ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has passed reduction in tariff through negative Fuel Charges Adjustment (FCA) to all non-protected residential and agriculture consumers.
“The Authority understands that after the recent rebasing of tariff and through re-targeting of power subsidies, resulting in creation of protected tariff category, the quantum of subsidy for the non-protected residential and agricultural consumers has been significantly reduced. In view thereof, and keeping in view the submissions of the MoE, the Authority has decided to pass on the negative FCA to all non-protected residential consumers and agricultural consumers as well,” said Nepra’s determination on FCA adjustment of Discos and K-Electric.
Nepra has approved negative adjustment of Rs 3 per unit for KE consumers for December 2024 whereas Rs 2.12 per unit negative FCA approved for Discos’ consumers for January 2025 has been approved.
However, Member (Technical) Rafique Ahmad Shaikh, in his dissenting note on Discos FCAs determination stated that he is of the considered opinion that impact of violation of Economic Merit Order (EMO) should not be passed on to consumers again, which is around Rs 1.5 billion.
On the issue of KE, Member (Technical) in his note stated that in December 2024, overall electricity sales in KEL declined by 6.6% year-on-year. Industrial sales, in particular, fell by 5.7% compared to December 2023 and experienced a significant 9.7% decrease compared to November 2024. This sharp decline in industrial demand requires immediate attention from stakeholders. In December 2024, KEL’s own power plants contributed 19% to its energy mix, while purchases from other Independent Power Producers (IPPs) and Captive Power Plants (CPPs) accounted for 7%, and NTDC supplied 74% of the total electricity. Notably, the cost of generation within the NTDC system is significantly lower at Rs. 9.60/kWh, compared to KEL’s own generation cost of Rs. 18.63/kWh. With NTDC possessing surplus generation capacity and its facilities situated close to KEL, it is crucial for both KEL and NTDC to prioritise and accelerate the interconnection works and studies between their systems. This will help optimise cost-efficiency and improve overall system performance. In the current interconnection arrangement, KEL’s power drawl capacity from NTDC is limited to approximately 1,600 MW.
However, in December 2024, KEL’s actual drawl from NTDCL averaged 985 MW (62% of the available capacity). This less drawl pushed out-of-merit generation from KEL’s own power fleet, leading to inefficiencies and under-utilisation of the efficient resources and undermining the existing infrastructure capacity utilization. In addition to the above, the contractual obligation for RLNG purchases by KEL is also adversely impacting its generation mix. Therefore, it is important that KEL, along with other relevant stakeholders, carefully consider all available primary energy and power resources before entering into any firm contracts. Such contracts should be structured to ensure the optimal utilisation of all available resources, taking into account factors such as cost efficiency, reliability, and sustainability.
Furthermore, NTDC, in its role as System Operator (SO) and planner, must adopt a more proactive approach by conducting comprehensive system studies in collaboration with all stakeholders. NTDC should actively present its assessments during KEL’s monthly Fuel Charge Adjustment (FCA) hearings and propose solutions to enhance the economic efficiency of the power system. As Transmission Network Operator (TNO), NTDC must also prioritise the completion of the K2 and K3 transmission lines. This will help maximise the effectiveness and efficiency of the power sector while ensuring optimal operations of generation facilities. Key obstacles— such as the limited transfer capacity between the two systems, the pending grid study required under the Interconnection Agreement between NTDC and KEL, and the delayed construction of the K2 and K3 transmission lines— must be addressed without further delay.
Copyright Business Recorder, 2025
Comments