Residents of Karachi Will Be Charged With Rs 4.83 Power Tariff for the Month of March

On Friday, the Nepra informed K-Electric of an extra FCA of Rs4.83 per unit to be levied to customers for power consumption in March.

This would enable the Karachi-based commercial utility to collect an additional Rs7.86 billion from customers paying for power in the forthcoming June billing month. According to Nepra, the FCAs will apply to all consumer groups except lifeline consumers.

The K-Electric had requested an FCA of Rs5.275 per unit, with financial institutions of Rs8.6 billion, but the regulator discovered that it was claiming electricity costs of Rs9.39 per unit for electricity purchased from the national grid, when the cost was actually Rs9.1 per unit under authorised rates, resulting in a net effect of Rs225 million.

Similarly, the regulator discovered Rs6 million in unjustified fuel expenses at 2 autonomous power plants in Gul Ahmad and Tapal. The authority also rejected KE’s claims for energy costs incurred during testing for the new Port Qasim Plant-III, claiming that such reimbursement was already integrated into its multi-year price, resulting in another Rs497 million disallowance.

Nepra authorised Rs4.83 per unit FCA (Rs7.86 billion) instead of the KE’s proposal of Rs5.275 per unit (Rs8.6 billion). It was also remembered that a five-year power purchase contract involving National Transmission and Despatch Company (NTDC) and KE for the sale/buy of 650MW on basket prices was signed on January 26, 2010.

Following that, on November 8, 2012, the Council of Common Interests (CCI) decided that KE will withdraw 300MW of power from NTDC. The CCI ruling has subsequently been challenged in the Sindh High Court by KE, and no new deal has been reached as of yet, despite the fact that K-Electric continues to take electricity from the power network, which is now roughly 1,100MW, without a contract.

The KE had initially requested an Rs4.89 per unit rise in FCA for March in order to collect Rs7.95 billion in consumer income. Still, it then reduced its proposal to Rs5.27 per unit, resulting in a revenue effect of Rs8.6 billion. The hike was attributed to rising national grid tariffs and RLNG costs for their own power generation, according to the company.

It stated that the greater than average fuel cost was due to a 10% and 40% rise in furnace oil and LNG costs, respectively, as well as a 9% increase in electricity supply from the national grid.

Changes in fuel costs are only passed on to consumers on a monthly basis through an automatic mechanism under the tariff mechanism, while the federal government builds quarterly tariff adjustments into the base tariff to account for variations in power purchase cost, capacity costs, variable operating costs, use of scheme charges, and the effect of system losses.

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