ISLAMABAD: Karachi Electric (KE) has termed proposed modification in its distribution licence contrary to Supreme Court order and against public interest, well-informed sources told Business Recorder.
National Electric Power Regulatory Authority (Nepra) has proposed modification in KE licence and will conduct a public hearing within next few days on this issue.
In reply to a letter written by Nepra, KE has submitted that proposed modification is not in the public interest rather it is against the public interest and the criteria provided under Section 26 of the NEPRA Act, 1997 (as amended) and the NEPRA Licencing (Application and Modification Procedure) Regulations, 1999 is not met. The proposed modification will have an adverse and devastating effect on the performance of the licencee, on the service being provided to consumers and on the costs and tariffs of the licencee.
Supreme Court in its order of September 01, 2020 allowed Nepra to conduct proceedings under section 26 of the Nepra Act, 1997 (as amended) on the basis and plea of Nepra that removal of exclusivity would enable the consumers of those areas experiencing load shedding with more options in the form of multiple service/electricity providers. However, the proposed modification in Nepra's letter is against the spirit of the order passed by the SC as the proposed modification is aimed at providing choice to star/low loss consumers such as industrial, bulk power and low loss residential and large commercial consumers who even at present are not experiencing load shedding. The proposed modification is against the public interest as it will enable new distributors/suppliers to carve out such low loss consumers from the KE's distribution network and resultantly increase cost for remaining regulated consumers for which no provision is suggested by Nepra to cater to those consumers who the Supreme Court is seeking to protect.
The under-criticism power utility is of the view that in past Nepra has only authorised generators to sell electrical power to those consumers of KE who are not facing any load shedding and the proposed modification is aimed at legalizing such unlawful concessions already granted by Nepra which also impairs the competitive landscape as KE, being governed under regulated tariff regime, cannot commercially set its tariff to compete. According to the power utility, Nepra is well aware that such consumers cross subsidise the vulnerable segments of KE's service territory and removal of such consumers from KE's ambit would result in avoidance of social obligation cost which will be passed on to remaining regulated consumers, thereby further aggravating the situation for these consumers especially in high loss areas.
The KE has submitted that the proposed modification is not only against the public interest but also contrary to the Supreme Court's Order. Moreover, instead of focusing on areas which currently experience load shedding and proposing a modification for those areas only, Nepra's insistence on the entire service territory including over 75% load shed exempt areas goes to show that under the garb of public interest Nepra is attempting to benefit low loss segments at the expense of vulnerable consumers.
KE has once again clarified that the provisions of Act No. XII of 2018 do not have retrospective effect, hence the terms of the Distribution Licence (DL) of KE cannot be changed by giving retrospective effect to the provisions of the Act No. XII of 2018. Moreover, Section 50 of the Act No. XII of 2018 itself protects anything done and all actions taken under the 1997 Act from being adversely affected or divested (including KE's DL) hence the proposed modification cannot be justified on the basis of amendments made through the said enactment.
The letter written by Chief Financial Officer (CFO) Aamir Ghaziani, further says that KE's current MYT tariff for seven year period was determined by Nepra on the basis that it will have exclusivity for this period, and any material changes, such as the one proposed by the Authority will be in violation of the Authority's own decision.
Copyright Business Recorder, 2020
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