Decisions on KE: Nepra issues determinations on review motions
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has issued determinations on the review motions filed against its earlier decisions regarding generation, transmission, supply tariffs and write-off claims of K-Electric.
According to the new determinations, Nepra has upheld its previous decision on KE’s write-off claims amounting to Rs 50 billion, stating that the Authority “finds no reason to modify or alter the impugned decision.”
However, the regulator has made amendments in certain aspects of its earlier determinations related to transmission, generation, and supply tariffs. The review motions were filed by the Power Division, Tanveer Barry, Arif Bilwani, Syed Hafeez Uddin (MNA) and Jamaat-e-Islami Karachi. With the implementation of revised calculations and assumptions, KE’s tariff is reduced by Rs 7.60/kWh to Rs 32.37 kWh from Rs 39.97 kWh.
KE’s Rs50bn write-off claims: Nepra unlikely to reverse its decision
The Authority stated that it had carefully reviewed submissions from KE, stakeholders, and the Ministry of Energy (Power Division). It noted that control periods under tariff determinations are a regulatory construct, distinct from the licensed operational life of a generation facility. While Independent Power Producers (IPPs) may receive tariffs for the full life of a plant, KE — as a vertically integrated utility operating under a multi-source portfolio — remains subject to evolving system requirements, interconnection capacity, and national least-cost dispatch objectives.
Nepra observed that with the completion of the KKI/NKI interconnection and enhanced grid access exceeding 2,000 MW, KE is expected to rely progressively on lower-cost national generation. Accordingly, periodic reassessment of the thermal fleet’s economics is essential to protect consumers from avoidable capacity payments on underutilized assets.
Nepra further noted that KE has formally initiated the decommissioning of SGEPS and KTGEPS due to fuel constraints and declining dispatch. In light of these developments, Nepra has decided to discontinue the tariffs for KTGEPS and SGEPS effective September 23, 2025, as disclosed by KE to the Pakistan Stock Exchange.
Additionally, considering the Power Division’s submissions, Nepra has decided to discontinue the tariffs of BQPS-I and KCCP from the date of notification of the decision in the official Gazette. The Power Division has been directed to ensure that the termination of these plants does not affect KE’s power supply situation. In case of disposal of the four terminated/retired plants, any gain or loss shall be adjusted as per Para 26.2 of the impugned determination, provided that disposal is conducted through transparent and competitive arm’s-length transactions.
NEPRA has also maintained its earlier decision regarding the control period of BQPS-II and BQPS-III.
In determining the final allowed figures, NEPRA analyzed KE’s request in detail, comparing it with historical costs over the preceding seven years and benchmarking it against costs allowed to other comparable plants of similar size and technology. The Authority approved the lowest of these figures, thereby significantly reducing the allowed operations and maintenance (O&M) costs.
The Power Division did not provide justification or concrete evidence to support its request to change the indexation mechanism; therefore, it was not considered. Moreover, Nepra noted that a sharing mechanism already exists — if the actual O&M cost is lower than the allowed indexed O&M, the benefit will be shared between consumers and KE in a 60:40 ratio. Accordingly, the Authority decided to maintain its earlier position.
Regarding the Distribution Investment Plan and Losses Assessment for the MYT tariff control period from FY 2023–24 to FY 2029–30, KE has been directed to conduct a thorough needs assessment of all projects on a regular basis for the remaining five years, considering prevailing ground realities. For this assessment, KE must engage a third-party firm.
Based on this review, KE shall submit a report — validated and recommended by the third-party firm — outlining the projects it plans to execute in the coming year and any rescheduling requests. The report must be submitted prior to the start of each financial year, ideally by early March. Nepra has provisionally allowed the requested land and Right of Way (RoW) costs, which will be subject to downward adjustment based on verified evidence of land purchases for grid stations and RoW compensation payments made by KE, to the satisfaction of the Authority.
Copyright Business Recorder, 2025