ISLAMABAD: National Electric Power Regulatory Authority (Nepra) is said to have received K-Electric’s Fuel Charges Adjustment (FCA) request on provisional basis for January 2024, in which it presented three scenarios of FCA adjustment i.e. Rs 3.34 per unit, Rs 3.78 per unit and Rs 8.78 per unit, sources in Nepra told Business Recorder on Thursday.
Recently, caretaker Prime Minister, Anwar ul-Haq Kakar had directed Nepra to resolve pending issues of K-Electric including determination of multi-year tariff. Saudi investors invariably raise this issue by pointing out that new investment cannot be committed when earlier investment is not protected. Saudi Arabia’s Minister for Energy also met top Pakistani authorities in Riyadh and Dubai wherein he raised the issues faced by M/s Jomaih.
According to sources, arguments had also been exchanged between the KE team and NEPRA team at the time of submission of tariff petition.
Nepra approves Rs1.52 per unit surcharge on KE consumers
NEPRA recently allowed Discos to increase their FCAs by Rs 7.05 per unit for January 2024 to be recovered in bills of March 2024. The Authority, in its letter of February 02, 2024 allowed tariff of quarter ending March 2023 as the interim tariff subject to adjustment/refund and subject to the final determination of the Authority for the new MYT 2024-2030.
In this regard, sources said, K-E has highlighted that while the tariff petition has been submitted for Authority’s approval, it has requested Authority to allow FCA on provisional basis to allow timely recovery of costs and avoid further accumulation of adjustments to be recovered from consumers. The provisionally approved FCA will be subject to adjustment, including related working capital impact, based on the final determination.
Further, as the tariff petition is yet to be determined, the source said, power utility company has calculated FCA adjustments under three scenarios which are as follows: (i) FCA calculated as the difference between Actual fuel cost vs the Reference monthly fuel cost as given in interim tariff. (FCA – Ref Interim Tariff). Under this method, monthly FCAs are calculated by comparing actual monthly fuel cost against reference fuel cost as approved by the Authority in KE’s FCA Decision for the month of March 2023. The reference fuel cost is grossed up on units served level with the monthly transmission loss of March 2023; (ii) FCA calculated as the difference between Actual fuel cost vs the Reference monthly fuel cost (FCA – Ref Monthly Cost). Under this method, monthly FCAs are calculated by comparing actual monthly fuel cost against each monthly reference fuel cost. The monthly references for fuel cost are based on the projected units sent out for each month for FY 2024 and based on these monthly sent out weightages, K-E will be allowed a determined tariff incorporating a single weighted average rate of Fuel Cost. K-E has highlighted that as the proposed base tariff will include yearly average fuel cost as reference, whereas for the purpose of FCA the monthly reference would be used instead of yearly average, it will result in a systematic over/under recovery of cost and incurrence of working capital cost which would require adjustment in tariff; and (iii) FCA calculated as the difference between actual fuel cost vs the annual weighted average reference cost (FCA – Ref Yearly Average Cost). Under this method, the monthly FCAs are calculated by comparing actual monthly fuel cost against weighted average annual reference fuel cost. Here the reference fuel cost will align with the yearly average fuel cost allowed in the determined tariff, and there will be no systematic under/over recovery of costs or additional working capital implications.
Copyright Business Recorder, 2024
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