KE not overbilling consumers, Nepra tells SHC

Power regulator says uniform tariffs applicable throughout country, including Karachi

The country’s top power regulator told the Sindh High Court (SHC) on Tuesday that the city’s power company was not overbilling its consumers and that uniform tariffs were applicable throughout Pakistan, including Karachi.

The National Electric Power Regulatory Authority (Nepra) made the claims in its comments filed on a petition seeking constitution of a judicial commission to investigate into K-Electric’s alleged overcharging of Rs62 billion.

Nepra said the Ministry of Water & Power (MoWP) had raised the issue of KE consumers being overbilled because of non-adjustment of improved transmission & despatch losses and thermal efficiency in the base tariff of the power company.

Petitioner Karamat Ali of the Pakistan Institute of Labour Education & Research (Piler) and others seek an inquiry into KE’s actions regarding overcharging consumers, unpaid and payable dues to various government entities, non-implementation of time-of-use metering and failure to resolve pending disputes prior to transfer of indirect shareholding to a private firm of China.

Nepra’s counsel Kashif Hanif said the MoWP had been informed that the city’s electricity consumers were not being overbilled because uniform tariffs were applicable throughout the country.

Hanif said the tariff awarded to KE in 2002 was a performance-based multi-year tariff (MYT) that was extended up to 2016 after the signing of amended implementation agreement by the MoWP with the power company in 2009.

He said that to cap any excessive profits and to extend relief to the consumers, a clawback provision was made part of the MYT determination through which KE was required to share its yearly profit above 12 per cent with its consumers on the allowed regulatory asset base.

Therefore, he added, the claim of overcharging KE consumers Rs62 billion due to the tariff adjustment mechanism was false and based on lack of understanding of the performance-based MYT.

He opposed constitution of a judicial commission because, according to him, no such body could assume the statutory role of the power regulator. “If anyone has a complaint, they should approach Nepra for redressing their grievance.”

On the subject of transferring KE’s shares to the Shanghai Electric Power Company (SEPC), Nepra said the proposed transfer was yet to be approved, adding that the federal government had already issued a no-objection certificate for the planned transaction.

KE’s counsel Arshad Tayebaly said the city’s power company was neither the signatory to nor had a copy of any terms & conditions decided between KE’s shareholders and the SEPC, adding that he had no information about any proposed transaction or agreement between the two parties.

SHC’s division bench headed by Justice Mohammad Shafi Siddiqui said such a statement would be considered at the time of the petition’s hearing, which was scheduled for May 17.

On behalf of the Chinese power company, Salman Talibuddin and Syed Ali Maaz sought time from the court to file their comments.

Meanwhile, Piler’s Ali said the respondents had failed to investigate the issue of overbilling despite reference of the power secretary to Nepra regarding unfair tariff for the city’s power consumers.

He said Nepra was informed by the MoWP that with the help of excessive tariff setting, KE consumers had been made to pay Rs62 billion in the past few years, not accounting for the losses on account of efficiency gain by the power utility in the previous years, adding that tariff determination practices adopted for KE violated the general policy and relevant guidelines.

Ali said Nepra was advised to take all the aspects in consideration while setting a new tariff for KE that not only corrected all the anomalies but also transferred the excessive payments back to the consumers as well as called for strict accountability of those responsible for causing colossal losses to the people.

His counsel said Nepra had, however, denied the allegations made against KE and defended the new tariff of the power utility, adding that being the regulatory authority, Nepra was not acting in a lawful and prudent manner and was not exercising its function and power as a regulator because it should have taken timely action against the power utility in the interest of the consumers.

He said constitution of a judicial commission was the only solution for proper inquiry into KE’s “illegal affairs”.

The court was requested to constitute a judicial body for probing the tariff issues and to direct the government to disclose all the terms of agreement for transferring shareholding of KE to SEPC as well as to restrain transfer of shareholding until conclusion of the commission’s investigation.