KE consumers to pay additional Rs4.8 per unit in June bills

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Friday issued its decision to K-Electric, permitting the utility to charge an additional Rs4.8269 per unit cost of electricity from power consumers on account of the March 2022 monthly fuel cost adjustment (FCA). 

These extra per unit charges will be collected from consumers in their billing month of June 2022, which makes up a cumulative amount of Rs7.862 billion.

On the petition submitted to NEPRA by KE, the utility had requested to allow it to charge Rs5.275/unit from consumers on monthly FCA, having an impact of Rs8.592 billion; however, after analysing the data, the power regulator allowed Rs4.8269 per unit increase.

On April 27, 2022, NEPRA conducted a public hearing on the K-Electric’s petition. The Authority observed that K-Electric had requested an amount of Rs213.32 million for the operation of KCCPP on HSD during March 2022. 

The authority for instant adjustment has provisionally considered the same amount, as requested by K-Electric, based on a heat rate of 7,950.183 btu/kW (at 100% as given in the Heat Rate report by IE), with the same CV of HSD and auxiliaries as reported by KE. Once the Authority approves the heat rate /auxiliaries of KCCPP on HSD and on account of CV, any adjustment would be adjusted subsequently along with the cost allowed previously.

During the hearing, Tanvir Bari representing KCCI, submitted that high FCAs have a detrimental impact on the industrial consumers of KE. Aneel Mumtaz inquired about the basis for change in the rate of energy purchased from CPPA-G. It was explained that KE had initially requested the cost of power purchased from CPPA-G based on the Fuel Cost Component of February 2022, as the rate for March 2022 was not available. Subsequently, K-Electric revised its request based on the FCA request of CPPA-G in the matter of DISCOs for March 2022.

Arif Bilwani, during the hearing, submitted that many plants owned by KE are being run on old provisional heat rates, which need to be updated. He further added that KE should buy more electricity from CPPA-G, cheaper than its generation.

The Authority observed that K--Electric had been directed to provide CV test reports for Tapal and Gul Ahmed each month from their fuel suppliers, third party, and labs. KE has submitted specific reports in this regard that are under review, and any adjustments will be considered in the subsequent adjustments. For the current month’s FCA, the highest CVs reported by both Tapal and Gul Ahmed, as per the submitted test reports for the current month, have been considered for the entire fuel consumed during the month to work out their fuel costs for the current month. This has resulted in a provisional negative adjustment of Rs4.58 million and Ps1.41 million for Tapal and Gul Ahmed.

Regarding the cost of energy purchased from CPPA-G during the current month, K-Electric has used Rs.9.387/kWh. However, the Authority's approved fuel cost component in XWDISCOs for the current month is Rs.9.0975/kWh. In view thereof, while working out the instant FCA of K-Electric, the rate approved by the Authority for XWDISCOS for March 2022 has been incorporated for the energy purchased by K-Electric from CPPA-G during March 2022. This has resulted in a decrease in total fuel cost by around Rs224.74 million.

Regarding the cost of Rs497.377 million claimed by KE on account of BQPS-III, the Authority has allowed KEL the project cost of BQPS-III in its multi-year tariff (MYT) for the control period of FY2016 FY2023 after benchmarking the same with a project cost of Haveli Bahadur Shah (HBS) RLNG power plant, i.e., US$0.694 million/MW.

The Authority carried out an in-house analysis of the data provided by K-Electric for March 2022 to work out the financial impact due to deviation from EMO. Regarding the financial effect of underutilization of efficient plants on lower gas pressure, a letter was issued to KE on September 16, 2021, which was directed to resolve its gas pressure/lower gas quantity issues within thirty (30) days. In response, KE has informed that it is in the process of determining the lower gas pressure issue. However, there are specific meetings with stakeholders that will take place in due time. Subsequently, K-Electric has shared details of communication with SSGC and the 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 an "As and When" available basis even after the GSA is signed. Given the above, Rs2 million has been deducted provisionally from the FCA claim of KE for March 2022.