ISLAMABAD: The power regulator on Friday approved a reduction of Rs4.89 per unit for K-Electric consumers on account of fuel cost adjustment (FCA).

The National Electric Power Regulatory Authority (Nepra) issued three notifications, allowing the ex-Wapda distribution companies (Discos) to generate around Rs97 billion in additional revenue through tariff hike and directed the K-Electric to refund Rs8.4bn to consumers.

As per the notification, the KE — Karachi’s power utility company — will refund Rs4.89 per unit to its non-subsidised consumers on account of monthly FCA for electricity sold in August. The relief will be granted during the current billing month (October).

The KE had sought Rs4.21 per unit FCA reduction to refund about Rs7.22bn. However, after examination of data, the regulator notified about Rs4.89 per unit reduction.

Okays tariff increase for Discos to collect Rs97bn

This is the second month in a row that FCA for KE’s consumers was lower than the reference tariff — the rate set as a base at the start of the year which is increased or decreased as per fuel prices. This will partly reduce the impact of record increase in the FCA over the past few months, going beyond Rs11 per unit.

According to the KE, the fuel cost was lower in August compared to July primarily due to decrease in fuel prices.

The relief would be extended to all the consumer categories, except lifeline consumers — domestic consumers using up to 300 units — agriculture consumers and Electric Vehicle Charging Station consumers.

In a separate notification, the regulator has given a go ahead to the Discos to generate an additional revenue of Rs97bn on account of FCA for August and Quarterly Tariff Adjustment (QTA) for April to June.

Under the FCA for Discos, the regulator has allowed an increase of 19 paise per unit for electricity consumed in August to generate Rs2.7bn during October.

The Central Power Purchase Agency (CPPA), on behalf of Discos, had demanded an increase of 22 paise on account of FCA to generate about Rs3bn.

In case of Discos, hydropower was the biggest contributor as its share increased to over 38pc, compared to 35pc in July and 24pc in June and May.

Meanwhile, lower availability of expensive imported RLNG also came as a blessing in disguise to consumers.

In the third notification, the Nepra allowed the Discos to charge Rs3.39 per unit to collect about Rs94bn under the quarterly tariff adjustment (QTA) mechanism. The permission was granted against the discos’ demand of Rs3.69 per unit combined QTA for 4th quarter (April-June) of fiscal year 2021-22.

The increase was sought on account of capacity charges, transmission charges, market operator fee, transmission and distribution losses on FCA and variable operation and maintenance charges, including the impact of additional recovery on incremental sales of the said period.

On the request of the energy ministry, Nepra has decided to implement the QTA from October 1. The approved QTA has replaced the Rs3.21 per unit charges (under the same head) which was already in place for the third quarter (January-March).

Since the new QTA was 18 paise per unit higher than the one expired on Sept 30, the recovery would be made in four months — Oct 22 to January 2023 — instead of the usual three months.

The QTA would be applicable to all consumers of Discos, except lifeline consumers.

The QTA included an amount of about Rs55bn under capacity charges and about Rs35bn on account of impact of transmission and distribution losses on monthly FCAs and Rs14bn for use of system charges and market operator fee.

On the other hand, reduction was sought on account of Rs8.3bn for impact of discounted rate on incremental sales and about Rs1.5bn under variable operation and maintenance cost — thus a net addition of Rs94bn.

The highest quarterly adjustment demand came from Multan Electric Power Company at Rs19.5bn followed by Rs17.8bn from Lahore Electric Supply Company, Rs12.274bn from Peshawar Electric Supply Company and Rs11.6bn from Faisalabad Electric Supply Company.

Under the tariff mechanism, changes in fuel cost are passed on to consumers on a monthly basis through an automatic mechanism while QATs are built in the base tariff by the federal government.

Published in Dawn, October 15th, 2022