ISLAMABAD: The K-Electric (KE) has sought about Rs4.21 per unit reduction in monthly fuel cost adjustment (FCA) to refund about Rs7.22 billion overcharged to consumers in August.

The National Electric Power Regulatory Authority (Nepra) has called a public hearing on Sept 29 to examine the KE’s petition. The regulator would also judge whether the company had followed the economic merit order while giving dispatch to its power plants as well as power purchases from external sources.

Last month, the KE had requested Rs3.48 per unit in FCA for electricity consumption in July but the regulator was not satisfied with a series of KE’s claims and had allowed Rs4.12 per month to refund Rs7.4bn it had overcharged consumers as per pre-determined reference fuel cost.

This is the second month in a row that FCA for KE’s consumers was lower than the reference tariff. This partly reduced the burden of the record-breaking increase in FCAs over the past many months going beyond Rs11 per unit.

The reduction in FCA is chiefly because of an increase in nationwide uniform base tariff that has gone up by Rs7 per unit last month. However, the KE said the FCA had reduced in August compared to July primarily due to a decrease in fuel prices. The price of power purchased from Central Power Purchasing Agency (CPPA) in August decreased by 33pc as compared to June.

Similarly, for RLNG, the price in August decreased by 16pc when compared to June as the country relied purely on long-term contracts and the authorities could not arrange expensive LNG through the spot market. On the other hand, the furnace oil in August was 3pc higher than in June.

The reduction in FCA, once approved by Nepra, would be applicable to all the consumer categories except lifeline consumers, domestic consumers consuming up to 300 units, Agriculture Consumers and EVCS (Electric Vehicle Charging Station) consumers of K-Electric. The negative adjustment on account of monthly FCA is also applicable to the domestic consumers having Time of Use (ToU) meters irrespective of their consumption level.

However, the impact of monthly FCA which is not passed on to certain categories of consumers mentioned above would be accounted for in the quarterly adjustments for other consumers.

Published in Dawn, September 21st, 2022