ISLAMABAD: The K-Electric (KE) has requested a provisional negative adjustment of Rs 4.84 per unit in the Fuel Charges Adjustment (FCA) for January 2025, which would pass on the financial impact of Rs 4.695 billion to its consumers.
Additionally, the KE is seeking to adjust a pending amount of Rs 13.5 billion from previous months.
The National Electric Power Regulatory Authority (NEPRA) is set to hold a public hearing on March 20, 2025, to review KE’s FCA adjustment request.
Provisional negative adjustment of FCA: Nepra urged to pass on benefit to KE consumers
In its submission to NEPRA, KE explained that following the determination of the Generation Tariff for its power plants post-June 2023, the company had submitted partial load, open cycle, and degradation curves along with startup costs for approval.
The KE’s request also includes an adjustment of Rs 13.5 billion for the period from July 2023 to January 2025, of which Rs 5.4 billion was previously set aside in the FCA decision for November 2024.
KE has urged NEPRA to consider the adjustment of accumulated fuel cost variations, so the recovery can be made through negative fuel cost variations for December 2024 and January 2025, ensuring consumers are not burdened later.
For the upcoming hearing, the following issues have been framed for deliberation: (i) is the requested FCA adjustment justified? (ii) did KE follow the merit order in dispatching power from its plants and purchasing power from external sources? and (iii) is KE’s request to adjust accumulated fuel costs due to partial load, open cycle, degradation curves, and startup costs for the period from July 2023 to January 2025 justified, considering the negative fuel cost variation? In the determination of December 2024, NEPRA’s Member (Technical) Rafique Ahmad Shaikh advised both NTDC and KE to collaborate to increase the supply of cheaper electricity from the National Grid to Karachi by resolving interconnection issues. He noted that overall electricity sales for K-Electric (KEL) in December 2024 had declined by 6.6% year-on-year.
Industrial sales fell by 5.7% compared to December 2023, and dropped significantly by 9.7% compared to November 2024. This sharp decline in industrial demand requires urgent attention from all stakeholders.
In December 2024, KEL’s own power plants contributed 19% to its energy mix, while purchases from Independent Power Producers (IPPs) and Captive Power Plants (CPPs) accounted for 7%.
The remaining 74% came from NTDC. However, the generation cost within NTDC’s system is significantly lower at Rs 9.60/kWh, compared to KEL’s generation cost of Rs 18.63/kWh. With NTDC having surplus generation capacity and facilities located near KEL, Shaikh stressed the importance of prioritizing and accelerating the interconnection between both systems. This would optimize cost-efficiency and improve overall system performance.
Currently, KEL’s power drawl capacity from NTDC is limited to around 1,600 MW, yet in December 2024, the actual drawl averaged 985 MW (62% of the available capacity). This underutilization resulted in the inefficient use of KEL’s own power plants, leading to higher costs and lower capacity utilization.
In its response, KE clarified that during December 2024, 21% of the electricity procured by CPPA-G (2,171 MW) came from RLNG plants within the national grid, compared to 19% generated by KE (252 MW) from RLNG. KE stated that the fuel costs of the RLNG plants operated by KE were comparable to those plants within the NTDC network during the same period.
KE further explained that the low demand in December 2024, due to the winter season, allowed it to appropriately manage its supply from the NTDC. KE balanced the low demand with a suitable supply from the NTDC network, utilizing plants with comparable costs to those in the NTDC system.
KE also pointed out that if it had received its full quota of natural gas as originally committed, the fuel cost could have dropped to Rs 8/kWh, just 40% of the actual cost incurred in December 2024.
The KE spokesperson emphasized that focusing solely on fuel costs may not present the full picture. A comprehensive analysis, which includes capacity payments, shows that the total power purchase cost from the national grid is approximately Rs 27/kWh. In comparison, the KE’s power purchase cost is similar.
Copyright Business Recorder, 2025
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