K-Electric says ready to pay back Rs7.04 per unit to consumers

ISLAMABAD: The K-Electric has shown its willingness to the National Electric Power Regulatory Authority (Nepra) to pay Rs7.04/unit back to power consumers in January 2023 bills on account of fuel charges adjustment (FCA) for November 2022.

The Karachi-based power facility has submitted its application to the power regulator, which would hold a public hearing on it on December 27, 2022, to know if the requested fuel charges variation was justified and whether the company had followed the economic merit order (EMO) while giving dispatch to its power plants and power purchases from private power suppliers.

Interestingly, in its earlier decision for October’s FCA, the Nepra had decided to refund Rs2.456 per unit to consumers in their December bills and it was being paid back and had a total impact of Rs4.11 billion on the company.

If the regulator accepts the plea of K-Electric, then this adjustment/ relief would be available to all user categories of KE except lifeline power consumers, domestic consumers consuming up to 300 units, and agricultural consumers and electric vehicle charging stations (EVCS).

This would be the fifth month in a row since July 2022 the regulator has instructed the K-Electric to reimburse the consumers’ specified per-unit charges.

A spokesperson of the company said, “November’s FCA was lower primarily due to a reduction in the prices of RLNG, furnace oil, and power purchased from CPPA-G [Central Power Purchasing Agency-Guaranteed] by 18 percent, 15 percent, and 37 percent respectively as compared to September 2022.”

He said that fuel adjustment is reviewed every month and is applicable on consumer bills for only one particular month per applicable tariff across the country. The FCA is incurred by utilities due to global variations in the fuel prices used to generate electricity and change in the generation mix. Furthermore, the consumers also get benefits when fuel prices decline as compared to the reference month.

The FCAs are applied after Nepra’s scrutiny and public hearings, which are conducted independently for KE and state-owned entities (XWDISCOs). Alongside final approval on the FCA to be charged to consumers, the Nepra also specifies the period during which these FCA can be applied to consumer bills, he added.

Regarding the FCA for September 2022, the Nepra had directed the K-Electric to refund Rs5.126/unit to clients in their November bills with an impact of around Rs9 billion on the company.

For August’s FCA, the KE was directed to refund Rs4.8862/unit to consumers in October bills having an impact of around Rs8.5 billion. Likewise, for July 2022’s FCA, the regulator asked the KE to pay back Rs4.117/unit in September 2022 bills.

While for June 2022’s FCA, the Nepra had allowed the utility to collect an additional Rs11.102/unit in electricity bills for August and September 2022, with a 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.