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ISLAMABAD: Karachi Electric (KE) is to refund Rs. 3.038 billion (Rs.2.5953/kWh) to its consumers under Fuel Charge Adjustment (FCA) for December 2021.

The FCA shall be applicable to all the consumer categories except lifeline consumers, domestic consumers consuming up-to 300 units and Agriculture Consumers of K-Electric. The power utility had sought negative adjustment of Rs 1.80 per unit for December 2021.

K-Electric used the rate of Rs.9.9179/kWh; however, the National Electric Power Regulatory Authority’s (Nepra) approved fuel cost component in the matter of Discos for December 2021 was Rs.8.6315/kWh. While working out December FCA of KE, rate approved by the Authority for Discos for December 2021 has been incorporated for the energy purchased by KE from CPPA-G during December 2021. This has resulted in decrease in total fuel cost by around Rs.913 million.

The Authority revised the net capacity and Heat Rate of SNPC-I as 51.154 MW and 8194.25 Btu/kWh - net HHV equivalent to 41.90% efficiency. Similarly, net capacity and Heat Rate of SNPC-II have been revised as 51.526 MW and 8143.699 Btu/kWh - net HHV equivalent to 41.64% efficiency.

The Authority afterwards through its decision of September 21, 2021, granted interim relief to SNPC and SNPC-II, in relevant tariff components, i.e., Fuel Cost Components (FCCs) and capacity charge components of generation tariff, on account of revision in heat rates and net capacities. As per the decision of September 21, 2021, FCC of both SNPC and SNPC-II have been revised as Rs.4.0971/kWh and Rs.4.0718/kWh, respectively, based on the revised heat rates and reference gas price of Rs.500/MMBTU.

The Authority determines the FCC of SNPC and SNPC-II, as and when required, owing to change in gas prices. However, no revised FCC has yet been determined by the Authority based on revised heat rates with latest gas price of Rs.857/MMBTU.

The Authority approved FCCs of Rs.6.6994/kWh in its decision of November 20, 2020, both for SNPC and SNPC-II, based on gas price of Rs.857/MMBTU but with old heat rates, i.e., heat rates prior to heat rate tests.

Accordingly, for working out the FCA of December 2021, the Authority has used FCC of Rs.6.6994/kWh for both SNPC and SNPC-II, as approved decision of November 20, 2020. Any adjustment in this regard would be made subsequently, once the Authority approves the revised FCC of both SNPC and SNPC-II based on revised heat rates and revised gas prices.

The impact of monthly FCA not passed on to the consumers would be accounted for in the quarterly adjustments.

The Authority, during the hearing observed that prima facie, certain efficient power plants were not fully utilized and instead energy from inefficient sources was generated.

The Authority observed that both KGTPS and SGTPS were not operated by K-Electric to their full capacities, and also less energy was drawn from NTDC during certain hours, without reducing generation from expensive plants connected to its network. Similarly, KCCPP was also operated on HSD.

The Authority carried out an in-house analysis of the data provided by K-Electric for the month of December 2021, to work out the financial impact due to deviation from EMO. The instances and events were shared with K-Electric for provision of clarification/ justifications, and K-Electric was asked for the reasons in this regard.

During the analysis, the main reason for EMO violation was observed to be “Less Drawl from NTDC/ Simultaneous Operation of Expensive Plants”. It was observed that KE had drawn lesser energy from NTDC during certain hours, without reducing generation from expensive plants connected to its network. Furthermore, certain plants were operated out of merit order, for which KE has been directed to submit details.

Accordingly, the financial impact due to the EMO violation events amounting to Rs.9. 11 million with regard to lesser drawl from NTDC and out of merit generation of power plants has been deducted while working out the FCA of December 2021. KE has been directed to submit details along with supporting document in this regard.

KE has informed that it is in the process of resolving the lower gas pressure issue; however, there are certain meetings with stakeholders that will take place in due course of time. Subsequently, K-Electric has shared details of communication with SSGC and Ministry of Energy (Petroleum Division) regarding the finalization of GSA.

However, during the FCA meeting, K-Electric’s representatives submitted that the draft GSA between KE and SSGC does not guarantee the Gas Pressure or Quantity and the Gas/ RLNG will be available with KE on “As and When” available basis even after the GSA is signed.

According to Nepra, 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. In case, the incremental industrial and winter incentive package becomes applicable in K-Electric, the amount of negative FCA allowed to such consumers would be adjusted in the subsequent adjustments of K-Electric.

Copyright Business Recorder, 2022

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