ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Friday approved an average increase of Paisa 36 per unit in Karachi Electric’s (KE’s) tariff for six months, i.e., January-June 2021 under monthly electric fuel charges adjustment formula, to be recovered in three months.
The power utility had sought adjustment in FCA for January-June 2021, of which a positive impact of Rs 1.978 per unit was for January 2021, Rs 2.495 per unit for February, Rs 1.497 per unit for March and Rs 0.21 per unit for June 2021. KE has also sought negative adjustment for two months, i.e. Rs 0.869 per unit for April and Rs 0. 646 per unit for May 2021.
The positive impact in monetary terms was Rs 2.082 billion for January 2021, Rs2.773 billion for February, Rs2.348 billion for March and Rs 0.442 billion June 2021. KE has also sought negative adjustment of Rs 1.606 billion for April and Rs 1.297 billion for May.
However, during the hearing, K-Electric submitted its revised numbers after incorporating the Authority’s approved rates of energy purchased from CPPA-G and FPCL. The revised FCA claims requested by K-Electric during the hearing were as follows: (i) January 2021 positive impact- Rs 2.006 per unit ( Rs 2.082 billion); (ii) February Rs 2.805 per unit ( Rs 3.119 billion); (iii) March, Rs 2.451 billion ( Rs 3.845 billion); (iv) April negative impact Rs 0.628 per unit( monetary impact Rs 1.161 billion); (v) May negative impact of Rs 1.058 per unit( financial impact, Rs 2.123 billion; and (v) June negative impact of Paisa 21.6 per unit( fiscal impact Rs 452 million).
However, after a detailed analysis of figures provided by the power utility, Nepra approved adjustment in tariffs for six months under FCA formula of which positive impact is for the following three months: (i) January, Rs 1.2505 per unit; (ii) February, Rs 2.0983 per unit; and ( iii) March, Rs 1.9419 per unit. The Authority has also approved negative adjustment for the following three months: (i) April 2021, Rs 0.5499; (ii) May, Rs 0.9498 per unit; and (iii) June 2021, Rs 0.1507 per unit.
Nepra allows KE to hike tariff
According to Nepra’s calculation, total positive financial impact of six months FCA adjustment will be of Rs 3.4 billion.
The Authority has clubbed positive and negative adjustments aimed at facilitating consumers.
According to the decision, FCA of January and June 2021 will be recovered in the bills of August 2021, February and April in September’s bills’ and March and May in bills of October 2021.
The positive FCAs, shall be applicable to all the consumer categories except lifeline consumers and be shown separately in the consumers’ bills on the basis of units billed to the consumers in the respective month to which the adjustment pertains.
Similarly, negative FCAs 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 was 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.
Further industrial consumers availing ISP will not get the benefit of Negative FCA on incremental sales only. They will, however, get the benefit of negative FCA on base tariff billed units.
During the course of hearing, Arif Bilwani submitted that K-Electric has not utilized the allocated gas efficiently as units generated on gas from BQPS-I power plant are higher during the period as compared to the units generated on gas from BQPS-II. The Authority observed that an in-house analysis regarding following of Economic Merit Order (EMO) by K-Electric has been carried out.
A representative of KCCI during the hearing submitted that due to higher generation cost and consequently higher tariff of K-Electric, the subsidy allocated by the Federal Government for K-Electric is utilized earlier. KCCI accordingly requested that impact of cheaper generation from Hydel and Nuclear may also be included in the tariff of K-Electric. The Authority noted that benefit of cheaper energy from Hydel, Nuclear and other cheaper sources is already being allowed in the tariff of K-Electric, as energy purchased by K-Electric from National Grid through CPPA-G is charged at the pool price, which includes energy & cost of electricity generated from Hydel, Nuclear and other cheaper sources.
Adjustments in KE’s tariff approved by Nepra
K-Electric in its adjustment requests has certified that it dispatches as per Economic Merit Order from its own generation units (with the available fuel resources) and import from external sources. It also certified that the cost of fuel and power purchase claims do not include any amount of late payment surcharge/mark-up/interest.
The Authority during the hearing observed that prima facie, certain efficient power plants were not fully utilized and instead energy from inefficient power plants was generated. The Authority carried out an in-house analysis of the data provided by K-Electric for the month of June, 2021, to work out the financial impact due to deviation from EMO. As per the in-house analysis/ workings carried out, the total amount to be deducted for the month of June 2021, due to deviation from EMO / underutilization of efficient power plants and gas pressure issue worked out as Rs.1.125 billion which includes Rs.184 million on account of deviation from EMO and Rs.941 million on account of gas pressure. KE subsequently provided the information regarding gas pressure issue, which is under consideration.
After going through the data, the Authority has decided to deduct the amount of Rs. 184 million from the FCA of June 2021, and the amount on account of gas pressure, i.e., Rs.941 million is being allowed on a provisional basis, subject to adjustment once the data provided by KE is analyzed. Regarding merit order exercise for the period from January 2021 to May 2021, K-Electric is directed to provide the information as per the requisite format, and the exercise would be carried out, once data on required format is received from K-Electric for the period.
Meanwhile, Nepra has approved a refund of Paisa 19.30 per unit for power Distribution Companies (Discos) for June 2021 under the FCA mechanism. The total financial impact of it will be of Rs 2.6 billion.
CPPA-G requested a positive FCA of Paisa 80.55/kWh, having an impact of Rs.11.2 billion. The Authority held a public hearing on July 28, 2021 and raised a question mark on proposed previous adjustments. The FCA of June 2021 shall be charged in the billing month of August 2021 to all consumer categories of XWDISCOs, except life line consumers i.e. having consumption up-to 50 units, domestic consumers consuming up-to 300 units and Agriculture Consumers of all the XWDISCOs. It was 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. Further industrial consumers availing ISP will not get the benefit of Negative FCA on incremental sales only. They will, however, get the benefit of negative FCA on base tariff billed units. This FCA would remain applicable only for one month. This FCA is not applicable to KE consumers.
Copyright Business Recorder, 2021
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