KE seeks another Rs3 per unit hike in quarterly adjustment

ISLAMABAD: Kar­achi’s power utility K-Electric has sought another Rs3.02 per unit in tariff adjustment for the April-June quarter of this year.

The National Electric Power Regulatory Autho­rity (Nepra) has accepted the petition for a public hearing on Oct 19 (Thurs­day) to examine whether KE’s request was justified and whether the company’s claim for Rs13.2 billion write-off against unrecovered bills should be allowed.

K-Electric’s demand for Rs3.02 per unit additional quarterly tariff adjustment is based on a revision in price settings at Rs2.57 per unit during April-June, followed by an annual inflationary impact of 87 paise per unit on operations and maintenance on top of already covered expenses in base tariff, and a couple of other previous positive and negative changes.

Based on its calculations and verifications, Nepra would forward its determination to the federal government for advice on when the adjustment would be passed on to consumers or whether it could be fully or partially set aside against the budgeted subsidy.

This is important given that Nepra and the federal government have already allowed up to Rs4.46 per unit increase in electricity rates for K-Electric consumers for two months — October and November — to reduce the government’s subsidy payments to the power company.

That is also on top of another Rs3.28 per unit increase notified last mo­nth for K-Electric users as part of a uniform national tariff increase being charged across the country for six months — from October to March 2024.

Therefore, the Karachiites are actually paying an additional Rs4.76 to Rs7.73 per unit, depending on their different slabs and categories, in October and November, and then Rs3.28 on average for the subsequent four months, i.e. December to March.

Against this backdrop, the regulator and the power division would have to sequence the additional Rs3.02 per unit adjustment to minimise the additional burden on consumers and the resultant political noise.

Interestingly, the regulator and the government are yet to find a legal cover to pass on another 47 paise per unit increase for the second and third quarters of the last year because the policy guidelines approved by the previous coalition government did not specifically cover those quarters.

This was despite Nepra having already shared a draft policy guideline that the power division should have gotten approved by the federal cabinet. These charges have already been recovered from consumers of other power distribution companies (Discos).

Under the tariff mechanism, changes in fuel cost are passed on to consumers only monthly through an automatic mechanism. However, quarterly tariff adjustments on account of variations in the power purchase price, capacity charges, variable operation and maintenance costs, and use of system charges, including the impact of transmission and distribution losses, are built into the base tariff by the federal government.