raised separately, but payment shall be made on net-out basis. K-Electric, however, in its adjustment claims has included cost of energy purchased from KANUPP on gross basis i.e. without netting it off for the energy exported to KANUPP.

The Authority, therefore, in line with clause 6.01 of the Agreement, has adjusted an amount of Rs.1,119 million from the fuel cost of KANUPP claimed by K-Electric in its adjustment requests.

For the energy purchased from national grid, the Authority noted that K-Electric while calculating the fuel cost of energy purchased from the national grid through CPPA-G, for the month of June 2019, has used the fuel cost approved by the Authority for the month of May 2019 instead of fuel cost approved by the Authority for June 2019, as the FCA of June 2019 of XWDISCOs was not approved by the Authority at the time of filing of adjustment requests by K-Electric. The same has accordingly been adjusted as per the approved rates of June 2019, resulting in decrease in fuel cost by around Rs.79 million for the energy purchased by K-Electric from national grid during June 2019. Similarly, for the energy purchased from Fauji Power Company Limited (FPCL), the rates used by K-Electric in its adjustments requests for the month of May and June 2019 are not as per the Authority’s approved rates for these months. The same has been adjusted as per the rates allowed by the Authority for these months, resulting in decrease in fuel cost of FPCL by around Rs.84 million.