ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has allowed K-Electric (KE) to increase its tariff by paisa 69 per unit for July, 2021 under monthly Fuel Component Adjustment (FCA) to be applicable to all categories of consumers except lifeline consumers.
KE had sought an increase of paisa 55.5 per unit to recover Rs1.091 billion from consumers; however, the regulator allowed adjustment of Paisa 68.9 per unit to recover Rs1.355 billion in bills of November 2021.
On 2nd September, 2021, K-Electric during the hearing submitted that at the time of submission of its FCA request, the Authority's approved fuel rate for Discos for July 2021 was not available, thereof, K-Electric used the last available rate of June 2021 in its workings. K-Electric accordingly requested that the amount claimed on account of energy purchased from CPPA-G is subject to adjustment based on the FCA decision of the Authority in the matter of Discos for July 2021.
The Authority noted that the power purchase agreement was signed between National Transmission and Dispatch Company (NTDCL) and K-Electric on January 26, 2010 for five years for sale/ purchase of 650MW on basket rates. Subsequently, a decision was made by the Council of Common Interest (CCI) in its meeting held on 8 November, 2012 with respect to the modalities for withdrawal of electric power from NTDCL by the petitioner, wherein it was decided to reduce the supply of energy by 300MW from NTDCL to K-Electric. However, the decision of the CCI has been impugned by way of suits/ petitions by K-Electric in the Sindh High Court at Karachi. No new agreement has been signed between K-Electric and NTDCL till-date, and K-Electric is continuing to draw energy from the National Grid, which at present is around 1100 MW.
The Authority observed that both Korangi Gas Engine Power Station (KGTPS) and Site Gas Tribune Power Station (SGTPS) were not operated by K-Electric to their full capacities, and less energy was withdrawn from NTDC (National Grid) consecutively for a number of days. Similarly, KCCPP was operated on HSD. The Authority also took serious notice of non-signing of GSA between K-Electric with SSGC and inquired why the consumers should bear inefficiencies and challenges on the part of K-Electric.
K-Electric during the hearing submitted that both STGPS and KGPTS are at tail end, resulting in low gas pressure as SSGC infrastructure is depleted, and requires rehabilitation. SSGCL has been asked time and again to make the required investments to improve the gas pressure and remove other technical issues. Various correspondences have been made in this regard with SSGC, which are available on record. K-Electric further submitted that merit order considers availability of plant and its fuel sources and if fuel is not provided by SSGC, the next available plant is despatched in order to provide relief to the consumers instead of load shedding.
On the point of a dedicated infrastructure, K-Electric submitted that it had offered to provide SSGC a dedicated infrastructure at the cost of K-Electric; however, because of being within the city and Right of Way (ROW) issues a fully dedicated infrastructure is not possible.
The Authority further inquired whether any feasibility study at the time of incorporation of SGTPS and KGTPS plants was carried out, knowing that the plants were at the tail end and would result in low gas pressure.
K-Electric submitted that feasibility studies were carried out, gas pressure was available at that time and all these issues were deliberated at the time of grant of generation license by the Authority. The Authority directed K-Electric to provide details of plant operation for the last 10 years to evaluate the issue.
Industrialist Arif Bilwani during hearing and in written comments submitted that cost of fuel for K-Electric's own generation is Rs.7.162tkWh, whereas for power purchased it is only Rs,4.257/kWh. Fuel cost of the most efficient plants of K-Electric i.e. BQPS-2 and KCCPP is Rs.13.93/ kWh and Rs.14.5llkWh respectively, which is unnecessarily burdening the consumers, being a pass through item. Further, BQPS-I (Unit-3) has already been excluded from the Generation License of K-Electric, however, the same are still being operated. Similarly, costlier energy is being procured from Tapal, Gul Ahmad and Lotte Chemical under the garb of necessity and power shortage.
Bilwani submitted that instead of operating BQPS-I, K-Electric should consider getting energy from coal power plants and K2 & K3 located in its licensed territory, which will result in reduction in transmission losses incurred while transmitting energy from South to North.
Zubair Motiwala, representing KCCI, submitted that K-Electric's own generation cost is higher as compared to the cost of power purchased. He stated that operation of inefficient BQPSI is being allowed along with Tapal and Gul Ahmed power plants, which have already outlived their useful lives. Since fuel cost is a pass through item for K-Electric; therefore, K-Electric would continue to operate these inefficient plants, whose efficiencies will further decline and K-Electric would claim much higher costs on account of FCAs in future.
Motiwala suggested that K-Electric should opt for power from National Grid instead of operating its own inefficient plants.
Tanvir Bari, a consumer of K-Electric, also raised the issues of low gas pressure and non-availability of GSA of K-Electric with SSGC.
Usman, another consumer submitted that delay in completion of RLNG plant shall not be allowed to be passed on to the consumers.
Aneel Mumtaz, a consumer, highlighted for the energy purchased from CPPA-G during July 2021 K-Electric used the Authority's approved rate of June 2021, instead of July 2021.
K-Electric in response to KCCI submissions, stated that its 900 MW RLNG highly efficient BQPS-III power plant will be commissioned next month and its 2 units will become operational in December/ January 2022. Thus, burden on BQPS-I will be minimized, which would only be operated at the time of peak load, being at the bottom of merit order. This will result in reduction in fuel cost owing to better efficiency of BQPS-III and lower cost of RLNG as compared to RFO. Regarding Tapal and Gul Ahmed, K-Electric submitted that at the time of renewal of their generation licenses/tariff determinations, power availability at National Grid! NTDC level was considered, keeping in view system stability and other technical limitations/constraints. The decision was taken after evaluations of all these factors. K-Electric also submitted that they are planning to have around 2050 MW from National Grid for which consultations are being carried out with CPPA-G and NTDC.
The Authority carried out an in-house analysis of the data provided by K-Electric for the month of July, 2021, to work out the financial impact due to deviation from EMO. K-Electric was accordingly, asked the reasons for operation of its plant on HSD. K-Electric in this regard submitted that due to shortage of gas and high demand there was no option available with K-Electric but to generate energy on HSD.
The Authority, in view thereof, decided to treat the same as a fuel constraint, on the same lines as in the case of financial impact incurred due to non- availability of RLNG to power plants dispatched by NPCC. Therefore, for the instant month no cost is being deducted on this account.
However, the Authority in its letter of September 16, 2021, directed K-Electric to finalize its Gas Supply Agreement/other arrangement to ensure gas availability at its SGTPS and KGTPS power plants and resolve the gas shortage/less gas pressure issue within 30 days. In case, any future violations are observed on account of shortage of gas/gas pressure then the financial impact of the same will not be allowed to KE.
Copyright Business Recorder, 2021