K-Electric to refund over Rs5 per unit to consumers in Nov bills

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Friday directed the K-Electric to pay Rs5.126/unit back to power consumers in November 2022 bills, as it charged a higher price from consumers in their electricity bills of September 2022 when the per unit cost of generation was lower. This is the third month in a row since July 2022 the regulator has instructed K-Electric to reimburse the consumers for high prices charged in earlier months.

It is also to be noted that apart from generating power from its own resources and procuring from private generators, K-Electric at present is also drawing 1,100 MW of power from the National Grid.

After this decision, the Karachi-based facility would reimburse approximately Rs9 billion to consumers on account of monthly Fuel Charges Adjustment (FCA) for September. The utility had charged higher prices from its consumers during the month, while the actual per unit cost was lower.

This adjustment/reliefthe month, while the actual per unit cost was lower. This adjustment/relief would be available to all the user categories of KE except lifeline power consumers, domestic consumers consuming up to 300 units, agricultural consumers and electric vehicle charging stations (EVCS).

The decision further said that the impact of monthly FCA, which is not passed on to certain categories of consumers, would be accounted for in the quarterly adjustments. The utility had shown its willingness in its application to NEPRA that it was ready to pay Rs4.62 per unit back to consumers. But after reviewing the data, NEPRA directed it to reimburse Rs5.126/unit. The benefit of this decision will be passed on to consumers through the November 2022 bills. The FCA is reviewed every month as per the tariff regime applicable across the country and is applicable to consumers’ bills for one month only.

NEPRA in its final decision said: “It is hereby clarified that negative adjustment on account of monthly FCA is also applicable to domestic consumers having Time of Use (ToU) meters irrespective of their consumption level.”

In its earlier decisions for August’s FCA, Nepra had asked KE to refund Rs4.8862/unit per unit to consumers in their October 2020 bills, which was being paid back and had a total impact of around Rs8.5 billion on the company.

For July 2022’s FCA, the regulator had asked KE to refund Rs4.117/unit to consumers in their September 2020 bills with a cumulative impact of nearly Rs7.4 billion. While for June 2022’s FCA, Nepra had allowed the utility to collect an additional Rs11.102/ unit in electricity bills for August and September 2022, with combined impact of Rs25 billion. For May’s FCA too, it had asked the KE to charge an extra Rs9.518/unit in two months, including Rs2.6322/unit in July and Rs6.886/unit in August bills.

The power regulator on October 25, 2022 held public hearings on the petitions of the privately-run distribution company. Nepra Chairman Tauseef H Farooqi chaired the proceedings, while the authority’s members Engr Maqsood Anwar Khan from KP and Rafique Ahmad Shaikh from Sindh were also present.

The Authority noted that the power purchase agreement was signed between the National Transmission and Despatch Company Ltd (NTDCL) and K-Electric on January 26, 2010, for five years for the sale/purchase of 650 MWs on basket rates. Subsequently, a decision was made by the Council of Common Interests (CCI) in its meeting held on November 08, 2012, with respect to the modalities for the withdrawal of electric power from NTDCL by the petitioner.

It was decided to reduce the supply of power by 300MW from NTDCL to K-Electric. However, the aforementioned decision of the CCI has been impugned by way of suits /petitions by K-Electric in the Honorable High Court of Sindh at Karachi. No new agreement has been signed between K-Electric and NTDCL to-date and the utility is continuing to draw 1,100 MW at present from the national grid.

Upon inquiry from the commentators regarding the status of 900 MW Bin Qasim Power Station-III (BQPS-III), KE submitted that it will be fully operational from the winter season.

NEPRA had also directed K-Electric to apprise the Authority in detail regarding its agreement with Pakistan LNG Limited (PLL) for the supply of RLNG for BQPS-III. The KE during the hearing briefed the Authority and submitted that it diverted the PLL supply of RLNG from BQPS-III to BQPS-II keeping in view the economic merit order. The Authority directed KE to ensure that the supply of RLNG is diverted to another plant only when it meets the criteria for economic merit order.

Meanwhile, K-Electric’s spokesperson said FCA is dependent on the global prices of fuel and is passed on to consumer bills under the prescribed rules and regulations of NEPRA and the government of Pakistan.

He said, “September’s FCA was lower primarily due to a reduction in fuel prices. The price of power purchased from CPPA-G (Central Power Purchasing Agency) in September 2022 decreased by 37% from June 2022. Similarly, for RLNG, the price in September decreased by 13% from June 2022.” Further, for furnace oil, the price in September increased by 2 percent from June 2022.